Chapter 1 – A question of control

Paul Godfrey seated himself to testify. The wiry 77-year-old newspaper company executive had been called to account by the federal government for the latest devastation his chain had wreaked on Canada’s news media. Hearings in Ottawa had convened quickly in 2016 after the company Godfrey headed, which owned most of the country’s largest newspapers, merged its newsrooms in four of Canada’s six largest cities where it published both dailies, despite promising not to.

Godfrey’s promise had been spread across all political levels, from mayors right up to new federal Liberal leader Justin Trudeau, after Postmedia bought 175 newspapers in 2014 from Sun Media, the country’s second-largest chain. The resulting double coverage in Vancouver, Calgary, Edmonton, and Ottawa had been controversial from the outset, but Godfrey quickly allayed fears over the increased concentration of media ownership. “I attended two of his private dinners in fine Alberta restaurants where he vowed to keep the newsrooms separate,” recalled Margo Goodhand, who was then editor of Postmedia’s Edmonton Journal. “We might even have to reinvest in the Sun newsrooms, he mused aloud in Calgary. . . . They’d be competitive, distinct, and entirely independent, he said.”

The 2016 merger of newsrooms and the layoff of 90 journalists by Postmedia Network was just the latest disaster in the slow-moving train wreck that was the newspaper crisis. Following years of layoffs and a few closures following the 2008-09 recession, local journalism in Canada had taken a beating. The cutbacks to news reporting were worst at Postmedia newspapers, however, because it was 92 percent owned by U.S. hedge funds that were skimming off most of its earnings as interest payments on the massive debt they also held. MPs wanted to know what was going on.

Dressed in a blue suit and wearing reading glasses under his deeply-furrowed brow and combed-back, graying hair, Godfrey audaciously started with a sales pitch to the Heritage committee in his opening statement. “Come back and advertise in our newspapers and on our websites,” he exhorted them. “Ad budgets have been cut, and the cuts from the Government of Canada have disproportionally been to newspapers.” Television’s share of the federal ad spend, he noted, had increased from 48 percent to 54 percent, while that devoted to online media, much of which was foreign-owned, had almost doubled. Print advertising had been cut in half to only 8.5 percent. The Heritage ministry was the worst offender, he told its standing committee, as while it had spent $6 million on advertising that year, none went to print. “If you're going to advertise, then you should give some consideration to Canadian publications.”

Liberal MP Adam Vaughan then began to grill Godfrey. They had crossed swords a few years earlier, when Vaughan was a Toronto city councillor and Godfrey was chair of the Ontario Lottery and Gaming Corporation with grandiose plans for a mega-casino on the downtown waterfront. Vaughan had won that encounter, as Godfrey was fired by incoming premier Kathleen Wynne.

“Postmedia’s largest shareholder is a U.S. hedge fund named GoldenTree Asset Management,” Vaughan pointed out to Godfrey. “Why would we fund a failing business model that’s owned by U.S. interests?”

“Your facts aren’t correct,” Godfey shot back. “The fact is that this company is controlled by Canadians.” It was a convenient fiction that Godfrey relied on, enabled by a loophole that lawyers had found in Canada’s 25-percent limit on foreign ownership of newspapers. To accept the separation of ownership and control as meaningful, however, required an almost complete suspension of corporate disbelief.  The Globe and Mail had already reported in 2014 that Godfrey conferred with Postmedia’s foreign owners frequently and that the hedge funds had pushed for the acquisition of Sun Media. “Paul doesn’t make major moves without calling them first,” it quoted an anonymous source close to the company as saying.

Vaughan attempted a weak comeback, having obviously not done his homework. “That being said, why would we bail out a U.S.-indebted company?” Godfrey used a bit of poetic licence to evade that one. “You’re not bailing out a U.S. company,” he replied. “You can be critical of GoldenTree Asset Management, but I'll tell you that you’re barking up the wrong tree.”

