Canada's largest big-city newspaper chain is under new ownership and management, and headed in a new direction.

Postmedia Network Inc., the organization led by Paul Godfrey and backed by U.S. private-equity player Golden Tree Asset Management among other investors, took full control of the venerable chain Tuesday, announcing the completion of a $1.1-billion transaction with Canwest Global Communications Corp. That transaction includes the Vancouver Courier, which is now part of Postmedia Network Inc.

The new ownership group plans to transform a collection of newspaper and online assets that have weathered the recession but, like others, still face an uphill battle to improve profitability in a challenging environment where the fight for reader and advertiser attention is more fierce than ever.

To win over those readers, advertisers and soon investors, Postmedia Network's yet-to-be-announced executive team plans to pursue an ambitious "digital first" business model that harnesses strong brands in dominant market positions.

"Print people have to be digital people, not just on the editorial side but advertising as well," Godfrey, the chain's new chief executive, said in an interview last week.

His faith in newspapers appears unshakable. "They have always been the content creators," he said. But fundamental changes are occurring that necessitate new ways to cover events and stay relevant. To start, his comments suggest Postmedia Network will further accelerate its news cycle.

"I would expect most reporters are going to carry video cameras so they can put their stories on the Web immediately, to cells, iPhones and social networks," he said.

John Paton, a special strategic adviser to Godfrey and management, is one of the most important pieces of the Postmedia machine and perhaps the ace up its sleeve. A Canadian and longtime newspaper executive - even one-time media investment adviser - Paton has implemented successful operating models for large newspaper organizations twice over the past decade.

"Going forward, if Postmedia Network is going to fulfil its core mission of journalism, it's going to have to give people the information they want on the platforms they want and when they want it," Paton said. "That means you're going to have build an operational plan dedicating resources to that."

In 2002, he co-founded ImpreMedia, a Hispanic print and online news company that has become the largest and most profitable in its category, with more than a third of all American Hispanics (more than 14 million adults) consuming its content regularly. Now the CEO of The Journal-Register Co., a U.S. publisher and owner of multiple dailies across New York state, Connecticut and Pennsylvania, he is restoring that company's financial footing.

His business plans have advocated sharp reductions in "legacy" costs and arming newsrooms with the ability to deliver news as it happens. Expensive proprietary software used in producing newspapers has been swapped with free online tools. Reporters have been given digital camcorders.

For Postmedia Network's 11 major dailies and 26 community papers, it appears similar changes to improve and enhance news delivery and digital ad sales are coming.

With the economy mired in recession, revenues at Canwest Ltd. Partnership, the division which housed the publishing assets, slipped 15 per cent to $1.1-billion last year, while operating profits fell 40 per cent to $177 million.

With the deal closed and business conditions rebounding, Postmedia Network is now eyeing an offering on the Toronto Stock Exchange. The timing to court equity investors may be right. Analysts foresee a cyclical recovery in print advertising over the near- and medium-term that Postmedia Network can take advantage of.

The longer-term focus is on combating a prolonged secular decline all newspapers are facing, and finding sustained revenue growth and increased profitability. To do this, leveraging brand identity and, most importantly, scale will be as critical as the operational shift, Paton said.

Known to generations of Canadians as the Southam newspapers, Canwest acquired the chain from Conrad Black's Hollinger Inc. in 2000 in a $3.2-billion deal. It owns some the biggest and most recognizable newspapers in the country, including The National Post, The Gazette in Montreal, The Ottawa Citizen, The Windsor Star, The StarPhoenix in Saskatoon, Regina Leader-Post, Edmonton Journal, Calgary Herald, The Vancouver Sun, The Province in Vancouver, and the Times Colonist in Victoria. The Community Publishing Group includes titles throughout the Lower Mainland and Fraser Valley, Vancouver Island and the Windsor-Essex region of Ontario.

Postmedia Network is also inheriting the biggest print and online publishing workforce in Canada, with more than 5,500 employees. "You have the single biggest asset for journalism and the single biggest asset to monetize that journalism in the country," Paton said.

Postmedia Network's ownership group is comprised of several debtholders of Canwest's publishing unit. The group outbid rival offers from Torstar Corp. and others to win an auction by Canwest's senior lenders. The group put the assets up for sale in the spring after the unit filed for creditor protection on Jan. 8.

- Postmedia News