Postmedia plans to buy bankrupt Atlantic Canada newspaper chain SaltWire

HALIFAX — Postmedia Network Inc. announced plans to buy “certain businesses” belonging to SaltWire Network Inc. and The Halifax Herald Ltd., the two insolvent media companies behind Atlantic Canada’s largest newspaper chain.

The Toronto-based company, which owns the National Post, Vancouver Sun, Calgary Herald, Ottawa Citizen and dozens of other publications, issued a statement Friday saying the deal is subject to conditions, including Nova Scotia Supreme Court approval and “outcomes satisfying. “with unionized workers.

Postmedia CEO Andrew MacLeod said the company plans to provide the resources to ensure “trusted, high-quality local news” continues to be delivered to affected communities across the Atlantic region.

“SaltWire sought (protection from its creditors) after years of financial difficulties, noting that its current operating model is unsustainable,” MacLeod said in the statement. “To save critical jobs in journalism, we will need the support of the relevant trade unions. to help build a viable business model.”

No financial details were disclosed and MacLeod did not explain what he wants from the unions representing workers at the two media companies. It also did not say which publications would be acquired.

Postmedia declined the request for an interview with MacLeod.

Patrick White, a journalism professor at the Université du Québec à Montréal, said Postmedia’s offer comes with caveats.

“We have to welcome the fact that Postmedia is trying to save this news organization,” he said in an interview on Friday. “But if you look at Postmedia’s record … their goal is to make a profit by cutting newsrooms.”

White said job losses at SaltWire appear inevitable in the coming months as Postmedia continues to struggle with a heavy debt load.

Willy Palov, president of the Halifax Typographic Union, said he was pleased to see a potential agreement in place. But he said not enough details have been released to comment on how it will affect journalists and other union members at The Chronicle Herald in Halifax.

“The members and I will need to review the proposed terms before we can say much more,” Palov said in an email. “Journalists and newspaper workers hope the company will invest in quality news coverage.”

Halifax Herald Ltd. owns The Chronicle Herald, an independent daily newspaper that was founded nearly 200 years ago.

In 2017, Herald owners Mark Lever and his wife Sarah Dennis created SaltWire Network Inc., which bought more than two dozen newspaper and web-related properties owned by Transcontinental Nova Scotia Media. These publications include daily newspapers in Nova Scotia, PEI and Newfoundland, including the Cape Breton Post in Sydney, NS, The Guardian in Charlottetown and the Telegram in St. John’s, NL, as well as weekly newspapers and several digital publications.

Together, SaltWire and The Herald employ about 800 independent contractors and 390 employees, including about 100 unionized positions, according to court documents.

Brian Daly, a journalism professor at the University of King’s College in Halifax, said the pending acquisition will allow Postmedia to expand its reach in Canada, but that expansion will not guarantee success.

“This industry is in dire need of innovative ideas, and I don’t see anything new here in terms of how the business model is going to work,” Daly said in an interview Friday.

Daly also said it remains unclear whether Postmedia will continue to operate smaller publications based out of Halifax, Charlottetown and St. John’s, NL.

“It’s been nothing but a race to the bottom in terms of losing properties in smaller communities,” he said. “Postmedia may buy big names from big cities in region”.

Lana Payne, Unifor’s national president, issued a statement saying the union is reviewing how the offer will affect unionized workers at St. John’s Telegram. She did not provide details.

Unifor represents 35 newspaper people and more than 10,000 media workers across the country.

On March 11, Toronto-based Fiera Private Debt Fund filed insolvency proceedings against SaltWire and The Herald under the Companies’ Creditors Arrangement Act, saying the companies owed more than $90 million to a long list of creditors after several years of mismanagement. At the time, Fiera alleged that senior managers had left operations “on the brink of a liquidity crisis”.

The federal act allows companies with more than $5 million in debt to avoid bankruptcy while they work out a plan to ensure creditors receive some payment for what they are owed.

As the senior secured creditor, Fiera said SaltWire and The Herald together owe it $32.7 million.

Fiera loaned money to SaltWire to help the Halifax-based company pay for its 2017 purchases from Transcontinental. And in 2019, SaltWire filed a lawsuit against Transcontinental, claiming the company overestimated the revenue the business would produce.

When Fiera went to court in March, the private lender said SaltWire and The Herald had been in default for more than five years and were making little progress in repaying their debts. Media companies have also been accused of failing to top up pension funds and failing to remit VAT payments to the federal government.

On March 13, Nova Scotia Supreme Court Justice John Keith granted the companies protection from creditors.

Instead of pushing the media companies to court, Fiera supported a restructuring and sale process through a series of loans that allowed SaltWire and The Herald to continue operating under the CCAA.

On June 20, the court-appointed monitor overseeing the insolvency proceedings, KSV Restructurare Inc. based in Toronto, confirmed the selection of an unnamed bidder, which turned out to be Postmedia.

With the help of the monitor, Keith will ultimately decide whether the business will ensure the survival of the companies and allow the creditors to receive some form of payment for the amounts owed.

This report by The Canadian Press was first published on July 26, 2024.

Michael MacDonald, Canadian Press