Postmedia agrees to sell its Infomart business to Meltwater for $38 million

Postmedia will sell its Infomart business to media intelligence firm Meltwater for $38.25 million.

Postmedia said it will use proceeds from the transaction to pay down debt, the company said in an announcement Thursday. The sale is expected to close on Aug. 15.

Meltwater is acquiring Infomart’s media monitoring business, which consists of the company’s database of Canadian media content, as well as a service that provides corporate customers with a direct feed of stories that interest them, and a professional services operation that provides custom-designed content analysis.

Postmedia will retain the FP Advisor business, which is a suite of corporate and financial data products.

Andrew MacLeod, executive vice president and chief operating officer of Postmedia, said data tracking and analysis has become a large global business. Postmedia wouldn’t have the ability to invest in the R&D needed to compete with global players, such as Meltwater, he said.

“It’s difficult for a company like ours to match that because it’s not our business and we don’t have the same customer set on a global scale,” MacLeod said. “It’s not our core business.”

It therefore makes sense for Postmedia to sell Infomart for an attractive multiple and use the proceeds to pay down debt, MacLeod said.

Meltwater was established in Sweden back in 2001 by chief executive Jorn Lyseggen. The company now has 1,500 employees at 55 offices around the world. It established a U.S. presence 10 years ago and set up shop in Canada in 2008. It currently has offices in Vancouver, Toronto and Montreal.

“We actually felt that Canada was very similar to Scandinavia — you know, well behaved, cool people, and the weather was very similar to what we had. In Canada, we were very successful from the get-go,” Kaveh Rostampor, North American head of Meltwater, said in a phone interview.

Meltwater, which describes itself as a media intelligence company, does more than offer customer access to news databases. Because the online world is flooded with so much information from conventional and social media, Meltwater uses tools to sort through it all and distill it into information its customers can use to make business decisions, Rostampor said.

Earlier this year, Meltwater bought an artificial intelligence company called Wrapidity which automatically extracts data from web content. And earlier this month, Meltwater acquired a social media analytics platform called Klarity.

Rostampor said Meltwater is committed to growing its footprint and becoming a leading media company in North America. Canada, in particular, is a market where Meltwater believes it can deliver “significant value” to clients, he said.

“We can bring to the Canadian market the best of two worlds,” Rostampor said. “We can provide Canadian companies a leading and successful platform, and we can now combine that with the deep experience and strong content that Infomart is bringing.”

Postmedia will continue to contribute content to Infomart after the deal closes, MacLeod said.

“It’s an ongoing relationship,” he said. “We’ll be continuing to license our content to them.”

Financial Post

dhasselback@nationalpost.com

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Yellen’s future uncertain as talk of possible successor expected to heat up

By Craig Torres, Saleha Mohsin and Jennifer Jacobs

Federal Reserve Chair Janet Yellen’s candidacy for another term is encountering resistance from some Trump administration advisers who want a new leader at the U.S. central bank, according to two administration officials, even as the Treasury secretary indicated she may still be in the running.

While White House officials are aware that Fed chiefs in the past have been asked to stay regardless of party affiliation, some advisers are keen to install their own pick in the coveted seat, two officials said on the condition of anonymity to discuss private deliberations. The selection process is in the early stages.

Publicly, Yellen hasn’t been ruled out.

“We haven’t made any decisions yet on the Fed chair, whether we’re going to have a new one or not going to have a new one,” Treasury Secretary Steven Mnuchin said in a Bloomberg Television interview June 20.

President Donald Trump has until the fall of this year to make a decision on a central bank chief and hasn’t given much thought yet to the qualities he’d like to see in potential contenders, according to another administration official, who like the others spoke about the matter on condition of anonymity.

The president hasn’t even discussed the situation at any length with his top economic adviser, Gary Cohn, this official said. Moreover, Trump likes Yellen and feels no sense of urgency to explore the matter, the official said.

