THOMSON TO SELL PAPERS BY MARKET GROUP : Globe and Mail will be only newspaper left as a major player heads for the Web.

Thomson Newspapers will be gone in a few months, but the Strategic Marketing Groups the company established in the '90s will live on.

Thomson Corp. put its 55 daily newspapers and 75-plus non-dailies up for sale Feb. 15, saying it wanted to focus on a global strategy to deliver information and services to businesses and professionals. Thomson will retain its flagship, the Globe and Mail, the older of Canada's two national newspapers, because the paper fits the strategic plan well. "We'll be free to grow as the Globe and Mail," says Chairman Roger Parkinson, whose holdings include multimedia outlets such as seven web sites and a television operation. "There's only going to be one winner in Canada, and that should be us."

Toronto-based Thomson began as a newspaper company. In the mid-'90s, it consolidated its papers into Strategic Marketing Groups (SMG), clusters of dailies and non-dailies that shared resources such as presses and business offices to achieve cost savings. "The first thing to stress is that we're not going to break the business up beyond the Strategic Marketing Groups," says Stuart Garner, president and chief executive officer of Thomson Newspapers in Stamford, Conn. "It's not a question of people looking at individual newspapers."

The strength of each Thomson SMG -- 11, plus nine stand-alone properties are for sale -- lies in its in-depth knowledge of the local market, Garner says. "I don't mean selling newspapers," he stresses; each group has a database about its communities that advertisers prize. "We can tell them about their customers," Garner says, as well as their competitors, their competitors' customers, local spending habits and "how far people will travel to spend money in their location."

Also in the mix are web sites that collectively drew $9 million in revenues last year and yielded a profit of $1.5 million, Garner says. To be sold separately are ClassifiedIQ, which put Thomson classifieds on-line, and the syndicated products unit, Thomson Target Media. The future of Thomson's Reader Inc. readership-improvement program and training center "remains to be seen," Garner says, noting that Reader Inc. "is more than just a training program, it's a whole attitude" about newspapering (see NewsInc., Nov. 22, 1999).

Thomson's exit from newspapers is not unprecedented, notes John Cribb, a principal with Bolitho-Cribb & Associates, a newspaper brokerage firm based in Bozeman, Mont., which had no role in the Thomson sale when Cribb was interviewed. "The concept is not all that unusual," Cribb says, pointing to the sell-off of newspapers by marketing company Harte-Hanks and the Walt Disney Co., which acquired print properties when it bought Capital Cities/ABC.

While scores of Thomson papers are now on the market, Cribb doesn't expect prices to be driven down by high supply. In fact, because Thomson is selling marketing groups, Cribb thinks "if anything, it may create more activity in the newspaper marketplace as all these regions reconfigure." Buyers may put others of their papers up for sale to strengthen or exchange their own clusters: "It's a major change in reconfiguring media markets in different parts of the country, and everybody is going to have to react to that."

A single buyer for all of Thomson is not likely to emerge, Cribb says, as the process plays out over the next four months or so. The whole package could command $2.2 billion, which is 10 times the papers' annual cash flow of $220 million, but says Cribb, "I think it'll also bring more than that sold in pieces."

One potential buyer -- certainly for the Canadian properties -- is Sun Media Corp. of Toronto, a unit of Quebecor Inc. of Quebec whose 15 dailies and 172 nondailies and specialty publications comprise the second-largest newspaper group in Canada. Sun Media President and Chief Executive Paul Godfrey says his company certainly will take a look at titles for sale.

"They happen to be in regions of the country we're not in and we'd like to be in, or they're close enough to our existing papers to pose the possibility for synergies," Godfrey says. "We'll make some decisions after we do our due diligence."

Citing Sun Media's role in Canoe, a national portal for Canada, Godfrey predicts: "We'll stand the challenge from the Internet. The newspapers that survive will have strong Internet connections."