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Quebecor's Peladeau aims to take media division public
4/21/2003

Montreal, - Quebecor Inc. intends to take its large media division public as soon as the stock market improves, chief executive Pierre Karl Peladeau revealed recently.

Peladeau said in an interview that a sale of shares in Quebecor Media would enable the parent company to reduce its massive debt, and would allow the Caisse de depot, Quebec's public pension fund, to recoup its investment.

It also would provide a windfall for Peladeau and other executives, provided the company does well.

The three top executives of Quebecor Inc. were awarded close to 150 million stock options during the past year which cannot be exercised until Quebecor Media goes public.

Peladeau, whose family controls Quebecor through multiple-voting shares, got 38.9 million of the options.

``We'd like to follow the pattern we did with Quebecor World,'' he said.

He recalled that the printing company was spun off from Quebecor in 1989, and ``two years later we were in the market,'' because the
investment climate was favourable.

``Now the problem is that (issuing) equity is expensive and debt is cheap.''

The Quebecor Media division of Quebecor Inc. owns the Sun newspaper group, the Videotron cable-TV company and the TVA Quebec television network, as well as French-language magazines, music publishing assets and the Netgaphe Internet portal operator.

Quebecor Media is owned 55 per cent by Quebecor and 45 per cent by the Caisse, which acquired its interest by supporting the $5.4-billion takeover of Videotron in 2000. Both owners have had to write down that investment, which contributed to a huge loss for the Caisse in 2002.

Quebecor has been trying to develop synergies between its media properties, in what some call convergence but Peladeau prefers to characterize simply as integration.

A major Quebecor convergence is underway with the Star Academie TV show, set to reach its grand finale Sunday after setting Quebec ad-sales and viewership records.

Broadcast five nights a week on TVA, Star Academie is cross-promoted by the group's newspapers and magazines, while sales of a CD have surpassed 400,000.

Fans also can watch the show's participants in 24-hour real time on the Internet, using Quebecor portals and Videotron's high-speed
connections.

``Unfortunately some people say today that convergence doesn't
work, but we see the opposite,'' said Peladeau.

He said other companies, like BCE Inc. with its ownership of CTV and the Globe and Mail in addition to Bell Canada, made large transactions with too high expectations, and concluded the concept is a flop.

``They set their expectations so high no one would be able to deliver. For us it's nothing huge; it's just working together, combining the value of a multitude of small effects, and somehow the strategy works.''

Peladeau said first-quarter advertising revenue is holding up at a level similar to a year ago.

Quebecor Inc. will release its quarterly results May 8.


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