Sunday, September 17, 2023

Metroland newspaper group faces bankruptcy

From The Globe and Mail.

Toronto Star publisher Nordstar Capital LP plans to put its regional newspaper business into bankruptcy last Friday, a move that will see more than 70 weekly papers converted into digital-only platforms and 605 jobs eliminated.

Nordstar-owned Metroland Media Group (MMG) launched a court-supervised restructuring “in response to unsustainable financial losses stemming from the changing preferences of consumers and advertisers,” the company said in a statement. 

Metroland is also exiting the flyer delivery business. The company said: “We believe this restructuring is essential to MMG’s long-term health and growth.”

Metroland’s bankruptcy means the end of weekly newspapers in many Ontario cities, including Barrie, Dundas, Oakville, Perth and Renfrew. The company is eliminating approximately two thirds of its workforce as it moves to digital platforms.

Approximately a third of the 605 employees losing their jobs work at Metroland’s flyer distribution operations. A third of the cuts are part-time staff. 

The company said 68 journalists will be laid off. As part of an internal document for employees, receiver Grant Thornton LLP said Metroland will not offer severance or termination pay, due to “insufficient funds.”

Toronto-based Nordstar, controlled by entrepreneur Jordan Bitove, will continue to publish seven daily newspapers in both print and digital formats. 

Along with the Toronto Star, the titles include the Hamilton Spectator, Peterborough Examiner, St. Catharines Standard, Niagara Falls Review, Welland Tribune and the Waterloo Region Record.

Mr. Bitove teamed up with former insurance executive Paul Rivett to purchase Torstar in 2020 for $60-million. 

In 2022, Mr. Bitove took full control of the publishing business after a falling out with his partner.

Between 2008 and April, 2021, around 448 news operations have shut down in 323 communities, according to the Canadian Media Directors’ Council, an industry association.

Nordstar said in June that it had entered non-binding talks to merge with Postmedia Network Canada Corp, the country’s largest newspaper chain and owner of the National Post and major city titles. 

The companies said that a combination was necessary to combat the “existential threat” facing the industry, which has seen print advertising and circulation revenue plummet as tech giants such as Facebook parent Meta Platforms Inc. and Google owner Alphabet Inc. have captured an increasing amount of revenue from advertisers.

The publishers called off talks in July, with Nordstar citing the “financial uncertainty” of the proposal. 

Postmedia is laden with debt, and The Globe and Mail reported that the company’s major lender, Chatham Asset Management, wanted to retain a significant amount of debt rather than convert it to equity in the new entity, scuttling the deal.

Postmedia chief executive officer Andrew MacLeod said the assertion was inaccurate, and the deal was called off because of the “unstable landscape as it pertains to Google and Facebook.”

The federal government introduced Bill C-18, the Online News Act, which would compel tech platforms to strike financial agreements with publishers for posting or linking to their content. 

Both Nordstar and Postmedia have been strong supporters of the legislation, which has been met with fierce resistance by tech companies.

Meta began blocking Canadians’ access to news on Facebook and Instagram starting in August in response to the legislation. 

Google has said it will do the same on its platforms unless its objections to the law are addressed.

Nordstar’s decision to move its weekly publications to a digital-only format could save costs, but industry experts say in the past, the strategy has often failed to create a profitable, sustainable business. 

“The problem with that is that audiences see less and less material that’s relevant to their own communities,” said Christopher Waddell, an emeritus professor of journalism at Carleton University. 

“At some point, the audience says, ‘Well, what’s the point of continuing to subscribe to this?’”

With Metroland laying off journalists, the challenge for the company is to maintain enough local news to entice readers. 

“The ultimate focus is the editorial content,” said Mr. Waddell. 

“It’s not much of a surprise that news organizations are finally making the decision to get out of print media, because the economics just don’t work anymore.”

“When the Star tried to do the deal with Postmedia, Metroland was a big part of that. 

It was pretty clear that Mr. Bitove thought that Metroland wasn’t going to be part of the Star’s future, or didn’t want it to be,” said Mr. Waddell.

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