Then Godfrey went on the offensive again, pointing out the recent closures of the Guelph Mercury and Nanaimo Daily News as proof of the newspaper industry’s decline. “If it continues to follow the trend it’s on, you won't be sitting here and talking about whether there should be subsidies or not,” he told Vaughan. “You’ll be talking about how we are going to continue to create a group of journalists producing content for Canadians. . . . If you think that's not going to happen within the next three years, you’re going to find that there will be a lot more closings.”

Godfrey repeated his threat later in the hearing. “I’m not trying to paint an overly bleak picture,” he insisted in response to MP questions. “I’m painting the picture that’s out there.”

I will tell you that within three years, there’ll be many more closures in some of your own communities because of the state of the newspapers. You’re our elected representatives. I commend you for even having this meeting. If you decide to do nothing, that’s your call. I'm not trying to paint an uglier picture than what it is. It’s ugly and will get uglier, based on the trends that exist today.”

Little could observers have known just how ugly things would get when Godfrey and the newspaper lobby he assembled didn’t get the bailout they wanted, and it wouldn’t take three years. It would only take half that long for things to get very ugly indeed in Canada’s newspaper industry. More pressing to Godfrey, however, was a time bomb that was ticking inside Postmedia’s finances. To defuse it would take some fancy footwork that would raise the company’s foreign ownership even higher.

Few realized just how close Postmedia was to imploding. Standard & Poor’s had downgraded its credit rating to triple-C-plus from single-B-minus in late 2015, calling its capital structure “unsustainable” and warning that the company could struggle to refinance its high-interest debt. Making things worse was the fact that most of Postmedia’s debt was in U.S. dollars, and a falling loonie meant that payments on the bonds that Postmedia had issued in 2011 had since risen in Canadian dollars by more than 30 percent. “With the Canadian dollar falling the way it’s falling,” Godfrey told the Canadian Press, “that’s almost like a noose around your neck.”

GoldenTree was also unhappy, having watched Postmedia’s advertising revenues continue to drop and the price of its shares fall to only 6 cents, which made its 58 percent stake in the company worth only about $9 million. The hedge fund had hired an investment bank to drum up interest in its ownership of Postmedia, the Globe and Mail had reported that March, and it had approached a half dozen potential buyers.

The Globe’s incisive Streetwise business column didn’t like the hedge fund’s chances of offloading its investment in Postmedia, however, mostly due to its ticking debt bomb, a restructuring of which risked wiping out much of GoldenTree’s investment. Its reporters pressed Godfrey on whether the company could continue to meet its interest obligations. “So far, we haven't missed a payment,” he replied. “Hopefully we won't miss a payment.” Streetwise saw little hope for Postmedia, contacting several potential investors who said they had been approached but were not interested. “Postmedia appears to have little value to salvage,” it added, “and what does exist will take a lot of heavy lifting to unearth, sources said.”

Created from bankruptcy

The newspaper crisis had literally created Postmedia, which in 2010 rose from the ashes of bankrupt Canwest Global Communications after it was caught holding the bag when the 2008-09 recession dropped advertising revenues sharply worldwide. The bag held $4 billion in debt on which Canwest could no longer make the payments. GoldenTree was actually betting on it going bankrupt, as it had been buying up Canwest debt on the bond market at pennies on the dollar, and it acquired more than enough to take the company over.

Canwest and its owning Asper family of Winnipeg had bought the historic Southam newspaper chain in 2000 as part of the brief but disastrous enthusiasm for “convergence” of media ownership between print and TV. To get in on the trend that swept the country’s media at the millennium, Canwest went deeply into debt to add newspapers to the Global Television network it had owned since the mid-1970s. The Aspers quickly went from riding high at the millennium to being out of business less than a decade later.

