Torstar-Postmedia deal biggest sign so far of newspaper crisis

by Angelo Persichilli                                                                                                                           The Hill Times  (Dec. 4, 2017)

Last week’s deal between Torstar Corp., The Toronto Star’s parent company, and Postmedia Network Inc. surprised many people because the agreement was reached, despite the not-so-idyllic relationship between some of their top managers.

Putting the interest of their respective companies ahead of their personal differences shows the level of professionalism on both sides. At the same time, the agreement is the most evident and dramatic sign so far of the deep crisis print media is in.

The logic behind the deal to swap 41 local papers is clear. If we look at the names of the publications involved, Torstar and Postmedia are trying to consolidate their presence in certain geographic areas and giving up others. Torstar will become the main media outlet in the GTA and Niagara Peninsula area, while Postmedia will be in Ottawa and central Ontario.

Why?

There are many questions about this zero-sum deal that looks like an agreement between two people who agreed to arrange for each other’s funeral.

However, although it looks like many things will change in Ontario media because of the deal, the reality is that the only outcome is the closure of most of the papers involved in the swap. I am sure that there are some economic reasons for letting the new owner close a company that was just acquired. Still, the question remains about why buy an organization for zero dollars only to close it. What is the purpose of this deal?

First, the swap is not an agreement reached between the two companies to implement a plan of growth; it is indeed one of the last attempts to slow down the loss of profit, after failed attempts have been made to reinvent themselves for years.

Second, and this is the essence of the deal: the two companies are trying to reduce the loss by consolidating their presence according to geographic criteria.

This is the concerning part. As we can see from the list of the papers involved by the agreement, Torstar is increasing its presence in southwestern Ontario, while Postmedia has more exclusive presence in the Ottawa area and central Ontario. They assume that by reducing the competition in certain areas, the advertising dollars now available will remain almost the same and will converge into their coffers. At the same time, they reduce the costs of closing news departments.

The deal is not motivated by the desire to have better news, but only to consolidate the revenue resources base while reducing costs. The rationale of the deal is to generate the same advertising revenue with one news department, instead of two.

As we can see, quality journalism is not the motivation. We can only hope that soon both companies will come up with a plan to cope with the new environment, to better exploit the new technology to distribute the news and to improve the bottom line reaching more news-consumers and not close papers.

This deal, for now, is consistent with the mistakes made in the past; a belief that growth can be achieved by reducing competition, expenses, resources, and by firing the journalists.

Reduced competition might help to increase profit, but it is a short-term illusion. In fact, with this agreement, the companies are only increasing the share of a disappearing market to defend the obsolete and dying print media.

Where is the profit? Nowhere. The only gain is the reduction of costs. Failing to understand why local media were starved to death is very dangerous; the consequences are that they are the next to be axed.

But this requires more space and I will deal with it in the next column.

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Postmedia took over the following publications: Belleville News; Brant News; Central Hastings News; Exeter Times-Advocate and The Exeter Weekender; Frontenac Gazette; Kanata Kourier Standard; Kingston Heritage; Meaford Express; Nepean/Barrhaven News; Norfolk News; Orleans News; Ottawa East News; Ottawa South News; Ottawa West News; Our London; Quinte West News; St. Lawrence News; St. Marys Journal-Argus and The St. Marys Weekender; St. Thomas/ Elgin Weekly News; Stittsville News; Stratford City Gazette; and the West Carleton Review.

Postmedia will also acquire Metro Ottawa and Metro Winnipeg, but will close all the acquired papers except the Exeter Times-Advocate and the Exeter Weekender.

Torstar will have ownership of the following newspapers: the Barrie Examiner; the Bradford Times; the Collingwood Enterprise Bulletin; the Fort Erie Times; the Innisfil Examiner; the Inport News in Port Colborne; the Niagara Advance and Niagara Falls Review; the Northumberland Today; the Orillia Packet and Times; the Pelham News; the Peterborough Examiner; the St. Catharines Standard; the Thorold Niagara News; and the Welland Tribune. Torstar also gets the ownership of two free commuter newspapers: 24 Hours Toronto and 24 Hours Vancouver. Torstar will close all but four papers: the Peterborough Examiner, the St. Catharines Standard, the Niagara Falls Review and the Welland Tribune.

Angelo Persichilli is a former Stephen Harper Director of Communications, a former GTA-area citizenship judge, a former columnist for Toronto Sun and Toronto Star and a former political editor at Corriere Canadese, Canada’s Italian-language newspaper based in Toronto.

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