I woke up one morning last week wondering what would happen if I Googled for news and information, and there wasn’t any, because news is dead.
That was the big story last week: the proposed merger between Postmedia and the Toronto Star. A merger — or takeover — that should destroy what’s left of the newspapers in this country.
In case you think this is not a local story, look around. PEC is ringed with Postmedia publications. They are on every side. The Belleville Intelligencer. The Trentonian. The Kingston Whig-Standard. Our very own County Weekly News.
These are venerable, well-established papers with long histories. And all had the misfortune to be bought up or acquired by one corporate chain or another until finally falling victim to Postmedia as “assets” somewhere between 2010 and 2015.
And now all are very nearly at the end of their lives.
What is this Scrooge, this Postmedia? It was created in 2010 by a U.S.-based hedge fund, Chatham Asset Management LLC, which acquires newspaper chains for their debt. It uses the newspaper profits to pay the interest on the debt, earning money from debt. The newspapers also earn money, at least at first, but those are beside the point.
Postmedia survives, if one can call it that, by making interest payments on its real asset, $288 million in debt. It doesn’t pay down this debt. It pays 10% interest on it. That keeps its hedge-fund owners happy.
Those payments, on the other hand, prevent the business from making any of the kinds of investments that might mean it thrives. Since 2017, Postmedia has spent $180 million on interest payments. Its share price peaked just after it was created, at $2,550. It now hovers at about $1.50. A decline of 99.9% in just over a decade.
Don’t feel sorry for it. The company spent the pandemic crowing about all the bailout money it was taking from the Canadian government. In 2020, it took $10.8 million from the media bailout, $40.3 million from the Canada Emergency Wage Subsidy, and $1 million from the Quebec government’s media subsidy program. Yet it still shuttered 15 community newspapers and cut 70 jobs. It then reported a $52.8 million net profit by the end of 2020. Guess where that money went?
Postmedia is not the slightest bit interested in news, or its newspapers, and certainly not in the communities they once served. It is interested in wringing as much money out of them as possible. When they fail — no business does well for long without regular capital investment — it closes them.
This system is particularly hard on small local newsweeklies like the one you are reading.
Postmedia does not, for example, employ a local ad sales team. It doesn’t care about local ads or small businesses. It likes big national ads it can run in every paper it owns. Much easier that way and much more profitable. It has a centralized sales force in Toronto for its local papers. It uses them to deliver this national advertising: flyers and such.
The editors are just there to put some stuff in around the ads. They use large fonts, big margins, lots of photos, to try to make something that looks like a newspaper.
Don’t be fooled. These are not newspapers. They are advertising flyers that masquerade as newspapers. They remind me of cigarettes: when selling highly addictive and/or life-threatening products to people went from being normal to a matter of public debate, cigarettes got outed as what they are: nicotine delivery systems. Likewise, Postmedia publications are advertising delivery systems.
The morning after the Postmedia merger was announced, I learned that Google, angry that Canada’s Online News Act was going to make it pay for the news it takes from what’s left of our newspapers, was going to block me from reading the few shreds that remain.
Hard not to sympathize. Why should Google pay for news when nobody else does?
What we pay for now is ads. One of the reasons advertisers shunned news during the pandemic, no matter how popular it was — newspapers were on a roll then, nobody could get enough news — was because they did not want to be associated with bad news.
In the smoky dystopia after the pandemic, no news is the good news. Thank you, Postmedia. Thank you, Google.
See it in the newspaper