Market reaction

Speculation that the Fed leader will stay on past her term ending in February is belied by the talk inside the White House that some of Trump’s aides doubt that he’d stick with Yellen, whom candidate Trump criticized last year for keeping interest rates low to help then-president Barack Obama.

“We’ll be working closely together with the president to consider all the issues,” Mnuchin added. Cohn, director of the National Economic Council, is working with Mnuchin on several Fed vacancies in the coming months. The two former executives of Goldman Sachs Group Inc. will be mindful of the financial-market impact of their decision.

The job of Fed chair affects every American, businesses that borrow and the price of money everywhere. The bond market would punish a bad choice, boosting market interest rates and threatening the economic expansion. Given the weight of the position, previous presidents have opted for continuity and reappointed the sitting chair, a tradition that would argue in favor of Yellen.

For her part, Yellen was careful not to criticize the president at her June 14 press conference. “I have felt that it’s been appropriate for interest rates to remain low for a very long time,” she said when asked about reports that Trump told her he considered her a “low interest-rate” person like himself.

When asked about a proposal to cut federal funding for job training programs, Yellen steered clear of criticizing the administration, noting “these programs can be undertaken at many different levels.”

People familiar with Trump’s sentiment suggest that the next chair — if not Yellen — is likely to have several qualities already visible in White House policies and nominations: a deregulatory bias, and a concern for credit flowing down to small businesses.

Loyalty vs independence

There’s another quality that shows through in his appointments that may not mesh well with the concept of an independent central bank: loyalty.

“What is Trump going to demand from the Fed chair? That is the question,” said Mark Spindel, an investment manager who has co-authored a book in the Fed’s relationship with Congress that will be published in August.

Republicans want to push through fiscal stimulus and tax reform at a time when the U.S. expansion has just completed its eighth year.

“The White House is not going to want the Fed” to offset fiscal initiatives, said Paul Mortimer-Lee, the chief economist for North America at BNP Paribas. “Whoever is running the Fed has to be independent enough to stand up to that.”

Conflicts may arise from a subtler point. White House officials could argue their tax policies hold the promise of supply-side effects that boost the economy’s potential growth down the road. Fed officials could disagree and raise rates, citing the short-term risks of higher inflation.

Job-market slack

Unemployment is low at 4.3 per cent, and Fed officials expect a tight job market to push prices up — one reason why they raised interest rates June 14. Mnuchin has said the unemployment rate has “excessive influence” over policy while pointing to broader measures of labor market slack.

However, even alternate measures of the jobless rate — which Yellen has also referred to — have come down in recent months.

“The big challenge for the next Fed chair is that the time will come to hit the brakes a little harder and cap the rise in inflation,” said Ethan Harris, head of global economics research at Bank of America Merrill Lynch. “Working through that without a recession is extremely difficult.”

Judy Shelton, an economist who advised the Trump transition team, said the president will look for somebody who wants to remove obstacles to Main Street credit growth.

“He was very concerned that small businesses didn’t have access to funds,” Shelton said. He was also concerned that “savers were getting zilch,” she added.

Careful selection

Choosing a Fed chair is typically the result of months of careful analysis by White House staff with highly specified criteria, according to people previously involved the decisions.

Republicans also have a general sense that the Fed under former chairman Ben Bernanke was too expansive and discretionary.

That’s raised investor’s interest in economists who espouse monetary rules such as Stanford University’s John Taylor. Glenn Hubbard, the dean of the Columbia University’s business school, wrote an essay in The Wall Street Journal on June 15 that advocated a policy rule. Taylor, Hubbard and former Fed governor Kevin Warsh were among the top four people economists picked as most likely candidates for the Fed chair job in a Bloomberg News survey conducted June 5-8. Yellen was atop the list.

Rumors about Yellen’s possible successor are likely to intensify as central bankers from around the world gather in Jackson Hole, Wyoming, for the annual conference sponsored by the Kansas City Fed typically held in August.

