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Transcontinental expanding digital operations

Tibor Kolley/Tibor Kolley/The Globe and Mail

Transcontinental Inc. is keen to play a bigger role in the digital and mobile landscapes even as it strengthens its core printing and traditional media operations.

Montreal-based Transcontinental says new-media applications - such as recent agreements with the Toronto Transit Commission and the Société de transport de Laval to provide custom text-messaging for riders - will be a major growth area.

An 18-year, $1.7-billion deal to print full-colour editions of The Globe and Mail on new-generation presses will provide "significant cash inflows" starting next year and help finance investments in new digital and interactive marketing services, president and chief executive officer François Olivier said on Wednesday.

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Transcontinental is poised to reap the benefits of a $700-million investment in capital expenditure projects in the printing business, he said on a conference call.

"These investments have provided us with a unique competitive position" as well as the ability to boost market share in printing, Mr. Olivier said.

Among high-growth areas in the interactive space are e-mail marketing, e-flyers and other mobile apps, the company said. Transcontinental is also a major publisher of magazines, community websites and websites.

The company reported fourth-quarter profit of $44.5-million or 55 cents a share, up from $43.1-million or 53 cents a year earlier. Revenue was up slightly to $570-million in the quarter. In the digital unit, revenue jumped 34 per cent to $36.8-million for the full year.

The company also raised its quarterly dividend by 2 cents to 11 cents a share, applicable to both the class A common shares and the class B super-voting shares.

While it's clear that Canada's biggest domestic printing company is making strides in shifting to new media, it is still too heavily reliant on the printing business, say some analysts.

"Print is still a huge part of the business," said David McFadgen of Cormark Securities Inc.

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Aravinda Galappatthige of Canaccord Genuity agrees, though he's encouraged by Transcontinental's moves to become more flexible in terms of being able to switch to other profitable lines of business. "They're preparing for potential challenges in printing by reconfiguring platforms," he said.

For example, the new facilities that print The Globe also produce state-of-the-art commercial flyers, he said.

Transcontinental is also Canada's largest publisher of consumer magazines, with about 40 titles, and the company said it continues to develop Web and mobile applications for them.

In 2010, the company added six Quebec weeklies and their websites to its stable of 175 local newspapers across Canada.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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