The newly-formed Postmedia Network took over its newspapers and began to make massive layoffs, for which hedge fund owners were notorious. It cut most of the editing positions at its newspapers across the country by centralizing their production at a strip mall in Hamilton. Postmedia then paid $316 million in 2014 for Sun Media, which was Canada’s second-largest newspaper chain. That gave it the tabloid Edmonton Sun in addition to the broadsheet Journal it already owned in Alberta’s capital, along with a Sun just to the south in Calgary, where it also published the dominant Herald. In Ottawa, a Sun similarly shone in the shadow of the Citizen. Postmedia’s plan in those cities, Godfrey had assured all concerned, was strictly a mechanical combination similar to that operating for decades at its dailies in Vancouver, seeking $6-10 million a year in cost savings through efficiencies in administration and production, but keeping separate newsrooms.

The only problem was that the federal Competition Bureau had neglected to make the promise a condition of allowing the purchase. Soon Postmedia’s required savings grew to $50 million as its advertising revenues continued to fall. Now the same stories and bylines were appearing in both local newspapers while scores more journalists were laid off to cut costs.

The little chain that grew

The Sun tabloids were near and dear to Godfrey, who had piloted the growing Sun chain for most of the 1990s. He broke into the newspaper business in 1984 as publisher of its flagship Toronto Sun straight from a career in local politics, where he served as a North York alderman for almost a decade starting in 1964 before going on to serve five terms as chairman of the now-defunct Metro Toronto conurbation.

He quickly rose through the corporate ranks, becoming president and chief operating officer of Toronto Sun Publishing Group in 1991, which was then owned by Rogers Communications, and CEO a year later. “By 1999, he had led a management buyout of the Sun's newspaper assets, taken that company public and arranged its sale to Quebecor,” noted the Globe and Mail. “The end result essentially tripled the company’s value and put an estimated $28-million into Mr. Godfrey’s pocket.”

The “little newspaper that grew” proved that colourful tabloids could find an audience in cities dominated by a larger broadsheet. Competing dailies had been folding for decades across North America as mass media alternatives exploded, but in Canada the success of tabloid Suns bucked that trend. In Vancouver, there was already a Sun and it was a broadsheet, but its Province partner converted to tabloid format in 1983 to keep the Sun chain out, and the makeover proved wildly successful, making it especially popular with younger readers. Both Vancouver dailies were already owned by Postmedia, and had been operating since 1957 in a partnership that was ruled an illegal monopoly but allowed to continue on the basis of “economic necessity.”

Foreign ownership

GoldenTree Asset Management’s majority ownership of Postmedia should not have been allowed under Canadian law, which limited foreign ownership in this culturally-sensitive industry to 25 percent, but decades of legal challenge to such limits had badly eroded them. Sharp lawyers found a loophole that did an end run around the law by forming a publicly-traded company with two classes of shares. Foreign owners were given stock that varied in voting power, which supposedly kept their “control” of the company under the allowable limit, even though their ownership well exceeded it.

GoldenTree reached out to Godfrey, who had headed a rival bid to acquire the newspaper chain out of bankruptcy, to run its new Canadian operation. It needed someone with not only some serious newspaper acumen, but also plenty of friends in high places, and Godfrey was without doubt the best possible candidate. Torontoist described him in 2015 as “a consummate networker and backroom operator, especially in local Conservative circles,” but added that “his track record has sometimes raised questions regarding whose interests he works for.” Phil Lind, a Rogers executive who helped hire Godfrey to run the Toronto Blue Jays baseball team it owned, wrote in his 2018 memoirs that “few are better political operatives than Paul.” 

The Globe and Mail described Godfrey as a “consummate strategist” in a 2014 profile. “Mr. Godfrey begins planning his next moves early each day during solitary walks along Toronto’s Bay Street. His Labrador retriever nudges him awake around 5:30 a.m. and they set out from his home at the Four Seasons Private Residences.”

He had left the newspaper business in 2000 after brokering the $983-million sale of Sun Media to Quebecor, which gutted it with 300 layoffs. He was chair of the Ontario Lottery and Gaming Corporation when Canwest lured him back as president and CEO of its flagship National Post in 2009. Godfrey was already 71 by the time GoldenTree came calling the following year, asking him to head the whole chain, but he couldn’t say no. Not with what they offered him.