Warsh’s chances

The vetting process for Fed chairs isn’t transparent, and the choices aren’t always predictable. For that reason, outsiders on occasion act like they are running for office. For example, Warsh, a Bush appointee to the Fed, attended a monetary policy meeting at the Hoover Institution at Stanford in May. Warsh is a fellow at Hoover.

Warsh, who didn’t respond to a request for comment, was listed as a discussion moderator following a presentation by Princeton University economist Markus Brunnermeier on the euro crisis. Instead, Warsh gave a speech on the Fed that used variations of the word “reform” a dozen times in the text, prompting some in the audience to conclude he was campaigning for the Trump nomination. A public relations firm is reaching out to reporters for Hubbard.

“The Trump White House has been so chaotic in terms of vetting, selecting, and actually nominating candidates that such uncertainty invites opportunistic angling for the nomination,” said Sarah Binder, a senior fellow of governance studies at the Brookings Institution in Washington, and a co-author with Spindel on the Fed book.

Crisis management

Jason Furman, the former chair of the Council of Economic Advisers under Obama, said White House staff initially had four specific criteria to screen candidates as they approached the renomination of Bernanke and the nomination of Yellen.

The first, he said, was how the person would manage policy in a recession or crisis, a question Furman said is relevant today. “The number one quality is: What are they going to do in stressful circumstances?” Furman said.

Managing the large and diverse Fed system, which has 12 regional banks, was another criterion, as was confirmability, Furman said. The White House’s legislative director sat in on every Oval Office meeting on Fed candidates, he added.

Finally, Furman said, some reflection of “White House values” was part of the consideration. For Obama, that included jobs. Yellen checked several of those boxes.

And the chair’s independence? That was a basic assumption by everybody involved, Furman said. “We just took it for granted that whoever we picked would not be listening to us on monetary policy,” he said.

–With assistance from Shannon Pettypiece

Banks see electric car industry revving up and ushering in an energy fortune

By Ambrose Evans-Pritchard

Morgan Stanley is betting that electric cars will corner 70 per cent of the European vehicle market by the middle of the century, leading to upheaval for the power sector and a scramble for dominance of lucrative new technologies.

Global banks in London and New York are no longer debating whether the switch-over will occur. Research reports have shifted to granular analysis over what this means for large swathes of the economy, and who will be the winners and losers as the old edifice crumbles.

Morgan Stanley says in a report this week that a ratchet effect is under way. It’s becoming more costly each year to develop petrol and diesel cars that comply with tightening rules on emissions of CO2 and particulates (NOx), yet the cost of electric-vehicle (EV) batteries keeps falling. The crossover point will arrive in the mid-2020s.

EV sales

The US bank expects global EV sales to reach one billion annually by 2050, pulling ahead of internal combustion engines. The switch could take place much faster. A widely-cited report by Tony Seba and James Arbib at think tank RethinkX argues it will make no sense to make fossil-fuel driven cars, trucks, buses, or tractors within a decade.

The US pioneer Tesla – worth more on Wall Street than General Motors or Ford – is targeting annual sales of one million EVs within three years. It is mulling a joint venture in China, the biggest market for zero-emission cars.

China has banned petrol motorbikes, leading to a massive switch to EV two-wheelers. Some 230 million are on the roads. Under draft proposals from the industry ministry, all car companies will have to reach an EV quota of 8 per cent of sales from next year, 10 per cent by 2019, and 12 per cent by 2020.

Morgan Stanley said it would be “very difficult” for Volkswagen, BMW, and Mercedes to comply with this. They will hit a sales cap in China. This will be a rude shock.

Whether China’s breakneck drive for EVs lowers CO2 emissions is an open question. This depends on how quickly it cuts reliance on coal plants – down 8 per cent in two years – and shifts to gas, nuclear, and renewables.

In Japan, Honda is betting its future on EVs, aiming to raise the sales share to two-thirds by 2030. Ford plans 13 new EV models in the next three years.

In Europe, Renault-Nissan is targeting 1.5 million EVs sales a year by 2020, and Volvo 1 million by 2025; Volkswagen is scrambling to make up lost ground with plans for 2 million to 3 million annually by 2025.

