Parent Company Buys Small Piece of Competitor.

(This article has been updated since it was originally posted.)

After barely a month as an AAN member, Ottawa’s Capital City has closed down. Details are sketchy, but according to Ottawa X Press managing editor Allan Wigney, Toronto’s NOW, owner of Capital City, has bought five percent of the X Press. “The agreement will enable us to trade photos and editorials to some extent,” he said, “but nothing has specifically changed [at the X Press].”

The move was a surprise, said Wigney, who also expressed doubt that Ottawa could have ever supported two weeklies. “Although I was just in Edmonton and they have two, which makes no sense. You never know.”

Capital City began publication in April of 1998, setting up a rivalry with the X Press in a market of approximately one million that is the home of Canada’s federal government and the center of the country’s high-tech industry. NOW publisher Michael Hollett said that despite an effort designed not merely to compete “but to beat the other paper,” Capital City could not make money. He cited the relatively small market and the ability of the X Press to adapt to the alternative threat as reasons NOW decided to pull the plug. “The paper [Capital City] was doing well, but there was a lot of support for the other paper. They reacted and they did a good job of making their paper better.”

Asked if the closing had come as a surprise to the Capital City staff, he said, “There were people in the business side who should have seen it coming.” The paper’s losses were considerable, he continued, “because we really tried to put a really good paper, and that costs.

“It’s a drag.”

X Press publisher Jim Creskey was obviously pleased that his alternative competition had left the arena, but acknowledged that “Cap City really gave us a big kick in the ass,” forcing the paper to beef up news coverage to keep pace. Noting that the X Press had faced a second alternative threat during Capital City’s run as well (Ottawa Metro, launched by the local business paper and lasted 12 weeks), he said that the two upstarts had virtually emptied out the X Press’ sales department, “but on the editorial side all were wooed, none left.”

Asked if Ottawa can support two alternatives, Creskey mused for a moment before replying, “Not right now. But I think the time will come.” In the meantime, the X Press has hired at least one former Capital City employee, others have interviews scheduled, and talks continue between NOW’s Hollett and editor/CEO Alice Klein and Creskey on the exact nature of the inter-paper cooperation.