“I’ve been a workaholic all my life, and I’m not slowing down,” he told Toronto Life when he was 73. “I work out three times a week, which keeps me energized. . . . I start by running six kilometres, then I’ll do lateral lifts with 12-pound weights while standing on one foot on a Bosu ball. I’m stronger now than I was in my 40s.”

Competition Bureau failure

Postmedia’s 2014 purchase of Sun Media raised concentration of newspaper ownership in Canada to among the highest in the free world. The Competition Bureau had been a huge failure in preventing it, seemingly waving the white flag at every opportunity to enforce the country’s anti-trust laws. Its gyrations in allowing Postmedia’s acquisition of Sun Media, however, proved the height of absurdity.

Its economic analysis laughably concluded that the tabloids acquired from Sun Media didn’t compete for advertising with the company’s broadsheets. It cited one paper by an economist which concluded that newspaper monopolies in Canada didn’t result in higher prices despite decades of studies worldwide which showed they did. That had all gone down on Stephen Harper’s watch as Conservative prime minister, however, as had Postmedia’s foreign ownership. Many hoped the new Liberal government elected in late 2015 would do something to clean up the mess that Americans were making of our news media.

Long-time Vancouver Centre MP Hedy Fry was doing her best to try. She had been outraged by the merging of newsrooms in her town. Fry quickly convened hearings in Ottawa that February of the Standing Committee she chaired of the Department of Canadian Heritage. “I know that our government has a strong will to deal with this now,” said Fry, then 74. “The thing about politics is that the time comes one day when stuff is facing you so hard that you have to do something about it. That time has come.”

The hearings would eventually result in a report that recommended changes to media regulation in Canada in order to bring ownership concentration under control. Unbeknownst to most, however, a parallel process was already underway which would ensure that another narrative dominated. The Heritage committee was supposed to tour the country that summer to hear from Canadians, but after the money proved unavailable in its budget, the field work had been contracted out to a so-called “think tank” in a study funded partly by Heritage and partly with corporate money.

Postmedia “a cancer”

The Toronto Star was Postmedia’s – and Godfrey’s – harshest critic for their decimation of Canada’s largest dailies. It had blasted Postmedia earlier in 2016 as nothing less than “a cancer on Canadian journalism.” The malignancy was created by “quick-buck hedge funds in the U.S.,” railed the Star. The acquisition of Sun Media was a “thinly disguised foreign takeover” that resulted in “a far greater concentration of news media ownership than exists in any other major economy.”

From what Star business reporter David Olive could tell, there couldn’t be much life left in Postmedia, which was fortunate. “As long as the biggest newspaper publisher in the country clings to life,” he quipped, “it is a blight on all the communities it underserves.” Postmedia was in “such wretched condition,” he insisted, that it was surely “not long for this world.” Postmedia was “flirting with insolvency,” according to Olive, since its earnings continued to plummet in lockstep with its advertising, which was increasingly migrating to the Internet.

The company had been so laden with debt held by its hedge fund owners that it couldn’t possibly keep up the payments much longer due to its falling revenues, according to Olive. “Postmedia has installed a time bomb on its balance sheet of $672 million in debt owed to the U.S. hedge funds,” he pointed out, and much of the debt had to be paid in mere months. “It's very difficult to see where Postmedia will get the money to do this,” Olive continued. “The interest payments have become downright asphyxiating.”

Of the $82 million in operating earnings that Postmedia would generate that fiscal year, fully $72 million would go to servicing its debt, meaning that its profits went mostly to its bondholders rather than its shareholders.

