The owners of The Toronto Star and National Post newspapers have ended their merger discussions, saying they were unable to come to an agreement.
Postmedia Network (PNC.A), owner of the National Post, and privately held Nordstar Capital, which owns The Toronto Star, said regulatory and financial uncertainty were factors in the negotiations aimed at merging the media companies ending.
The two companies announced in June that they were planning to merge in a deal that would help the two newspapers combine resources, achieve efficiencies, and better manage the “existential threat” facing traditional newspapers.
But industry observers complained about a potential merger, comparing it to a previous deal that saw The Toronto Star and Postmedia exchange 41 community and daily newspapers, 36 of which were later shutdown, hurting local news coverage and weakening competition.
Postmedia laid off 11% of its editorial staff earlier this year as its chain of newspapers that also includes the Vancouver Sun and Calgary Herald continue to struggle with declining circulation and a loss of advertising revenue.
The Toronto Star has also cut editorial staff, appointed a new chief executive officer (CEO), and moved head offices over the past year.
The Canadian Media Concentration Research Project estimates that U.S. technology giants Alphabet (GOOGL), Meta Platforms (META) and Amazon (AMZN) receive 90% of an estimated $12.3 billion in annual online advertising revenue, leaving little for Canadian news outlets.
Between 2011 and 2020, about 300 community newspapers across the country either closed or merged with other publications, according to data from News Media Canada.
The federal government in Ottawa recently passed the Online News Act, which forces tech companies to compensate media outlets for content they share or repurpose on their platforms.
However, Alphabet-owned Google and Meta Platforms, owner of Facebook and Instagram, responded to the legislation by announcing they will block Canadian news content on their digital platforms.
Postmedia’s stock has declined 17% in the last 12 months to trade at $1.81 per share.
