What’s happening with Postmedia and Nordstar?
Postmedia Network Canada Corp. and Nordstar Capital LP are in talks about a potential merger.
They said in a press release that they’re trying to create greater scale in order to respond to the “existential threat” facing the media industry.
Postmedia owns newspapers across the country including the National Post, the Edmonton Journal and the Calgary Herald, as well as the Sun in Ottawa, Toronto, Calgary and Edmonton.
Nordstar owns Metroland Media Group and the Toronto Star, and is a relatively new company, having been created to acquire Torstar Corp. in 2020.
Is this a done deal?
No, this is not final yet. The companies are in ongoing talks about the merger, which they said is currently in the form of a non-binding letter of intent.
Does the government need to weigh in?
The Competition Bureau will likely have to sign off on this deal amid an industry that’s been shrinking and consolidating for years.
Industry Minister François-Philippe Champagne, who oversees the Competition Act, wouldn’t comment on the deal Wednesday.
In November 2017, Torstar and Postmedia swapped 41 publications, mainly in Ontario, with plans to stop publishing most of them. The deal resulted in the cutting of 291 jobs.
The transaction led to an investigation by the Competition Bureau, which after several years said it wouldn’t take further action.
The competition implications of this potential merger aren’t immediately clear, said Christopher Waddell, professor emeritus at the School of Journalism and Communication at Carleton University, on Tuesday.
What’s involved in this deal, and how would it be structured?
The proposed merger would see an even division of voting rights between Postmedia shareholders and Nordstar, which is privately held. However, the economic interest wouldn’t be split evenly — Postmedia shareholders would hold a 56 per cent economic interest and Nordstar would hold a 44 per cent interest.
However, the Toronto Star appears to be somewhat set apart from the rest of the merged entity. Postmedia said the proposal would see the Toronto Star maintain editorial independence through the incorporation of a new company that would manage its editorial operations. Nordstar would retain a 65 per cent interest in that company.
Jordan Bitove, owner of Nordstar, would be chairman of the merged entity and Andrew MacLeod, chief executive of Postmedia, would be CEO. Bitove would remain publisher of the Star.
What’s in it for these two companies?
One thing that may be attractive for Postmedia is that the deal would result in a “significant reduction in overall debt through a conversion of a portion of the outstanding debt to equity,” according to the press release Tuesday.
The company’s most recent financial earnings report says it has $261 million in long-term debt.
Though the Star and its ownership have had their own struggles, Postmedia in particular has been in turmoil for the last two decades, said Dwayne Winseck, a professor at Carleton University’s School of Journalism and Communication.
The company announced significant layoffs in January this year, affecting around 11 per cent of editorial staff. In recent years, Postmedia has closed a number of small-town newspapers, reduced print production of some titles, and moved some titles to digital-only formats to manage costs, among other layoffs and buyout offers.
The deal could also give the Star a chance to prove itself as being viable as a standalone paper, said Winseck: “We still have a wounded pony in the race.”
But as for the other papers involved, the deal could result in a reduction in the number of publications or even mergers between some of them, said Waddell.
Torstar holds an investment in The Canadian Press as part of a joint agreement with subsidiaries of The Globe and Mail and Montreal’s La Presse.