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SEC clips wings of American vulture fund feeding off Canada’s largest newspaper chain

New Jersey hedge fund Chatham Asset Management, which owns most of Canada’s largest newspapers, paid US$19.3 million recently to settle charges of improper trading brought by the U.S. Securities and Exchange Commission. The dodgy dealings are chronicled in my new book The Postmedia Effect, but their outcome was only announced as it was rolling off the presses earlier this month. The charges provide a glimpse into the kind of questionable tactics often engaged in by hedge funds like Chatham, which is attached like a leech to Postmedia Network. It owns two-thirds of Postmedia’s shares despite a supposed 25-percent limit on foreign ownership in this culturally sensitive industry, but more central to Chatham’s business model, it is bleeding the company dry through interest payments on the massive amount of its bonds which it also holds. 

Postmedia is just one of several newspaper chains owned by Chatham, which was founded in 2003 by junk bond trader Michael Melchiorre. In 2020, it acquired out of bankruptcy the U.S. chain McClatchy, owner of major dailies such as the Miami Herald, Kansas City Star, and Sacramento Bee, by buying up its distressed debt on the bond market for pennies on the dollar. It already owned American Media Inc., publisher of the National Enquirer and magazines such as Men’s Journal and Us Weekly, which it took over in a similar way. 

Alleged manipulation of bond prices is what got Chatham in hot water with the SEC. “Trading in AMI bonds had the effect of increasing the prices of those generally illiquid securities in a way that was disconnected from economic reality,” noted an SEC spokesperson. It alleged that Chatham advised its clients to buy and sell AMI bonds back and forth at prices it proposed, which raised their value significantly from 2016 to 2018. Chatham and Melchiorre consented to the SEC's findings without admitting or denying them and agreed to pay US$11 million in compensation, $3.3 million in interest, and US$5 million in civil penalties. Similar suspicions have been raised about manipulation by Chatham of Postmedia’s bond prices, according to Fortune magazine. “The strong price of the debt is difficult to explain, traders say.” 

Its bonds rarely change hands. Yet its junior bonds offer yields comparable to more senior securities. The notes don’t pay regular interest in cash, a sign of their inherent riskiness. At least five other traders who’ve looked at the bonds say their prices seem too good to be true. 

Chatham sold the National Enquirer in 2019 after a scandal erupted over its “catch and kill” tactics used to aid the election of Donald Trump as U.S. president in 2016. Trump’s lawyer Michael Cohen was sentenced to three years in prison in 2018 on charges including campaign finance violations, tax fraud, and bank fraud over hush money paid to porn star Stormy Daniels and Playboy model Karen McDougal to cover up affairs with the presidential candidate. Trump himself now faces 34 felony charges of falsifying business records to conceal the payments. McDougal was paid $150,000 for her story by National Enquirer publisher David Pecker, who supported Trump’s election, but it was never published. Pecker, who was then a Chatham appointee to Postmedia’s board of directors, was granted immunity from prosecution in exchange for providing information about the payments. He resigned from Postmedia’s board shortly after the scandal broke.

Chatham took over Postmedia in 2016 from GoldenTree Asset Management, a New York hedge fund which had acquired it out of the 2010 bankruptcy of Canwest Global Communications by similarly buying up its distressed bonds. Canwest was deeply in debt when the 2008-09 recession dropped its advertising revenues sharply, so it issued new bonds at interest rates as high as 12.5 percent in a desperate attempt to stay afloat. GoldenTree bought many of the bonds for as little as 10 cents on the dollar, then kept the debt on the company’s books to ensure that it was paid first every month. “All it had to do was to keep the company alive long enough to collect on its loans,” as I note in The Postmedia Effect. “A bond paying 12.5 percent interest bought for 10 cents on the dollar, after all, provided a return of 125 percent a year.” 

Under GoldenTree, Postmedia bought Sun Media, Canada’s second-largest newspaper chain in 2014, giving it 15 of the country’s 21 largest dailies at last count, including the National Post, Ottawa Citizen, Vancouver Sun and Montreal Gazette. It sold out to Chatham two years later in a change of ownership that “happened so quietly,” according to the New York Times, “that Postmedia’s own financial news site described it as a debt restructuring in a report that included a single mention of Chatham as ‘one of the investors.’” Under Chatham’s ownership, the Times noted, 1,600 employees or 38 percent of its workforce were laid off over the next four years as Postmedia “centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another.” 

