Postmedia, Toronto Star owner Nordstar end their merger discussions

TORONTO –

Canadian media firms Postmedia Network Canada Corp. and Nordstar Capital LP, the corporate that owns the Toronto Star, have ended discussions a few potential merger, saying they have been unable to come back to an settlement.

Both firms issued press releases disclosing the change, with Torstar Corp. noting that the added backdrop of regulatory and monetary uncertainty contributed to the talks ending.

“These are challenging times for media companies, but we intend to keep working hard to give Canadians the news they need to stay informed, which is essential to our communities and to the functioning of our democracy,” mentioned Nordstar proprietor and Toronto Star writer Jordan Bitove in a press launch.

Postmedia president and CEO Andrew MacLeod mentioned in a press release that the “need for creative solutions and foundational transformation in our industry remains.”

The two firms introduced in late June that they have been in talks to merge in a deal that might have seen Postmedia and Metroland Media Group mix forces, whereas the Toronto Star could be managed by a brand new firm.

They had mentioned the proposed deal would assist them scale up so as to reply to the “existential threat” dealing with the media trade.

But specialists sounded the alarm over what such a deal might do for native news protection and for competitors in journalism. Many in contrast it to a deal in 2017 that noticed Torstar and Postmedia swap 41 group and day by day newspapers, 36 of which have been subsequently closed.

The Competition Bureau launched a probe into that deal however ultimately made no transfer to cease it.

Postmedia laid off 11 per cent of its editorial employees earlier this yr within the newest signal of battle for the nationwide firm, which owns publications throughout the nation together with the National Post, Vancouver Sun and Calgary Herald.

The now-dead deal would have seen Nordstar retain a 65 per cent curiosity within the new firm that might have been created to run the Toronto Star.

Meanwhile, Postmedia shareholders would have held a 56 per cent financial curiosity within the merged firm, with Nordstar holding the remainder, whereas voting shares would have been evenly cut up.

The deal would have additionally seen Postmedia convert a few of its excellent debt to fairness. The firm in its final full fiscal yr paid $31 million in curiosity bills whereas carrying about $275 million in debt.

Postmedia and Nordstar talks got here amid a wave of layoffs at media firms, together with Postmedia, Bell and the Athletic and Vice.

Each have seen their revenues strained in recent times as newspaper and cable subscribers have dropped and digital giants have swooped in, swallowing up promoting {dollars}.

The Canadian Media Concentration Research Project discovered Google and Facebook collectively accounted for 79 per cent of estimated $12.3 billion internet advertising income in 2021 and over half of complete promoting spending throughout all media.

Adding Amazon into the equation means the three US digital conglomerates accounted for near 90 per cent of the internet advertising market, the challenge additionally discovered.

The dominance of the three gamers means little promoting income is left for Canadian publishers. News Media Canada calculated promoting income for group newspapers within the nation dropped to $411 million in 2020 from $1.21 billion in 2011. Over that span, nearly 300 papers both disappeared or merged with different publications.

To fight such ramifications, the federal authorities not too long ago handed the Online News Act, which is able to drive digital giants to pay media retailers for content material they share or repurpose on their platforms when it comes into impact later this yr.

Postmedia and Torstar executives have lengthy supported publishers receiving reparations from digital giants.

Alphabet-owned Google and Meta, the proprietor of Facebook and Instagram, responded to the laws by asserting they are going to block content material from Canadian news publishers from their companies earlier than the regulation comes into drive.

Google has mentioned it’s going to drop its News Showcase, a product it makes use of to license news from over 150 native publishers together with Postmedia and Torstar, in Canada.

Last week, the federal authorities, province of Quebec and metropolis of Montreal mentioned they have been pausing promoting on Meta platforms in response to the corporate’s plans to take away news content material.

Heritage Minister Pablo Rodriguez mentioned the federal government is in talks with Google and believes its issues can be managed by the approaching laws because the invoice is carried out, however he prompt the dialog with Meta was completely different.

A spokesperson for Meta has mentioned the regulatory course of will not tackle its issues, with the invoice set to come back into drive in beneath six months.

Last week Torstar and Postmedia, in addition to media firms Cogeco Inc. and TVA and Videotron proprietor Quebecor Inc. mentioned they have been suspending promoting on Meta’s platforms.

This report by The Canadian Press was first printed July 10, 2023.

——

Torstar holds an funding in The Canadian Press as a part of a joint settlement with subsidiaries of The Globe and Mail and Montreal’s La Presse.