The owners of the National Post and Toronto Star newspapers are pursuing a merger of their companies as they say the media in Canada faces an “existential threat.”
Postmedia Network (PNC), which owns several newspapers across Canada such as the National Post, Vancouver Sun and Calgary Herald, is in talks to merge with Nordstar Capital, owner of The Toronto Star and Metroland Media Group that publishes community newspapers.
The two companies say the proposed merger is an attempt to create economies of scale as both publishers lose money amid declining subscribers and advertising revenue.
In a news release, Jordan Bitove, publisher of The Toronto Star, said that “The newspaper industry in Canada is at an extreme risk.”
The companies said the proposed merger, which has not yet been finalized, would see Postmedia shareholders hold a 56% economic interest and Nordstar hold a 44% stake in the newly created newspaper publisher.
Nordstar would also retain a 65% interest in holding company Toronto Star Inc.
Bitove would serve as chairman of the merged companies and Andrew MacLeod, chief executive of Postmedia, would be the new firm’s chief executive officer (CEO).
Should the merger be finalized, The Toronto Star would maintain its editorial independence through a new company that would be established to manage its editorial operations.
Postmedia continues to struggle financially. The company most recently posted a net loss of $20.8 million and is labouring under $275 million of debt. Postmedia reduced its editorial staff by 11% this past January.
The Toronto Star, which has been continuously published since 1892, is reportedly losing $1 million a week. The newspaper has undergone several management changes in recent years.
It is not clear when or if the merger of Postmedia and Nordstar will be finalized.
Postmedia’s shares are currently trading at $1.91 each, making it a penny stock. In the last decade, the company’s share price has declined by more than 90%.
Nordstar Capital is privately held and does not trade on a public stock exchange.
