TORONTO — Canadian media companies Postmedia Network Canada Corp. and Nordstar Capital LP, the company that owns the Toronto Star, have ended discussions about a potential merger, saying they were unable to come to an agreement.
Both companies issued press releases disclosing the change, with Torstar Corp. noting that the added backdrop of regulatory and financial uncertainty contributed to the talks ending.
"These are challenging times for media companies, but we intend to keep working hard to give Canadians the news they need to stay informed, which is essential to our communities and to the functioning of our democracy," said Nordstar owner and Toronto Star publisher Jordan Bitove in a press release.
Postmedia president and CEO Andrew MacLeod said in a statement that the "need for creative solutions and foundational transformation in our industry remains."
The two companies announced in late June that they were in talks to merge in a deal that would have seen Postmedia and Metroland Media Group combine forces, while the Toronto Star would be managed by a new company.
They had said the proposed deal would help them scale up in order to respond to the "existential threat" facing the media industry.
But experts sounded the alarm over what such a deal could do for local news coverage and for competition in journalism. Many compared it to a deal in 2017 that saw Torstar and Postmedia swap 41 community and daily newspapers, 36 of which were subsequently closed.
The Competition Bureau launched a probe into that deal but eventually made no move to stop it.
Postmedia laid off 11 per cent of its editorial staff earlier this year in the latest sign of struggle for the national company, which owns publications across the country including the National Post, Vancouver Sun and Calgary Herald.
The now-dead deal would have seen Nordstar retain a 65 per cent interest in the new company that would have been created to run the Toronto Star.
Meanwhile, Postmedia shareholders would have held a 56 per cent economic interest in the merged company, with Nordstar holding the rest, while voting shares would have been evenly split.
The deal would have also seen Postmedia convert some of its outstanding debt to equity. The company in its last full fiscal year paid $31 million in interest expenses while carrying about $275 million in debt.
This report by The Canadian Press was first published July 10, 2023.
Companies in this story: (TSX:PNC.A)
Torstar holds an investment in The Canadian Press as part of a joint agreement with subsidiaries of The Globe and Mail and Montreal’s La Presse.
The Canadian Press