Torstar

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Torstar Corporation
TypePrivate
TSX: TS.B
IndustryMass media
Founded1958
HeadquartersOne Yonge Street
Toronto, Ontario
Key people
OwnerNordStar Capital LP
Number of employees
4,000 (2016)[1]
DivisionsDaily News Brands
Metroland Media Group
Websitewww.torstar.com
One Yonge Street, the Torstar headquarters

Torstar Corporation is a Canadian mass media company which primarily publishes daily and community newspapers. In addition to the Toronto Star, its flagship and namesake, Torstar also publishes daily newspapers in Hamilton, Peterborough, Niagara Region, and Waterloo Region. The corporation was initially established in 1958 to take over operations of the Star from the Atkinson Foundation after a provincial law banned charitable organizations from owning for-profit entities. From 1958 to 2020, the class A shares of Torstar were held by the families of the original Atkinson Foundation trustees. The private investment firm NordStar Capital LP, owned by Jordan Bitove and Paul Rivett, officially acquired Torstar on August 5, 2020.[2]

History[edit]

Torstar was founded after the Ontario government passed a law barring the provisions of late-Toronto Star owner Joseph Atkinson's will from being enacted. Atkinson had bequeathed the newspaper to a charitable organization he had founded. The Progressive Conservative provincial government of George Drew passed a law banning charitable organizations from operating profitable entities such as newspapers. Rather than sell the newspaper, the trustees of the Atkinson Foundation bought out the Star privately and founded Torstar as a private corporation.

On November 26, 2010, it was announced that the Canadian Press news agency would be taken over by a for-profit corporation, with Torstar serving as one of its investors.[3] In December 2011, Torstar acquired a 25% minority stake in specialty television channel owner Blue Ant Media.[4]

On November 27, 2017, Postmedia and Torstar announced a transaction in which Postmedia will sell seven dailies, eight community papers, and the Toronto and Vancouver 24 Hours to Torstar, in exchange for 22 community papers and the Ottawa and Winnipeg versions of Metro. Except for the Exeter Times-Advocate, St. Catharines Standard, Niagara Falls Review, Peterborough Examiner, and Welland Tribune, all acquired papers will be closed. Torstar stated that it wanted to focus on building synergies within its existing markets served.[5][6] The swaps effectively remove competition between the two companies in the affected markets;[7] the Competition Bureau stated that it would review the proposed deal.[8] and in March 2018, formally accused the companies of using no-compete clauses to reduce competition in the newspaper industry, in violation of the Competition Act.[9][10]

On September 20, 2018, Torstar announced that it would acquire iPolitics.ca to enhance its coverage of the federal government.[11]

On December 20, 2018, Torstar applied to the Ontario Superior Court for an order to keep documents seized from its offices by the Competition Bureau sealed from the public.[12]

Contested Sale to NordStar[edit]

Initial NordStar Proposal[edit]

On May 26, 2020, Toronto Star publisher John Honderich announced the sale of Torstar to Nordstar Capital LP, controlled by Jordan Bitove and Paul Rivett, for $52-million. The price for the class A voting shares and class B non-voting shares was set at 63 cents in the deal. At the time of the most recent quarter, Torstar had $69-million in cash on its balance sheet – more than the $52-million acquisition price from Nordstar.[13] However, Torstar’s share price had suffered from the company’s inability to generate enough revenue or cost savings to pay quarterly dividends, which were suspended late in 2019. The suspension pushed the publicly traded B shares to what was then the lowest level since at least the late 1990s — 53 cents.[14] Weeks prior to the announcement of the deal, Torstar had reported a $23.5-million loss for the first quarter of 2020.[15]

