CANADIAN 'SI' EDITION IN JEOPARDY;SENATE VOTE APPROACHES ON EXCISE TAX PENALIZING SPLIT RUNS

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Sports Illustrated's battle to continue publishing a Canadian edition appears headed toward a final showdown this week.

At stake is a 21/2-year-old weekly edition with 140,000 circulation that is expected to run about 260 ad pages in Canada this year.

The last stand could come Nov. 30, when the Canadian Senate is expected to act on a bill that will levy an excise tax equivalent to 80% of the cost of an ad on any Canadian advertiser in a split-run edition of a foreign-owned magazine. A split run is defined as any magazine in which 20% or more of the editorial is the same as the material in editions distributed outside the country. SI is the only such foreign-owned split-run magazine printed in Canada.

Blasting the proposal as "unfair and vindictive," SI President Don Elliman said if the measure is approved, the edition will probably be shut down and long-term plans to increase editorial and advertising to weekly frequency will be permanently scuttled. While the Canadian edition is published weekly, Canadian ads appear just once a month and he had hoped to increase them to 18 times next year.

Mr. Elliman said he would continue to sell Sports Illustrated in Canada, but it would be the U.S. edition of the magazine, and therefore the split-run tax wouldn't apply.

SI's estimated annual revenue from Canadian ads is $1.1 million. A b&w page is $4,440 while a color page is $5,657.

The move to clamp down on split runs-even if they are printed in Canada, as is the SI edition-picked up momentum in September when the Canadian House of Commons passed the bill.

The Canadian Senate is roughly equivalent to the British House of Lords and so cannot effectively change the bill. That's why Catherine Keachie, president of the Canadian Magazine Publishers Association, said she expects the measure to become law "before Christmas."

Ms. Keachie said without the change, the nation's magazine industry might be wiped out by U.S.-based magazines that could operate cheaper because of larger economies of scale. "Are you a country if you don't have your own magazines?" she asked.

Advertisers in the SI edition include Labatt Breweries, General Motors of Canada, Adidas and Rolex Canada-and they appear caught in the middle.

"There aren't a lot of print alternatives for reaching the male market in Canada," said a Labatt spokesman.

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