Postmedia confirms planned merger with owner of Toronto Star

Postmedia Network Canada Corp. confirmed in a statement that it is in talks to merge with Nordstar Capital LP, the owner of Metroland Media Group and the Toronto Star.

The company says discussions are so far non-binding to consider a combination.

“The merged entity, which is yet to be named, would be jointly owned and jointly controlled by Nordstar and existing Postmedia shareholders,” the statement from Postmedia reads.

Nordstar would have a 50 per cent voting interest and 44 per cent economic interest, while Postmedia shareholders would have a combined voting interest of 50 per cent, and a combined economic interest of 56 per cent.

Toronto Star publisher and owner of Nordstar Jordan Bitove would be chairman, while Postmedia CEO Andrew MacLeod would be CEO of the new company.

Postmedia says the Toronto Star would maintain its editorial independence from the merged entity through the incorporation of a new company that would manage its editorial operations.

“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 economics of scale in the business model,” said MacLeod in a statement.

“The proposed merged entity would provide the best opportunity to ensure strong news media coverage for Canadians from coast to coast.”

He says news media around the country is under threat, and new models are “urgently required.”

“Scale, reach and efficiency are all prerequisites for future success and to compete with the global technology platforms,” MacLeod continues.

“Canadians deserve respect and expect world-class journalism from trusted sources, and we are committed to preserving the editorial independence of all our newsrooms.”

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While many of the details are yet to be confirmed, it’s not clear that the deal would lead to better coverage, said Christopher Waddell, professor emeritus at the School of Journalism and Communication at Carleton University.

“It’s not clear to me … how this accomplishes what they’re saying they’re going to accomplish in being able to invest more money and produce a strong news media coverage for Canadians.”

He said the pace of contraction among news organizations has been accelerating amid declining ad revenues and audience numbers, and that this deal looks to be the result.

“There’s more than a little bit of desperation.”

Postmedia has been struggling financially for years, saddled with extensive debt. It reported a net loss of $20.8 million in its latest quarterly results, while in its last full fiscal year it paid $31 million in interest expenses while carrying about $275 million in debt.

Postmedia also announced laying off 11 per cent of its editorial staff in a town hall meeting on Jan. 24.

Shortly after, Postmedia confirmed it would move numerous newspapers to digital-only formats in Alberta, eyeing more outsourcing deals for printing and laying off workers. The transition took place on Feb. 27.

Last week, Jamie Irving resigned as executive chair of the media conglomerate’s board. He had held the role for less than seven months after assuming the role when longtime Postmedia chairman Paul Godfrey stepped down.

Postmedia said it confirmed the discussions in light of unusual trading activity, which saw its share price climb by more than 50 per cent on the day.

The company owns the National Post, Vancouver Sun, and Calgary Herald, among others, and employs about 650 journalists.