A former high school football star from Chicago, Melchiorre gained a reputation for playing tough while head of Morgan Stanley’s junk-bond trading group in New York. “Although not physically imposing, Melchiorre could be foul-mouthed and loud," noted Fortune, "and would berate fellow traders as he bopped around the trading floor in his stocking feet.” Chatham soon built a “formidable reputation” under Melchiorre. “Playing tough is the Chatham way,” it noted, adding that the firm and its founder had developed “a reputation for hard-edged business.” Postmedia recently closed 12 newspapers in Alberta and announced that another 11 percent of its workforce would soon be axed. It is also selling real estate as its advertising revenues continue to fall, putting it under water on its debt payments and thus facing bankruptcy soon, according to The Postmedia Effect.

Meet the newspaper lobby behind the propaganda push for media bailout money

Since 2017, Canada’s newspaper industry has pushed relentlessly for bailout after bailout, first from government and more recently by asking Ottawa to force Google and Facebook to pay them for supposedly “stealing” their news stories by posting links to them online. These efforts paid off first in a five-year, $50-million Local Journalism Initiative announced in early 2018, which it criticized as a “Band-Aid solution.” The newspaper lobby then stepped up its propaganda campaign, running countless columns and articles calling for government to subsidize the press, which paid off later that year in a five-year, $595-million bailout. That runs out this year, so the lobby has more recently been calling for passage of Bill C-18 The Online News Act, which would entitle them to payments from Google and Facebook.

1. Paul Godfrey.  The former CEO of Postmedia Network, which is Canada's largest newspaper chain but is 98-percent owned by U.S. hedge funds, he founded the newspaper lobby after reading a 2016 article in the Globe and Mail about a paper that proposed tax credits to subsidize all Canadian media, including newspapers. He invited Richard Stursberg, a former head of CBC English who wrote the paper for Rogers, to dinner with his board of directors. Thus began a campaign that brought not only the $595-million bailout in 2018, but also millions of dollars in bonuses for Godfrey, as it raised his pay packet above $5 million that year. With his most important work done, he soon stepped down as Postmedia CEO.

2. Richard Stursberg.  He turned his paper into the 2019 book TheTangled Garden. “The board members were enthusiastic,” he recalled of meeting Postmedia’s directors.  “After the dinner, Godfrey agreed to round up the other newspapers and see if they were prepared to finance a study on how tax credits might work for them.” The press barons liked Stursberg’s idea so much that they even agreed to open their books so he could better craft his study. Stursberg wrote the playbook for bailout propaganda, using the Big Lie technique to claim falsely that big media companies in Canada had suffered “losses as far as the eye can see” due to declining ad sales. “If the federal government does not wake from its torpor," he warned, "the major Canadian media companies are likely to collapse.”

3. Edward Greenspon.  Head of the Public Policy Forum think tank and a former editor of the Globe and Mail, he has written many reports, columns and articles supporting media bailouts. He authored an influential report in February 2017 titled The Shattered Mirror that was adopted by media as the dominant narrative on the news business in Canada but was criticized by academics for exaggerating the plight of newspapers and ignoring problems like foreign ownership and sky-high concentration of ownership. The Shattered Mirror proposed a government fund to which newspapers could apply for aid, and according to Stursberg, Greenspon advised the newspaper lobby that “the mandarins in Ottawa did not like the idea of tax credits.” A meeting with top bureaucrats in Ottawa that April thus proposed that they choose either tax credits or a fund.