Power companies

A parallel battle is under way among power companies, each eyeing control of ultra-fast charging points in the way that US railroad barons sought to snap up land in the late 19th century. Even more money will be made from the “big data” networks that underpin EV technology. Chargemaster in the UK runs a network of public charging stations called POLAR. ChargePoint in the US offers an ultra-fast unit enabling “hundreds of miles of range in under 15 minutes”.

Morgan Stanley expects up to 3 million public charging stations in Europe by 2050, up from 100,000 today. They will be ubiquitous. Smart phones will locate them instantly. “Range angst” will rapidly fade. Britain’s National Grid has carried out advance planning under its Future Energy Scenario and is eyeing a network of fast-chargers for the motorways. It estimates there could be 6 million EVs in Britain by 2030 under a “Gone Green” assumption.

A string of European firms are jostling to seize the lead in their home markets, with SSE in the UK, Innogy, EON, Iberdrola, Enel, Fortum, EDP, ABB, and Schneider Electric, all pushing ahead with expansion plans.

They are watching developments closely in Norway. The country is close to 30 per cent penetration for EVs, achieved by tax-free status and waivers on toll roads, as well as free parking until 2016.

Germany’s Bundesrat has voted to ban the sale of new fossil-fuel cars by 2030. This is not binding but it is a straw in the wind. In Italy, EVs are tax-exempt for five years. France offers euros 6,300 subsidies for EVs.

Nicholas Ashworth from Morgan Stanley says electrification will break the existing system with time. Utility companies should have no trouble over the next decade but the extra power required to recharge a European fleet of 150 million cars in 2050 would be equivalent to “another Germany” springing into being.

Nobody knows how much could be achieved by shifting to off-peak hours through smart grids and variable tariffs. Nor whether car batteries will act as a major storage reservoir.

Everything is up in the air. All we know is that vast sums are at stake and vested interests that fail to adapt in time will be wiped out.

As Apple Music grows, it wants to pay labels less — here’s why that is important

In the two years since its release, Apple Music has been gunning for Spotify’s top spot atop the music streaming world, playing the upstart as it rushes to occupy territory as an ambitious, new competitor.

It’s made some important strides. Apple has aggressively converted 27 million subscribers, and has bolstered its catalog with exclusive online television. And in yet another sign of Apple’s momentum, the company is said to be renegotiating its deals with record labels, offering a smaller cut on the promise it will continue to deliver ever more eager listeners.

Given that progress, what is the number two streaming player doing hawking its service on daily deals site Groupon alongside coupons for cargo shorts and couples’s massages? It’s part of the land grab, analysts say.

“A lot of the deals on Groupon are from companies that perhaps have seen better days,” said Rafi Mohammed, a pricing consultant. “But on occasion Groupon does do a high-profile deal with a major company.”

First time customers can sign up for Apple Music and get three months free, if they grab the Groupon deal. Afterwards, subscribers are automatically renewed for a regular membership, at $9.99. The free trial is the same as the one Apple offers on its own site. Experts say that rather than giving off a whiff of sales-desperation, Apple’s Groupon move is the latest sign of the company’s aggressive play to reach new streaming customers.

“Apple Music is growing fast but not as fast as Spotify,” said Mark Mulligan, a digital music market analyst. “It needs to widen its acquisition funnel to attract more users. Groupon is just one example of this strategy.”

Apple’s consumer base is limited to people who already own Apple devices, whereas Spotify’s potential audience is anyone with a smartphone. But within the ecosystem of Apple products, this can work to Apple’s advantage, Mulligan said. “Over the next couple of years Apple is likely to strengthen its position due to its ability to market directly to iOS device owners and to give increased priority to Apple Music within its devices. In effect Apple has an inbuilt advantage within the iOS ecosystem and by the same token, the ability to limit the reach of Spotify.”

