Source: Canadian Press

MONTREAL — Transcontinental (TSX:TCL.A) says the print medium isn't dying even though digital media is forcing Canada's largest printer to adjust to rapid transformation in the communications and advertising business.

"We see print and the new media co-existing for a very, very long time," chief executive Francois Olivier said in an interview Thursday following the company's annual shareholders meeting.

The Montreal-based company said that the printing, newspaper publishing and marketing firm will continue to evolve to meet the changing needs of customers.

While printed flyers will remain a primary way for advertisers to reach customers, book publishing faces dramatic challenges.

"We believe that things like the Kindle (and) iPad are probably going to take anywhere from five to 20 per cent of the printed market away . . . in the next couple of years, so it's a big big big thing for us," Olivier said.

The impact would be significant, he cautioned, but it won't mark the end of printed books. The market already has overcapacity and will lose further volumes.

Transcontinental recorded $150 million in book printing revenues in 2007, the last year it was broken out separately from magazine and catalogue revenues.

Transcontinental continues to see rapid growth of new media but Olivier is cautious about pursuing dramatic changes to its operations.

"We've got to be careful because sometimes we and our customers get carried away," he said.

The company has created a new sector that is focused on one-to-one advertising and new digital communications such as email-based marketing, e-flyers and custom publishing.

Digital media generated about $150 million last year, less than seven per cent of total revenues. But the sector grew by 30 per cent in each of the last two years. Its email marketing business has doubled its sales annually.

Olivier believes new media will increasingly be used to complement flyer printing, which remains popular and well-read.

Next month, Transcontinental will launch a web version called Dealstreet.ca for English consumers and Publicsac.ca in French.

The goal is to help retailers get more bang out of their advertising dollars while giving consumers another venue to search for and compare shopping deals.

It will also give the company a further window to changes in marketing spending and allow it to adjust to any impact on its traditional business.

Founder Remi Marcoux, who has endured several recessions, said change is inevitable but there will always be printing.

"Transcontinental was born out of change," Remi Marcoux told shareholders.

"We will continue to evolve in pace with our customers, whether businesses or consumers, to meet their new needs and new expectations."

Transcontinental acted quickly to counter the effects of the recession by closing plants and shedding 2,000 workers. The moves will trim $110 million in annual costs, including $80 million in savings last year. More jobs could be lost as the company shifts work to more efficient operations.

It also plans to dramatically reduce its U.S. footprint by agreeing to sell its direct marketing business. It remains the leading direct marketer in Canada.

The company expects its key printing sector will continue to grow slowly with a gradual recovery of advertising, which directly or indirectly drives more than 80 per cent of its business.

"What we have seen so far in the beginning of the year is no further deterioration but so far we don't have a whole lot of growth," he said at a news conference.

While Olivier said Transcontinental is willing to consider acquiring a portion of Canwest Global Communication's (TSX:CGS) newspaper assets, it has no interest in becoming a daily newspaper publisher.

"We have no interest if the assets are sold as a block. If they are sold as a piece there might be a few pieces of the Canwest assets that we might be interested in," he said.

Transcontinental is Canada's leading publisher of consumer magazines and the second-largest community newspaper publisher. Its digital platform delivers content through more than 120 websites.

On the Toronto Stock Exchange, its shares gained 10 cents to $12.67 in trading Thursday.

© Canadian Press