4. Bob Cox.  The former Winnipeg Free Press publisher, and chair of the newspaper industry group News Media Canada, he had been night editor at the Globe and Mail under Greenspon. He wrote numerous columns and opinion articles as part of the bailout campaign. The day after a Heritage committee report called for government aid to news media in June 2017, NMC proposed a five-year, $1.375-billion bailout that was soon rejected by Ottawa. Cox then chaired an industry panel that doled out money under the $50-million Local Journalism Initiative announced in early 2018, including to his own newspaper. He also chaired the so-called Journalism and Written Media Independent Panel of Experts which wrote the rules for the $595-million bailout in 2019. Cox retired in 2021.

5. Isabel Metcalfe.  A Liberal insider once named the second-most powerful lobbyist in Ottawa, she was hired by NMC to make its case in Ottawa after its $1.375-billion bailout proposal was rejected. Blacklock’s Reporter obtained documents which showed that Metcalfe held 79 meetings with senior officials, including in the Prime Minister’s Office. “Metcalfe met then-Minister Joly and her successor, Heritage Minister Pablo Rodriguez,” it reported. “Metcalfe also lobbied thirteen deputy and assistant deputy ministers; had five meetings with the Prime Minister’s Office; and lobbied the Department of Finance eight times.” The government’s $595-million news media bailout was soon announced.

6. John Honderich.  The long-time head of Torstar, publisher of the Toronto Star, several other dallies, and a major chain of Ontario community newspapers, wrote numerous columns reprinted in Torstar papers urging Ottawa to bail out news media. His October 2018 column “Where is Ottawa’s help for Canada’s newspapers?” demanded to know where the money was that Ottawa had promised to assist Canadian journalism. “One or two exploratory talks have been held but there has yet to be even a request for proposals,” he groused. “Maybe next year, we are told.” The bailout was announced the next month, but Torstar was taken over by a private equity firm in 2020 and Honderich died in 2022.

7. Jerry Dias. The former president of Unifor was a founding member of the newspaper lobby, having attended the meeting publishers held with Stursberg. Unifor represents many Canadian media workers, and Dias authored numerous columns urging that their jobs be saved with subsidies first from government and then from Big Tech. A May 2020 National Post column Dias wrote appeared in 40 Canadian newspapers, including such non-Postmedia dailies as the Winnipeg Free Press and the Saint John Telegraph-Journal. Dias retired in March 2022 after a union investigation alleged that he had taken a $50,000 bribe from a supplier of COVID-19 test kits.

8. Howard Law.  As media director for Unifor, Law regularly promoted media bailouts on the MediaPolicy.ca blog he started in 2017, and he seemed to step up his campaign on behalf of Bill C-18 after he retired in 2021. “The very big and very right-wing Postmedia is a favourite piñata for mainstream media haters,” Law wrote after Canadaland revealed yet another $10-million in bailout funding late that year. “I suppose the implication is that Postmedia is lining its profitable pockets with federal cash.” In one blog post, he called opposition to the bailout by then-National Post columnist Andrew Coyne an “acquiescence to ignorance and the destruction of liberty.” Law is also active on Twitter, where he promotes his blog and anything else favourable to media bailouts.

9. Friends of Canadian Broadcasting.  Founded in 1985 to defend the CBC from budget cuts, it had 40,000 members within a decade. After re-branding itself simply as Friends, it campaigned during the 2019 federal election for politicians to “Unfriend Facebook” in order to combat so-called fake news online. Its “news thief” campaign in mid-2020 plastered downtown Toronto with wanted posters picturing Facebook founder Mark Zuckerberg for the crime of “Theft of news content.” Friends has been an ardent proponent of Bill C-18 The Online News Act.

10. Jamie Irving.  Vice-president of Brunswick News, the family chain which monopolized New Brunswick media for decades, Irving was deposed as publisher of its flagship Saint John Telegraph-Journal after a series of controversies in 2009, but he was named vice-chair of News Media Canada in late 2020. He soon began promoting Bill C-18 in columns reprinted in dozens of Postmedia newspapers across the country. Postmedia bought Brunswick News for $16.1 million in early 2022, but less than half the purchase price was paid in cash, with the rest in Postmedia shares, making it more of a merger. Irving was named to replace Godfrey as executive chair of Postmedia’s board at the end of that year. 