The new owners planned to make Torstar a private company with former Premier of Ontario David Peterson as chair of the board. The initial financing for the deal was reported to be provided by Canso Investment Counsel Ltd.[16] Canso is also a major debtholder of Postmedia, which owns a chain of newspapers across Canada including the National Post.[17] Canso also held just under 1% of the class B non-voting shares of Torstar. Since 2017, the largest shareholder in Torstar was Fairfax Financial, owning 40% of the company's class B shares.[18] Canso and Fairfax had a history of investing together, with the most notable example being BlackBerry.[19] Canso and PointNorth (a fund launched by Jordan Bitove [20]) also had a history of investing together, most notably the privatization of AGT Food and Ingredients.[21] Prior to the announcement of the Torstar deal, Paul Rivett had recently retired as the president of Fairfax after 17 years with the company. Rivett remains on the board of directors of certain Fairfax investees and will keep his position as chair of Recipe Unlimited.[22]

In a published statement, Paul Rivett said that Nordstar would work to ensure the "long-term viability of the business" and to continue the Torstar publications' values. "Torstar was formed around these values [the advancement of society], the Atkinson Principles, and I can assure you that if the agreement is approved, they will continue to serve as the organization’s intellectual foundation."[23]

Canadian Modern Media Holdings Proposal[edit]

Shareholders were to meet to vote on the NordStar offer on July 21. In the meantime, news reports on July 8, indicated that another purchaser, under the name Canadian Modern Media Holdings Inc. (CMMH), had expressed interest in making an offer, said to be worth $58-million, or 72 cents per share.[24] The group was led by Matthew Proud, CEO of legal software firm Dye & Durham Corp., his brother Tyler Proud, CEO of technology company Avesdo Inc., and Neil Selfe, financial industry veteran and founder of INFOR Financial Group. Former Ontario finance minister Greg Sorbara was also involved.[25] As of July 9, the Torstar board continued to support the NordStar bid.[26]

The CMMH proposal, included a promise of contingency payments to shareholders from future asset sales, which were potentially worth at least another 50 cents.[24] The rival bid was conditional on being deemed a 'superior proposal' by Torstar's board, and would need to gain the support of the controlling shareholders, namely Fairfax Financial and the voting trusts’ Honderich, Hindmarsh, Campbell and Thall and Atkinson families. The Torstar board stated representatives of the trust and Fairfax did not intend to support the CMMH bid.[24]

NordStar Revised Proposal & Final Sale[edit]

On July 11, the NordStar bid was increased to $60-million, or 74 cents per share, with the Voting Trust and Fairfax revising their soft lock-up agreements, to hard lock-ups.[27] This effectively put an end to the bidding process because the terms of the revised bid meant that "the Voting Trust and Fairfax can’t change their votes to support any other bid".[28]

In the shareholder vote held on July 21, 99.7% of the class A shareholders favoured the NordStar offer as did 98.1% class B shareholders. However, only 81.9% of minority shareholders (not including the Voting Trust or Fairfax Financial) voted to accept the NordStar offer.[29] On July 23, Blake, Cassels & Graydon LLP, an international corporate law firm representing Torstar, brought forth a motion on behalf of Torstar before Ontario Superior Court Justice Gilmore to approve Torstar’s plan of arrangement with respect to the acquisition of Torstar.[30] Grant Vingoe, chair of the Ontario Securities Commission, had previously said in a letter to Andrea Horvath that the court was the appropriate venue to challenge the proposal.[31] He further said that the test to be applied by the court was whether the process leading to the arrangement was fair and reasonable.

Two shareholders appeared before justice Gilmore and expressed concern that the process was deeply flawed and that as a result they did not receive fair value for the shares.[32] One of those shareholders was a former Torstar EVP and former publisher of the Hamilton Spectator, who owned over 1-million class B shares. The other shareholder was the second largest shareholder of Torstar class B shares, outside of Fairfax Financial and the members of the Voting Trust. After the one hour online hearing, Justice Cory Gilmore delayed the Ontario court's decision on whether to approve the takeover of Torstar. The decision on the $60-million bid was put off after Justice Gilmore said she needed more time to examine written submissions by NordStar, Torstar, rival bidder Canadian Modern Media Holdings, and the minority shareholders.[32]

