One company now owns 214 of Canada’s newspapers…
Edmonton, Alberta, 1914. Photograph via.
From The Walrus:
For most of the last century, newspapers were a licence to print money. Sports car-driving sales people boasted of turning down clients because the paper was too full; they couldn’t take another ad. Newspapers were the only game in town and clients came to them. Yearly profit margins of well over 20 percent were common. And the Edmonton Journal was one of the strongest.
Journal management was so supportive and generous to its workers, a union drive in the 1990s was roundly rejected by fully 77 percent of the employees, unheard of at that time.
That decision may have come back to haunt them. On January 19, 2016, twenty-five of us were let go—from rookies to veterans of more than forty years. Starting with me.
Then again, we weren’t working for the Southam family that day.
Southam’s empire was purchased by Conrad Black’s Hollinger Inc. two decades earlier and sold again in 2000 to Izzy Asper’s Canwest Global Communications, with much of the $3.2 billion purchase price using borrowed money. In 2009, six years after Asper’s death, Canwest declared bankruptcy.
Surprisingly, there were several interested buyers. Soon to be Postmedia CEO Paul Godfrey led the winning $1.1-billion bid, largely backed by GoldenTree Asset Management, a New York hedge fund that buys distressed assets and slashes costs to turn businesses around. The other two leading Postmedia investors, Silver Point Capital LP, and FirstMark Capital, are also from the US. Like Canwest before it, Postmedia is mired in debt. Its most recent (November 30, 2015) quarterly financial report shows that debt at $643 million; it has $19.4 million in operating income and owes $18.7 million in interest payments. With revenues falling by double digits each quarter and a good chunk of that debt in US dollars, these results are more than grim. “What’s really hurtful to us (is the) second-lien notes are all in US funds,” Godfrey told the Canadian Press in January. “With the Canadian dollar falling the way it’s falling, that’s almost like a noose around your neck.”
The network has sold or is selling every physical asset it owns, from the Calgary Herald building to the Journal and Montreal Gazette printing plants. It is running out of assets and running out of time.
Unless the sickening plunge in revenues somehow stops or its debt is dramatically restructured, bankruptcy seems inevitable. And remarkably, it owns most of this country’s newspapers.
How did we get here, with one company owning 214 of Canada’s newspapers? Very, very quickly. Just last year, in fact. But things started to go south about a decade ago.
Cover image by Leonard J.