Since news broke late Tuesday that the Toronto Star’s parent company had agreed to a sale to a pair of investors for the equivalent of $52 million, lots of people have been looking at the political angle, convinced that either:
(b) because they had tipped former Ontario Liberal premier David Peterson as its vice-chair, the paper would become more entrenched as the Red Star so-liberal-its-actually-communist propaganda machine.
In reality, neither is true. In the short term, at least, the Star (and its other newspapers, the Hamilton Spectator, the Waterloo Region Record, the St. Catharines Standard, the Niagara Falls Review, the Welland Tribune, the Peterborough Examiner, Sing Tao and all of the Metroland community papers) will stay the same. The last thing a new investor wants to do is scare off a loyal customer base.
That’s not to say that political allegiances, whether real or imagined, aren’t a problem. It’s uncomfortable, not to mention demoralizing, when journalists are told they can’t participate in protests or express controversial opinions when their bosses openly donate money to political parties and/or used to work for them.
But more important than ensuring its apparent impartiality is ensuring its survival. Torstar as a whole was sold for $52 million. Its 63-cent buyout offer is a premium on its current share price, but a tiny fraction of Torstar’s value before the internet hacked away at its business model. In 2003, Torstar was worth up to $30 a share.
By comparison, Postmedia bought out the Canwest newspapers in 2010 for $1.1 billion, out of bankruptcy protection. Postmedia bought Sun Media in 2015 for $316 million. TVA bought Transcontinental’s 14 magazines for $55.5 million in 2015. Two years earlier, Quebecor sold 74 community newspapers to Transcontinental for $75 million. In 2007, Quebecor’s Sun Media bought Osprey Media (20 dailies and 34 weeklies) for $575 million.
Is Torstar really worth less than all of these? Unfortunately, yes. Because the newspaper business model has collapsed, especially over the past 15 years.
Nordstar’s Jordan Bitove, whose family helped found the Toronto Raptors, started Mobilicity and owns a third of SiriusXM Canada, and Paul Rivett, former president of Fairfax Financial Holdings, haven’t presented a plan for Torstar. Instead, they have focused on what they’re not doing to do. They’re not going to clean house in senior management (CEO John Boynton is staying on). They’re not going to drastically cut costs. And they’re not going to abandon the famous Atkinson principles the paper lives by.
Instead, they talk about “patient capital” and “long-term viability”. They claim they’re willing to sink a lot of money into this company to keep its journalism going while they figure out how to make it profitable.
That must be a sigh of relief for Torstar employees, who don’t have to worry about layoffs for a bit.
The hope is that Nordstar will do to the Star family what Jeff Bezos did for the Washington Post: Sink a bunch of money into it and not care about making a profit for a while.
The worry is that Bitove and Rivett are either (a) lying about their intentions and are more interested in the Star’s real estate than the newspaper, or (b) will make a series of poor business decisions and eventually bail when they get tired of losing money.
With the loss of ad revenue, most of which is never coming back, newspapers need a new business model. They can’t live off classified ads like they used to. People don’t need to subscribe to get their news, opinions, movie listings, comics, puzzles, event listings and all the other publishing knick-knacks that newspapers accumulated over the 20th century.
Are Bitove and Rivett the guys who can transform this business, which first requires figuring out what to transform it into? Nothing about their biographies or statements suggests to me that they are. But if they limit their roles to being sugar daddies and hire people who are willing and able to innovate well, they might be the best thing that’s ever happened to the newspaper, and maybe even the industry.
But it’s very easy to lose a lot of money in this business (as the Star demonstrated with its ill-fated StarTouch tablet app), and though the new owners are wealthy, their wealth is not infinite.