On July 25, the Globe and Mail published an interview with Butch Folland, a significant member of Torstar’s voting trust and the great grandson of the founder of Torstar, Joseph E. Atkinson, Torstar’s original publisher and the author of the Atkinson Principles. Mr. Folland is also the grandson of Harry Hindmarsh, who was President of the Star following Mr. Atkinson’s death in 1948. His personal ties to the Toronto Star date back to age 13 when he took a job as an office boy. In that article. Mr. Folland is quoted as saying “I was really disappointed in the outcome. I felt that the process wasn’t really fair in the way it affected me.” [33]

Late in the evening on July 27, an Ontario court approved the $60-million takeover of Torstar Corp. by private equity firm NordStar Capital LP over the objections of the rival bidding group, which immediately said it planned to appeal the judge’s decision.[34] Ontario Superior Court Justice Cory Gilmore ruled NordStar, controlled by entrepreneurs Jordan Bitove and Paul Rivett, could close their purchase of Torstar, setting aside requests from competing bidder Canadian Modern Media Holdings Inc. to re-open an auction of the company. CMMH had formalized its rumoured bid the previous Monday, having submitted a formal offer for 80 cents per share for Torstar on July 20, more than a week after the families and Fairfax pledged their support to NordStar.

Canadian Modern Media Holdings Inc. had complained that shareholders were not given the opportunity to assess that bid, and that the nondisclosure agreements (NDA) they were subject to prevented the details from being made public. After the ruling, CMMH said it would seek leave to appeal the decision, saying it still believes that the NordStar deal is "neither fair nor reasonable." As such, CMMH stated it expects to "immediately commence an appeal of today’s decision and will seek a stay of Justice Gilmore’s decision, preventing the closing of the plan, pending the determination of the appeal."

On July 31, 2020, the Ontario Superior Court of Justice rejected the appeal. [35] The judgement by Justice Michael Penny included this comment: "Having carefully read the material filed and considered the submissions of the parties, I have concluded that the motion for a stay of the order ... must be dismissed."[36] The deal closed on August 5.[2]

Operations[edit]

Torstar's media operations are divided into two primary divisions: Daily News Brands, Community Brands and Digital Ventures.

In September 2018, Torstar announced a deal to acquire the existing political news website iPolitics, effective on 1 October 2018. The initial coverage of the deal did not clarify which of the following divisions of the company would be the formal owner of iPolitics.[37] Torstar did announce that iPolitics would maintain its own bureau in Ottawa.[38] After the sale was completed, Torstar laid off five of the publication's staff, and appointed Marco Vigliotti as the senior editor.[39]

Daily News Brands[edit]

The Daily News Brands division primarily comprises the Toronto Star and its associated properties, including Torstar Syndication Services. The division also owns another six Ontario regional daily newspapers and a stake in the Canadian edition of the Chinese-language Sing Tao Daily.[40]

The StarMetro chain of free daily newspapers serving Calgary, Edmonton, Halifax, Toronto, and Vancouver was also part of this division until publication of those titles ceased in 2019.

Community Brands[edit]

The Community Brands division, Metroland Media Group, owns more than 70 weekly community papers as of late May 2020, the free magazine Canadian Immigrant, and other community-oriented properties.[41]

VerticalScope[edit]

On July 29, 2015, Torstar announced its acquisition of a 56% majority stake in VerticalScope, a Toronto-based operator of online communities, for $200 million. The company operates websites and message boards that focus on niche categories, particularly within the automotive industry. Torstar CEO David Holland explained that the purchase was designed to bolster the company's presence in digital media.[42]

Star Touch and ePaper apps[edit]

Launched in 2015, Toronto Star Touch was the company's app designed specifically for tablet computers. It was discontinued in late July 2017 after an investment totaling $20 million because of an inadequate volume of readers and advertisers and was replaced by ePaper.[43] The latter is "a new universal app" (a digital copy of the print version of the Star) available for both Android and iOS smartphones and tablets.[44][45]

Other investments[edit]

Torstar owns a 20 per cent stake in the Victoria, British Columbia-based newspaper publisher Black Press,[46] and a 16 per cent stake in broadcaster Blue Ant Media. The company is also part owner of The Canadian Press.[47]

Past investments[edit]

Torstar launched a weekly celebrity-based magazine called Scoop in 2005, which folded one year later.

