The last week of November 2017 should
have been a fruitful one for
John Hammill, with
Christmas advertising pouring in to fill the pages of the newspapers for which he
sold ads in the small Ontario communities of Orillia, Barrie, Collingwood,
Bradford, and Innisfil. Hammill had just started his second year as regional
advertising director for Postmedia’s six
daily and
eight weekly newspapers in its Northern Ontario region, having been promoted
from publisher of its
daily Orillia Packet &
Times.
Hammill’s workweek ended abruptly
that Monday morning, however, after he heard the announcement that Postmedia
and Torstar had traded 41 newspapers and were closing 36 of them. Within 10
minutes, he received a letter from Postmedia’s Human Resources department informing
him that the company had sold the newspapers he worked for, and that the new
owner would “not require your services.” Hammill deduced that the companies
had co-ordinated the closures, since he had been fired by Postmedia although
Torstar was the new owner. “I didn’t actually have too much of a problem with
the swap then,” he later told the Vancouver-based website The Tyee.
“I understand business.”
At 147, the Packet & Times was
almost as old as Orillia. “A bust of its founder stands in the library,” noted
the Globe and Mail.
The newspaper was closed “with a snap of the fingers,” added the Globe, and then one final insult was added. “The Packet
didn't get a chance to put out a final issue bidding farewell to the community
it served for all those years.” Hammill
understood the transaction was just business and felt no need to go public with
his doubts until he saw Godfrey’s interview on BNNBloomberg, in which the CEO claimed
he had no idea that Torstar would close the newspapers it acquired from
Postmedia. “That’s when I spoke up,” Hammill told The Tyee. “I must have
seen the interview a dozen times.”
Hammill contacted
the Competition Bureau and contradicted what Godfrey claimed about all the
closed newspapers losing money, revealing that they were instead making money.
The closed Collingwood Enterprise Bulletin was doing “really good,” he
said, while the Barrie Examiner was “doing okay,” and he was surprised
they had been closed. Hammill wasn’t
about to wait for the bureaucrats in Ottawa to bail him out, however, as he had
a family to support. He had enough experience in the newspaper business to know
that there was still a market for advertising in small communities such as his.
Maybe it wouldn’t be in print newspapers, but he knew that he could sell ads.
Hammill got in touch with Sault Ste. Marie-based Village Media, which published a
string of online publications including SooToday.com, GuelphToday.com,
BarrieToday.com and TimminsToday.com. Together with several other laid-off Packet
& Times workers, Hammill and Village Media founded OrilliaMatters.com,
which went live in early 2018, not six weeks after their newspaper was closed.
Few held out
hope that the
Competition Bureau would step in to
halt the trade between Postmedia and Torstar or the newspaper closures that followed.
After all, it had taken no action when similar dealings went down a few years earlier
in B.C., where the regional chains Black Press and Glacier Media had
traded and closed dozens of titles, which accounted for a majority of the newspaper closures in Canada between 2010
and 2016. Of the thirteen
paid dailies that were closed, merged, or changed publication frequency during
that period, including
the Nanaimo
Daily News, nine were published in B.C. and owned by Black Press
(six) or Glacier Media (three).
The two chains also closed numerous
long-publishing community newspapers they acquired from each other, with Black
Press accumulating titles on Vancouver Island, where it soon owned them all,
and Glacier Media adding newspapers in the Vancouver suburbs. “It is by now a
familiar script,” noted B.C. Business magazine in 2015. “Through horse-trading, Glacier Media or Black Press . . . become the sole
owners of a community’s weeklies. And then one of those papers shuts down.”
When Glacier closed the weekly Westender community newspaper in Vancouver
at the end of 2017, which it had acquired from Black Press in a city where it already
owned the thrice-weekly Courier, it brought to 24 the number of newspapers
lost to closure or merger following their exchange of 33 titles.
The Competition
Bureau had also taken no action after Postmedia acquired Sun Media in 2014,
effectively merging the country’s two largest newspaper chains. Its ruling in
that case was a watershed moment for newspaper
competition in Canada. The deal itself was unprecedented. “This doesn’t just alter Canada’s print-media
landscape,” observed the Globe and Mail,
“it takes a bulldozer to it.” Postmedia, it added, had “thrown down the
gauntlet to Canadian regulators, and forced the country to have a conversation
that it has long avoided: How much are we willing to compromise the principles
of a diverse and competitive press in the name of keeping it alive?”
The Toronto
Star noted that Postmedia’s sudden newspaper dominance wasn’t raising the
concern it should have. “If the deal is approved by the federal Competition
Bureau, one company will own almost all the significant daily papers in English
Canada — with the exceptions of the
Star, the
Globe and Mail,
Winnipeg Free Press and
Halifax Chronicle Herald,” it pointed out.
“In most cities, the choice for newspaper readers will be
between Postmedia – and Postmedia.” The Bureau
investigated the transaction for five months and somehow concluded that the Sun newspapers
Postmedia acquired in Calgary, Edmonton, Ottawa, and Toronto didn’t compete
with its broadsheets in those markets. “Extensive documentary and empirical
evidence demonstrated that the parties are not close rivals from the
perspective of readers,” its ruling noted, “a finding that was supported by the views of market participants and by an
analysis of the demographic characteristics of the parties’ respective
audiences.”