As Apple Music has built up a dedicated following, the company is said to be negotiating to reduce the share of revenue it doles out to record companies, according to Bloomberg. Apple currently offers record labels 58 per cent of streaming revenue. The terms of the new deals would bring down the cut record labels receive closer to Spotify’s, which offers 52 per cent, signaling that Apple no longer has to appease the industry with bargain rates. The renegotiated terms would depend on Apple Music delivering a growing base of streaming subscribers.

With nearly 30 million subscribers, up from 20 million in December, Apple is aiming to unseat the 50-million customer market leader Spotify. Pandora, which has long offered Internet radio, recently launched a premium, on-demand streaming service to compete with Spotify and Apple, and hopes to amass 6 million to 9 million customers by the end of this year.

Using free and discounted trial offers is common for music streaming services, Mohammed explained. In addition to Apple Music’s three-month deal, Spotify, Pandora Premium and Amazon’s Music Unlimited all currently have promotional offers ranging from 30 to 90 days. Spotify also has a deal running on Groupon.

“I would view the Groupon partnership as just a signal of Apples’s aggressiveness to become the king of the streaming market,” said Muhammad. “Apple really needs to make a splash.”

While Groupon has been associated by some businesses and critics as devaluing a company’s brand, since customers armed with a coupon are less likely to return and pay full price, Muhammad said that Apple has explicitly shaped the deal as a one time-offer, managing the consumer’s expectations.

“Groupon isn’t really going to affect its brand. The way they framed it is it sets the expectation that this is a good deal, but you shouldn’t expect to capitalize on this again,” he said. “You are not devaluing the product because you are very up front.”

The Washington Post

PokerStars expects to hit the jackpot with expansion into India

By Sandrine Rastello

The world’s largest online poker company will soon enter the fastest-growing smartphone market.

PokerStars owner Amaya Inc. — soon to be renamed The Stars Group Inc. — plans to start services in India with a local partner by the end of this year, lured by the country’s 1.2 billion mobile users. The Montreal, Quebec-based company is aiming for at least half the Indian market, which it estimates could reach $150 million over time.

“It’s a booming country,” Chief Executive Officer Rafi Ashkenazi told reporters after an annual meeting in Montreal Wednesday, where shareholders agreed to rename the company and move its headquarters to Ontario. “We want to be there in time and we want to make sure that we are, as usual, the market leader when it comes to poker.”

The venture into India and proposed legislation that could make online poker legal in some U.S. states could help offset expected revenue loss in Australia, which Amaya will exit to comply with upcoming legal changes. While India too has a lack of legal clarity, some states have given licenses to online poker companies on classifying their products as “games of skill.”

Ashkenazi said his chief operating officer is currently in India to finalize details of the agreement with the local partner, which already has a license. He didn’t name the company. The deal will give PokerStars access to all of India except “a couple” of states, Ashkenazi added.

KPMG estimates that India’s online gaming industry will more than double to $1 billion by 2021, adding 190 million gamers with the majority on mobile devices. Amaya shares have climbed 22 per cent this year as Ashkenazi focused on paying down debt, installing a new management team and growing the casino and sports betting business.

Is Sears Canada closing the store in your neighbourhood? Find out here

Sears Canada Inc said today it plans to cut jobs and close stores as it restructures its operations, following years of declining sales as it has lost customers to big-box retailers, more nimble apparel companies and online merchants.

The Canadian company, which was spun off from U.S. department-store pioneer Sears Holdings Corp in 2012, said it planned to close 59 of its 225 stores and cut 2,900 of its approximately 17,000 workers as part of a restructuring that was approved by an Ontario bankruptcy court on Thursday.

Here are the stores to be closed: 

Cenovus facing tough market for critical sale of $5 billion in energy assets

CALGARY — Cenovus Energy Inc’s efforts to sell $5 billion of energy assets, already facing a rocky road because weak oil prices are depressing the appetite for deals, has become complicated by the surprise departure of its chief executive officer, fund managers said.