Between late 2005 and early 2011, Torstar also held a 20 per cent stake in CTVglobemedia, a Canadian media company which broke up when BCE Inc., the parent company of Bell Canada, purchased the company's media assets.[48] This caused some controversy because CTVgm owned The Globe and Mail, a competing newspaper to Torstar's own Toronto Star. There were no editorial hurdles between the two newspapers however. Torstar sold its shares in 2011.

On May 2, 2014, Torstar announced the sale of Harlequin Enterprises, a publisher of romance novels, to HarperCollins for $415 million.[49][50]

Corporate governance[edit]

Current members of the board of directors of Torstar are:

See also[edit]

References[edit]

  1. ^ "Company Profile for Torstar Corp (CA;TS.B)". Retrieved 2008-10-09.
  2. ^ a b Rubin, Josh. "NordStar takes possession of Toronto Star publisher". Toronto Star.
  3. ^ Dana Flavelle (2010-11-26). "Major publishers invest in Canada's oldest news agency". Toronto Star. Retrieved 2015-11-25.
  4. ^ "Torstar acquires 25 per cent stake in Blue Ant Media". Toronto Star. Retrieved 31 July 2015.
  5. ^ "Postmedia to close community newspapers in Stratford, London, St. Thomas". CBC News. Retrieved 2017-11-27.
  6. ^ "Torstar, Postmedia swap community papers, most to close". The Globe and Mail. Retrieved 2017-11-27.
  7. ^ Faguy, Steve (2017-11-27). "Postmedia/Torstar deal results in almost 300 jobs lost as dozens of newspapers shut down". Retrieved 2017-11-27.
  8. ^ "'The alarm bells should go off:' Postmedia, Torstar deal will see 36 community papers closed". Financial Post. 2017-11-27. Retrieved 2017-11-30.
  9. ^ Jackson, Emily (2018-03-22). "Competition Bureau's concerns over Postmedia-Torstar newspaper swap revealed in court filing". Financial Post. Retrieved 2018-04-06.
  10. ^ "Torstar, Postmedia and the arrogance of the deal". The Globe and Mail. Retrieved 2018-04-06.
  11. ^ "Toronto Star owner to buy political website iPolitics". CBC News. Retrieved 2018-09-20.
  12. ^ Carney, Bryan (2019-02-05). "Torstar (Again) Blocks Release of Evidence in Conspiracy Case". The Tyee. Retrieved 2019-03-04.
  13. ^ "Toronto Star owner Torstar to be sold, taken private in deal worth $51-million". Retrieved 2020-07-28.
  14. ^ "Canadian media company Torstar to be sold, privatized in $52M deal". Global News. Retrieved 2020-07-28.
  15. ^ "Torstar agrees to $52M sale to NordStar Capital". CBC. 2020-05-26. Retrieved 2020-05-27. recommended by a special committee of Torstar's board of directors and has the support of the majority of its shareholders and its largest independent shareholder, Fairfax Financial Holdings Ltd.
  16. ^ "Torstar buyers say they want to take the publisher private and 'build something that's very special'". Toronto Star. May 28, 2020. Retrieved May 29, 2020. unsecured debt pays 10 per cent annual interest,
  17. ^ "Toronto Star takeover clears competition hurdle". Financial Post. Retrieved 2020-07-28.
  18. ^ "Torstar to be sold, taken private in $52-million deal". Toronto.com. 2020-05-26. Retrieved 2020-05-27.
  19. ^ "Brookfield, Power back BlackBerry financing deal". Retrieved 2020-07-28.
  20. ^ Inc, PointNorth Capital. "PointNorth Capital Obtains Initial Commitment from OMERS". www.newswire.ca. Retrieved 2020-07-28.
  21. ^ Inc, AGT Food and Ingredients. "AGT Food and Ingredients Announces Definitive Agreement for Going Private Transaction at C$18.00 per Share". www.newswire.ca. Retrieved 2020-07-28.
  22. ^ "Torstar buyers say they want to take the publisher private and 'build something that's very special'". thestar.com. 2020-05-26. Retrieved 2020-07-28.
