Consolidation and Corporate Debt

Postmedia announced the nonbinding talks on June 27, following what it described as “unusual trading activity.” According to Postmedia’s statement, NordStar would have 50 percent control and 44 percent economic interest in the yet-to-be-named merged entity, and Postmedia shareholders would have 50 percent control and 56 percent economic interest. Tacitly acknowledging the divergent editorial leanings of Postmedia publications and the Star, the statement offered assurances that “the Toronto Star would maintain its editorial independence from the merged entity through the incorporation of a new company.”

Indeed, the statement suggests that the potential merger has little to do with any political or editorial agenda and is primarily about shoring up the companies’ troubled finances. Andrew MacLeod, CEO of Postmedia, was quoted in the announcement saying: “The core rationale for the proposed merger is to create a new entity with reduced debt, national digital scale to compete with the global technology giants and economies of scale in the business mode.” The statement also included platitudes about strengthening “democracy” and “the fabric of our country.”

There is doubt as to whether the merger would actually solve the two companies’ financial woes. As reported by the Globe and Mail, the merger would create a lighter debt load, but would be unlikely to fix more structural problems.

Postmedia, founded in 2010 as the successor to the bankrupted Canwest Global Communications Corp., is currently $288 million in debt and making interest payments by accruing yet more debt from hedge fund lenders. The majority of Postmedia’s shares are currently owned by Chatham Asset Management, an American hedge fund that would swap almost all of its loans to Postmedia for equity in the merged entity, according to sources who spoke to the Globe.

In the first six months of 2023, as the Globe explained, Postmedia issued payment-in-kind bonds to Chatham in lieu of interest payments. During this period, Postmedia lost $36.6 million. The Globe noted that Postmedia’s previous attempts to reverse its financial fortunes by scaling up have not been successful. In the past eight years, Postmedia bought the Sun Media newspaper chain, swapped forty-one newspapers with Torstar (the company now owned by NordStar), and purchased the Brunswick News empire. Financial troubles have continued apace, resulting in a years-long trend of journalists being cut from the company’s payroll.

In recent years, up to August 2022, the company’s total number of employees shrank by more than three hundred. In January, it was revealed that Postmedia planned to lay off 11 percent of all of its remaining editorial staff due to “economic contraction.” CBC News reported that the Montreal Gazette was set to be hit even harder, with Postmedia looking to axe 25 percent of the newspaper’s editorial team. In the Prairie provinces, Postmedia shuffled its regional news editors, appointing one regional editor in chief to oversee seven daily newspapers.

Cashing in on the Company Line

Amid the carnage wreaked on newsrooms, Postmedia’s executives have in recent years enjoyed handsome bonuses. In the 2021 fiscal year, the company’s top five highest-paid executives received a combined total of nearly $2.6 million in bonuses, according to the company’s filings. Bonuses paid to executives for the 2022 fiscal year shrank considerably, however, with MacLeod having to make do with a $150,800 payment on top of his $1.06 million annual salary.

The scale of the potential merger between Postmedia and NordStar will mean that Canada’s Competition Bureau will likely need to investigate and sign off on the deal. But given Canada’s toothless competition laws and the bureau’s recent approval of another massive corporate merger, it is doubtful the federal body will stand in the way.

Besides the grim prospects for journalism jobs in Canada, the merger would all but complete a long-standing right-wing dominance over print news media. Postmedia’s news publications are known for having right-wing editorial stances, with the corporation’s brands endorsing the Conservative Party in every federal election since the company’s founding, and publishing a long roster of far-right opinion columnists.

Despite being traditionally regarded as a liberal-leaning newspaper, the Star’s standing as a rare nonconservative voice in a sea of Tory blue print media has been gradually chipped away. NordStar took over Torstar (the company that owns the Toronto Star) in the spring of 2020. It was pointed out at the time that NordStar’s owners, Jordan Bitove and Paul Rivett, had made extensive donations to conservative politicians and parties (Rivett departed the company in the fall of 2022). In a statement at the time of the takeover, NordStar made assurances about maintaining the Star’s “commitment to progressive positions.”

However, this has been called into question, particularly following the paper’s coverage of the 2022 Ontario election, which concluded with a puff piece applauding the success of Premier Doug Ford’s campaign strategy.

Disrupting Democracy

To say that the looming merger represents a broader state of crisis in Canadian news media would be an understatement. And it’s not just impacting the corporate behemoths. The once-promising endeavors of Overstory Media Group, a start-up aiming to create a for-profit, community-oriented news media chain, took a dark turn earlier this year. Job cuts in the editorial department coincided with a unionization effort, while allegations surfaced of pressure from management to prioritize clickbait over investigative journalism.

Besides for-profit media, independent, nonprofit outlets also face a disastrous blow as a result of Google’s decision to pull Canadian news content from its search engines. This impending action comes in response to Bill C-18, which mandates that tech giants like Google and Meta compensate Canadian news producers for featuring their content and share a portion of their profits.

The outcome was eminently foreseeable as a result of the poorly thought through legislation, but Justin Trudeau’s government appears to have no backup plan to tackle it, beyond using big words backed up with very little material clout. The federal government appears to be unable to prevent predatory corporate mergers, never mind rein in Big Tech’s dangerous amount of control over people’s access to journalism.

The future of journalism and the ability to hold power to account is looking increasingly imperilled. In this grim state of affairs, supporting independent, nonprofit media has never been more important, even if it is a last Hail Mary.