Talks to combine two of the biggest newspaper publishers in Canada have fallen apart.
Postmedia Network Canada Corp. and Nordstar Capital LP — the majority owner of the Toronto Star and dozens of other smaller newspapers under the Metroland banner — announced late last month that they had entered into non-binding discussions about possibly merging together.
The framework of the proposed merger would have seen Postmedia transfer its dozens of newspaper titles over to Metroland, with voting control of the new entity split 50-50 between the two sides.
But on Monday, the two sides announced that those talks have broken down, and they have been unable to come to an agreement, “and the added backdrop of regulatory and financial uncertainty led them to make the decision to end their negotiations.”
Both companies saddled with debt
The economics of print journalism have been trending lower for years, but the pace of that decline has quickened in recent years, as an abrupt reallocation of advertising spending coupled with major drops in subscriber numbers.
Digital platforms are growing quickly, but not profitably enough to fill in the gap. Both companies are saddled with debt that has become increasingly expensive to finance as interest rates have risen in recent months.
Postmedia has hundreds of millions of dollars of debt on its books, the biggest chunk of which is $177 million worth of bonds, set to expire in 2027, with an interest rate of 10.25 per cent.
Nordstar, meanwhile, has at least $55 million of unsecured debt on its books, with an interest rate of 10 per cent.
When the merger was first proposed, the “core rationale,” the two companies said, “is to create a new entity with reduced debt.”
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In a statement, Jordan Bitove, owner of Nordstar and publisher of the Toronto Star, says the company is still committed to the news business.
“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,” Bitove said.
“Torstar remains focused on addressing the existential threats to journalism in Canada, which have been amplified in recent weeks with the announcements by Meta and Google that they intend to block access to Canadian news,” he added.
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