  23. ^ "Torstar buyers say they want to take the publisher private and 'build something that's very special'". Toronto Star. May 26, 2020. Retrieved May 27, 2020.
  24. ^ a b c "Investors propose competing $58-million bid for Torstar". Retrieved 2020-07-28.
  25. ^ "Another bid for Torstar emerges, this one for $58 million". thestar.com. 2020-07-08. Retrieved 2020-07-28.
  26. ^ "Torstar stock surges on second offer to buy the company — board continues to support initial NordStar bid". Toronto Star. July 8, 2020. Retrieved July 10, 2020.
  27. ^ "NordStar raises offer for Torstar, secures key shareholder support". Retrieved 2020-07-28.
  28. ^ "Surprise $60-million bid from NordStar locks up acquisition of Torstar". Toronto Star. Retrieved 2020-07-12.
  29. ^ "Shareholders have given a proposed $60 million takeover of the Toronto Star's publisher their seal of approval". St Catharines Standard. Retrieved 2020-07-21.
  30. ^ "Strong shareholder support for Torstar takeover will 'carry a lot of weight' in court approval, experts say". thestar.com. 2020-07-22. Retrieved 2020-07-28.
  31. ^ George-Cosh, David (2020-07-21). "Torstar shareholders vote in favour of NordStar takeover - BNN Bloomberg". BNN. Retrieved 2020-07-28.
  32. ^ a b "Ontario court delays much-anticipated decision on Torstar takeover". thestar.com. 2020-07-23. Retrieved 2020-07-28.
  33. ^ "Torstar trust member critical of deal to sell paper". Retrieved 2020-07-28.
  34. ^ "Judge approves NordStar's $60-million takeover of Torstar". Retrieved 2020-07-28.
  35. ^ "Torstar Corporation Announces Dismissal of Stay Motion in Connection with Arrangement with NordStar Capital LP". Financial Times. 2020-07-31. Retrieved 2020-08-01. the Ontario Superior Court of Justice (Divisional Court) has dismissed a motion for a stay of the final order
  36. ^ "NordStar takeover of Toronto Star publisher cleared to go ahead early next week". Toronto Star. Retrieved 2020-08-01.
  37. ^ "Torstar signs agreement to purchase political website iPolitics". CBC News, September 20, 2018.
  38. ^ "Torstar buying Ottawa-based news site iPolitics". Global News. 2018-09-21. Retrieved 2020-05-29.
  39. ^ "iPolitics lays off five after ownership change". The Hill Times, November 14, 2018.
  40. ^ Daily News Brands
  41. ^ "Canadian media company Torstar to be sold, privatized in $52M deal". Global News. 2020-05-26. Retrieved 2020-05-27. Torstar owns the Toronto Star, Hamilton Spectator, Waterloo Region Record, St. Catharines Standard, three other dailies and some 70 weeklies.
  42. ^ "Struggling Torstar wagers $200-million on a niche digital company". The Globe and Mail. 29 July 2015. Retrieved 31 July 2015.
  43. ^ Toronto Star ePaper edition
  44. ^ "Toronto Star Shutters Star Touch, lays off 30 staff". FinancialPost. 2017-06-28. Retrieved May 27, 2020.
  45. ^ "Toronto Star To Shutter $20-Million Tablet App". Huffington Post Canada. 2020-06-26. Retrieved 2020-05-27. Thirty employees will lose their jobs, Aleksandra Sagan Canadian Press
  46. ^ "Is spinoff in the cards?". Financial Post. Archived from the original on 4 March 2016. Retrieved 31 July 2015.
  47. ^ Media Classified acquires City Parent magazine from Metroland Media
  48. ^ Kiladze, Tim (13 September 2010). "Torstar walks away from BCE-CTV smiling". The Globe and Mail. Retrieved 6 September 2012.
  49. ^ "News Corp. to Buy Harlequin for $415M". ABC News. May 2, 2014. Retrieved May 2, 2014.
  50. ^ Greenfield, Jeremy Greenfield (May 2, 2014). "News Corp Acquires Harlequin, Adds to HarperCollins Portfolio". Digital Book World.

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