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Transcontinental Executive Chairman Remi Marcoux listens to a question at a press briefing in Montreal Wednesday, Feb. 18, 2009.

Ryan Remiorz/The Canadian Press/Ryan Remiorz/The Canadian Press

Transcontinental Media is banking on a new advantage in more local markets in Quebec.

The subsidiary of Montreal-based printing and publishing company Transcontinental Inc. announced Monday that it has bought most of the assets of Avantage Consommateurs de l'Est du Québéc Inc., a privately held publisher and distributor owned by Rimouski, Que.-based businessman Gonzague Drapeau. Financial terms of the deal were not disclosed.

The acquisition gives Transcontinental three new community newspapers: L'Avantage votre journaland L'Avantage gaspésien, which together reach more than 60,000 households weekly in the Gaspé region, and the monthly Le Régional, which has a circulation of 91,000 in Eastern Quebec – plus their accompanying websites.

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It also gives Transcontinental a wider distribution network for its Publisac business, which sends out bags stuffed with advertising flyers to Quebec households. Until now it paid the small company to distribute Publisacs in Eastern Quebec, one of the few regions where Transcontinental did not control its own flyer distribution. Owning the papers also gives it access to more consumer data, which is valuable to advertisers.

All of this is even more important now that Publisac has some competition in Quebec. Last week, Quebecor Media Inc. announced the launch of Le Sac Plus, another flyer business that starting this week will package that company's own regional papers in a bag along with its clients' flyers.

Transcontinental has made it a priority recently to expand its local newspaper business. Earlier this month, it bought Groupe le Canada Français, owner of Quebec's oldest weekly paper, Le Canada Français, an 10 others in the south of the province. And the company's executives have said publicly that more acquisitions in local publications were to come even though the outlook for local advertising is bleak. Spending by local advertisers did not come back as quickly after the recession as it did for national print advertisers. Chief financial officer Benoît Huard has said local spending would remain sluggish through May, June and July, and would not predict whether it would pick up in the fall. Transcontinental's entire media segment, which includes its business as the country's largest consumer magazine publisher, has seen its operating income dropped in the first half of this year, to $22.3-million, compared to $33.3-million in the first half of 2010.

By buying community newspapers, the company is building up its presence in local markets both in print and online, which is a boon for its flyer distribution business and also for new online ventures such as its directory website, which also sells a service to smaller community merchants that need help building a website. The local investment is also crucial to the success of its daily deal websites, La Méga Prise and The Mega Catch, which depend on a company's impact in a community in order to do business in the increasingly competitive world of Groupon-style deal websites.

Transcontinental publishes almost 180 papers across Canada and 88 in Quebec, including dailies, weeklies, monthly papers and other community publications.

"We decided to make the local markets one of our main strategies in our media division," Marc Ouellette, the senior vice-president of the company's Local Solutions Group, said. "… We're positioning ourselves to become the best local reference for news for the consumer, and local marketing for local merchants."

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