Brian Ferguson’s announcement on Tuesday that he will step down as CEO in October is the latest sign of tumult within Canada’s oilsands industry, which has seen international oil majors dump $22.5 billion in assets this year alone.

It follows Cenovus’ unpopular, debt-fueled $13.3 billion purchase of ConocoPhillips’ oilsands and natural gas assets in March, which sparked a near 50 per cent fall in Cenovus shares.

Cenovus’ aim to pay down debt to restore its once-pristine balance sheet now hinges on selling conventional oil and gas assets in a market with a shrinking pool of buyers as oil prices hit 10-month lows around US$42 a barrel.

“Everybody knows they are selling and that they have a weak hand. (The divestitures) are not impossible and they have good assets, but it’s challenging,” said John Stephenson, president of Stephenson & Co Capital Management. He said Cenovus needs to repair its balance sheet and find a credible CEO replacement to look attractive again.

His fund has sold around 85 per cent of its Cenovus holding since the ConocoPhillips deal.

Drilling for oil and gas in western Canada is relatively expensive compared with other parts of the world, making these assets less appealing.

Fierce opposition to new crude oil export pipelines like Kinder Morgan’s Trans Mountain expansion project and stricter environmental regulations than in the United States are also likely to be of concern to potential buyers.

Cenovus should be able to achieve at least the low end of its divestiture target, said Ryan Bushell, portfolio manager at Leon Frazer & Associates Inc, which is a shareholder. But doing so would depend on commodity prices and finding buyers with a positive long-term view on the oil market, he added.

The pool of potential buyers is limited. Global majors like Royal Dutch Shell have already cut back operations in Canada, and large domestic firms like Canadian Natural Resources Ltd are digesting sizeable acquisitions.

Small- and medium-sized companies whose share prices have taken a battering from more than two years of depressed oil prices are likely to struggle to raise the equity to fund acquisitions, analysts said.

“Many shareholders will be wanting management to be prudent and not issue equity at such depressed levels, which will naturally take buyers out of the bidding process,” said Jeremy McCrea, an analyst with Raymond James.

Mid-sized conventional producers Painted Pony Energy Ltd and Cardinal Energy Ltd issued equity to fund acquisitions this year, and saw their share prices slump as a result.

For Cenovus shareholders, who are sitting on about a $10 billion paper loss, ConocoPhillips’ impending sale of its 20 per cent stake in the company is another factor to weigh on the stock on top of the current challenges.

Ratings agencies DBRS is currently reviewing Cenovus’ credit rating, spokesman Scott Anderson said. DBRS placed Cenovus, which it rates BBB, under review with negative implications after the ConocoPhillips deal and said a rating downgrade is likely depending on proceeds from asset sales.

© Thomson Reuters 2017

CBC hired external investigator to probe nepotism complaints after executives’ spouses awarded 13 contracts

The CBC hired an external investigator to probe two top television executives after receiving complaints that at least 13 contracts were handed to production companies owned by their spouses. Although the investigator found no breaches of the public broadcaster’s conflict of interest policy, the legal counsel for one anonymous complainant said the findings are “inconsistent with the facts” and the contracts present the appearance of conflict of interest.

In May 2015, lawyer and workplace investigator Gillian Shearer was retained by the broadcaster to review whether approvals of the projects amounted to a conflict for Sally Catto, CBC’s general manager of programming, and her predecessor in another senior position, Phyllis Platt, who is no longer with the broadcaster.

The CBC acknowledged the investigation in a statement: “After a thorough review, it was determined that Sally Catto and Phyllis Platt did not breach our Conflict of Interest and Ethics Policy.”

“It’s not uncommon for people to develop personal relationships through work and this industry is no exception to that rule. CBC employees who are involved with someone within the industry must recuse themselves from any decision-making regarding projects that include their partner,” the statement adds.

Read the full story: http://nationalpost.com/news/canada/cbc-hired-external-investigator-to-probe-nepotism-complaints-after-executives-spouses-awarded-contracts/wcm/fa70b68a-9f3a-49a8-92f8-35cf207b8bda