Besides, Godfrey had assured all concerned that Postmedia would keep the
newspapers, and their newsrooms, separate. “We intend to keep Sun Media’s
large daily newspapers in those markets where we overlap,” he told the Toronto
Sun when the deal was announced in
2014. “Their readers and their advertisers in many cases are different
from those of Postmedia.” The Sun reporter paraphrased Godfrey’s
promise. “Sun Media will continue to operate independently with its own
newsrooms and opinions, he said.”
Part of the problem was that the Competition Bureau
was empowered to examine only economic factors, which in the case of newspapers
meant advertising and not news. Its governing Competition Act was “not
intended nor designed to deal with the important question of ‘diversity of
voices,’” the Bureau noted in a 2003 summary of its work
in
media industries prepared for a Senate inquiry into news media.
The inquiry’s subsequent report was harshly critical of both the Competition Bureau and, in
broadcasting, the Canadian Radio-television and Telecommunications Commission
for what it called their “neglect” of news media.
“One challenge is the complete absence of a review mechanism to consider the
public interest in news media mergers,” it noted. “The result has been
extremely high levels of news media concentration in particular cities or
regions.”
Another problem with the Competition
Act was that it required the Bureau to allow any merger or acquisition which
provided efficiencies of operation that outweighed any detriment to the public.
“
Even where there is a finding
that a merger would likely substantially lessen or prevent competition,” noted
the Bureau in its 2003 review, “the Competition Act specifically
directs that the merger be allowed to proceed if it would also likely result in
gains in efficiency that are greater than and offset the effects of the
lessening or preventing of competition.” The relevant section of the Competition
Act had lain dormant for almost 30 years, however, until a Supreme Court
of Canada ruling came down in 2015 just as the Competition Bureau was
investigating the Sun Media takeover by Postmedia. The ruling in the case of a
hazardous waste merger in northern B.C. provided an ill-timed precedent that
disempowered the Competition Bureau. This spotty record of anti-trust enforcement in the newspaper industry did
not inspire much hope that the Competition Bureau would intervene in the
Postmedia-Torstar trade and closures, but it could not ignore the whistleblower
evidence provided by Hammill.
The Competition Bureau soon pursued search
warrants, describing in court documents how lawyers for both companies had been
working on Competition Bureau official Pierre-Yves Guay to call the investigation
off. “A lawyer for Torstar e-mailed Mr. Guay to request a phone call with both
companies’ lawyers,” according the documents. “Mr. Guay replied by e-mail that this would be ‘highly inappropriate’ and
scheduled separate calls instead the next day.” The Competition Bureau claimed that Hammill’s evidence indicated “prior negotiation, agreement or
arrangement” between the companies related to the closings.
As a result, its investigators
said they believed the companies had “entered into a conspiracy” because their agreement
specified which employees would be terminated when the transaction closed. The court documents also pointed to press statements made by Postmedia
executives that both companies were unaware of the other’s plans to close the
papers as “inconsistent with actions taken by Postmedia and Torstar and with
the terms and conditions set out in the transaction documents.”
After search warrants were granted, Competition Bureau officers raided
the offices of both Torstar and Postmedia in mid-March, along with those of Torstar’s
Metroland chain in Mississauga and its
Hamilton Spectator. The search of Metroland’s headquarters found
documents which referred to the deal as Project Lebron, presumably after the
basketball star, but on Postmedia’s end it was code-named Project Ice.
“Given
the pattern of facts laid out by the Competition Bureau,”
the Globe and
Mail concluded, “the best course of action may have seemed to be: Do one thing, say another,
and bet that no one ever found out.”
The news wasn’t all bad for
Postmedia in 2018, however. In his annual economic statement that November,
Finance Minister Bill Morneau announced $595 million to subsidize reporting,
subscriptions to digital news services, and charitable tax deductions to
non-profit news media. The bailout brought
jubilation from the newspaper lobby, especially from
Godfrey, who called it “a turning point in the
plight of newspapers in Canada” so significant that it even warranted the
donning of track shoes. “I tip my hat to the prime minister and the finance
minister,” he said. “They deserve a lot of credit. Everyone in journalism
should be doing a victory lap
around their building right now.” Less than a week later, Postmedia released information to shareholders in advance of its annual general meeting which showed that
Godfrey’s annual compensation for the fiscal year topped $5 million. In
addition to his $1.2 million salary as CEO, Godfrey was awarded $1.2
million in bonuses, $2.4 million in stock options, and other compensation that brought
his total remuneration to $5.04 million. Andrew MacLeod, who had been promoted
a year earlier to president and chief operating officer, received $2.2 million,
or more than double his compensation the previous year, while the total for
Postmedia’s top five executives came to more than $10 million.
Postmedia announced early in 2019 that
Godfrey, who was about to turn 80, would step back from management and serve
out the remaining two years of his contract as executive chair of its board. As
expected, it named MacLeod to replace him as CEO. The bailout did not mean
total victory for Godfrey’s leadership of Postmedia, however, as some
unfinished business still hung over its head in the form of the Competition
Bureau investigation. “We remain confident that this will ultimately result in an exoneration,”
MacLeod said.
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