Torstar

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.

History

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. In December 2011, Torstar acquired a 25% minority stake in specialty television channel owner Blue Ant Media.

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. The swaps effectively remove competition between the two companies in the affected markets; the Competition Bureau stated that it would review the proposed deal. 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''.

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

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.

Contested Sale to NordStar

Initial NordStar Proposal

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. 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. Weeks prior to the announcement of the deal, Torstar had reported a $23.5-million loss for the first quarter of 2020.

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. Canso is also a major debtholder of Postmedia, which owns a chain of newspapers across Canada including the National Post. 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. Canso and Fairfax had a history of investing together, with the most notable example being BlackBerry. Canso and PointNorth (a fund launched by Jordan Bitove ) also had a history of investing together, most notably the privatization of AGT Food and Ingredients. 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.

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 he 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."

Canadian Modern Media Holdings Proposal

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. 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. As of July 9, the Torstar board continued to support the NordStar bid.

The CMMH proposal, included a promise of contingency payments to shareholders from future asset sales, which were potentially worth at least another 50 cents. 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.

NordStar Revised Proposal & Final Sale

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. 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".

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. 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. 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. 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. 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.

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.”

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. 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.
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." The deal closed on August 5.

Operations

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''. Torstar did announce that iPolitics would maintain its own bureau in Ottawa. After the sale was completed, Torstar laid off five of the publication's staff, and appointed Marco Vigliotti as the senior editor.

Daily News Brands

The Daily News Brands division primarily comprises the ''Toronto Star'' and its associated properties, including Torstar Syndication Services. The division also owns The Hamilton Spectator, the Waterloo Region Record, the St. Catharines Standard, the Niagara Falls Review, the Welland Tribune, and the Peterborough Examiner. Torstar also has a stake in the Canadian edition of the Chinese-language ''Sing Tao Daily'' since 1998. the ''Toronto Star'' purchased a majority stake in Sing Tao's Canadian newspaper ''Sing Tao Daily'', which it jointly owns with Sing Tao News Corporation. ''Sing Tao Daily'' encountered controversy in April 2008, after media watchers discovered the paper had altered a translated ''Toronto Star'' article about the 2008 Beijing Summer Olympic Games protests to adhere to Chinese government's official line. ''Sing Tao''s then-editor Wilson Chan was fired over this.

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

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.

VerticalScope

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.

Star Touch and ePaper apps

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 universal apps available for both Android and iOS smartphones and tablets.

Management

The following is a list of past presidents and CEOs of Torstar:

* Beland Honderich 1966–1988 (as president), 1976–1988 (as CEO and chair)
* David R. Jolley 1988–1994
* David A. Galloway 1988–2002
* J. Robert S. Prichard 2002–2009
* David P. Holland 2009–2017
* Neil Oliver 2022–present

Other investments

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

Past investments

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. 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.

See also

* Postmedia Network
* Quebecor Media
* The Woodbridge Company
* Grant v. Torstar Corp.

References

External links

Torstar corporate webpage

{{Torstar

Companies formerly listed on the Toronto Stock Exchange
Newspaper companies of Canada
Companies based in Toronto

1958 establishments in Ontario