The 83-year-old Godfrey wasn’t going anywhere, however. A major Canadian shareholder in Postmedia from all of the stock options he had received while CEO, he remained a special adviser to the board, which included doing advocacy work with government. “I’m going to be there doing a lot of the same things that I’ve done in the past,” Godfrey told the Globe and Mail. “I realize a lot of people are going to think this is a retirement. I’m not retiring.” Godfrey is thus still working behind the scenes to bring to completion the bailout work he started when he invited Stursberg to dinner in 2016 and then founded the newspaper lobby.

New book urges Ottawa to let the country’s largest newspaper chain go bankrupt

My new book The Postmedia Effect chronicles the machinations of Canada's largest newspaper chain, which is 98-percent owned by U.S. hedge funds that are bleeding it dry by also holding most of the company's massive debt. New Jersey-based Chatham Asset Management alone owns almost two-thirds of Postmedia Network shares and holds much of its debt. It's a scam that has been going on since 2010, when the American vulture capitalists used a legal loophole to do an end run around Canada's 25-percent limit on foreign ownership in this cultural industry. Postmedia Network, which at last count owned 15 of the country's 21 largest dailies, has been kept alive since 2019 by a $595-million media bailout that expires this year. 

Now the newspaper lobby it founded to persuade the federal government to bail out the industry is pushing for Ottawa to order Google and Facebook to pay publishers for supposedly "stealing" their news stories by posting links to them. It might work if the government enacts Bill C-18 The Online News Act, which passed third reading in Parliament last year and is currently before the Senate. Google and Facebook have made it clear, however, that they don't intend to be used as a piggy bank by Canada's dying newspapers and will instead discontinue carrying links to news stories.

That will leave Ottawa with a dilemma. It could either continue to bail out the foreign-owned company that publishes most of Canada's largest dailies, such as the National Post, the Ottawa Citizen, the Vancouver Sun and the Montreal Gazette, or it could let it go bankrupt. The latter would not only put hundreds of Canadians out of work, but also leave millions without a daily or weekly newspaper. My book concludes, however, that it might be the only way to get rid of the vultures.

My research shows that Postmedia reached a tipping point last year at which its dwindling profits no longer covered its annual debt payments of more than $30 million. Its 2022 earnings fell to only $13 million, almost $10 million of which came from government subsidies. It has been in a crash dive ever since, closing a dozen community newspapers in Alberta earlier this year and selling its Calgary Herald building for $17.25 million to U-Haul, which plans to convert it into storage lockers. It then announced that 11 percent of its roughly 650 journalists would soon be laid off, leaving politicians and local business leaders scrambling to do damage control.

The Postmedia Effect, however, concludes that it would be "probably best to let Postmedia fail rather than keeping it alive through serial bailouts so it could keep paying off the debt held by its New Jersey hostage takers." Under Chatham's ownership, the former Southam newspapers have turned hard right politically by head office decree. Much of the "news" they carry is now "native advertising," which is paid content designed to look like news. This isn’t journalism, but instead a perversion of journalism, I conclude in The Postmedia Effect, so it won't be much of a loss. "From the ashes might emerge a new type of journalism, one that wouldn’t be for sale to any advertiser who wanted to buy positive coverage."

Not all Canadian newspapers are failing, my research finds. The Globe and Mail is making a profit both online and in print by investing in quality content. Community newspapers have been able to survive in towns where Postmedia has ironically had to close titles by meeting local needs rather than providing cookie-cutter content. New titles have even sprung up in some communities where Postmedia has left town. Online publications such as the Halifax Examiner are flourishing in many communities by providing the kind of hard-hitting investigative reporting the Postmedia newspapers can no longer afford. Letting Postmedia fail would hardly be the disaster some pundits predict, and in fact could very well be for the best, as I conclude in The Postmedia Effect. "Its would be no big loss, hopefully to be followed by something better."