Postmedia, Toronto Star owner in merger talks
The two media giants have entered into non-binding discussions on options for combining operational assets, according to company officials
Adrian Humphreys, Ottawa Citizen
Published Jun 27, 2023 • Last updated 13 minutes ago • 3 minute read
Two of Canada’s largest media companies — Postmedia, owner of National Post, Toronto Sun and a large fleet of major Canadian newspapers, and Nordstar, owner of the Toronto Star and smaller city and weekly newspapers — are in talks for a potential merger.
The two media giants have entered into non-binding discussions on options for combining operational assets, according to company officials.
The information was released in response to unusual trading activity in the companies’ securities, said Phyllise Gelfand, vice president of communications for Postmedia, in a written statement released late Tuesday afternoon.
The merged company, which would be jointly owned and jointly controlled by Nordstar and existing Postmedia shareholders has not yet been named. Each side of the transaction would have a 50 per cent voting interest. Postmedia would have a 56 per cent economic interest in the new corporate entity and Nordstar the remaining 44 per cent economic interest.
The two companies’ top executives would remain in positions of authority in the new merged company: Jordan Bitove, publisher of the Toronto Star and owner of Nordstar, would be chairman and Andrew MacLeod, chief executive officer of Postmedia, would be CEO.
“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 model,” said MacLeod.
“The proposed merged entity would provide the best opportunity to ensure strong news media coverage for Canadians from coast to coast. The news media industry in Canada and around the world is under existential threat, new models are urgently required. Scale, reach and efficiency are all prerequisites for future success and to compete with the global technology platforms. Canadians deserve and expect world-class journalism from trusted sources, and we are committed to preserving the editorial independence of all our newsrooms,” added MacLeod.
The Toronto Star would also maintain its editorial independence from the merged entity, with Nordstar retaining a 65 per cent interest in a new entity, Toronto Star Inc., which would manage editorial operations of the Star. Bitove remains publisher of the Toronto daily.
“The viability of the newspaper industry in Canada is at an extreme risk, especially in the small towns and communities that are important to this nation,” said Bitove.
“By pooling resources and working collaboratively, we can ensure that more Canadians have access to trusted journalism and quality reporting. This will strengthen our democracy and protect the fabric of our country. Preserving the editorial independence of our newsrooms, including the Toronto Star, is of particular importance to this arrangement going forward.”
While fierce rivals in news gathering and editorial, corporately, the two media giants have done business together in the past.
In 2020, Torstar accepted a $60 million takeover offer from NordStar Capital LP which was financed by Canso Investment Counsel Ltd., which is a major debtholder of Postmedia, a deal approved by Canada’s Competition Bureau.
NordStar was formed by Bitove and then-partner Paul Rivett to buy Torstar assets in 2020 for $60 million. After a rocky relationship and a public dispute over direction, the two split, leaving Bitove in control of NordStar and Torstar’s media properties.
In 2017 Postmedia, Torstar and a Torstar subsidiary, Metroland Media Group, struck a deal to swap 41 community and small daily newspapers. The subsequent closure of many of the titles drew public complaints and the attention of the Competition Bureau. After an investigation, the bureau declined to take further action.
Both companies have faced economic hardship during increasing digitalization of news which has meant cuts, layoffs and cost reductions.
Negotiations for the media mega-deal are ongoing and the merger is not a done deal, company officials said.
The status of the arrangements are outlined in the form of a non-binding “Letter of Intent” that comes with no assurance of a completed or definitive agreement.
Officials also say an agreement would be subject to closing conditions that may or may not be satisfied.
Postmedia said it would not immediately be releasing additional information on the potential merger.
https://ottawacitizen.com/news/canad...3-53811cac0684