The following memo was sent to Postmedia staff on Feb. 1, from CEO and President Paul Godfrey.
Beginning on the front page of Saturday’s Toronto Star and taking up nearly the entire front page of the business section was a vicious attack on our company. This is just the latest of many attacks from The Toronto Star. The Toronto Star has made several scurrilous claims about our company, its investors and our products.
What’s most disturbing in all of this is the impact it has on you, the passionate people who work hard every day to support our great products and deliver results for our customers. Describing Postmedia as a “cancer” and “abomination” go far beyond creative license and are unforgivably vicious. It’s time to get the facts straight.
In an industry where every traditional media outlet – print and broadcast – is being affected by the crushing power of foreign-owned digital giants, we are all – all of us in this industry – under tremendous pressure to reinvent our business models and fast.
Postmedia came into existence through a process that was court supervised, every step of the way. The ‘floor price’, set by the secured creditors, was $925 million, the threshold at which an offer would be considered to be “credible.” The eventual selling price of the assets was $1.1 billion (significantly more than the $800 million Torstar bid). While the bidding process generated interest from several Canadian companies, none of them ‘stepped up’ to the level that the successful bidders did.
GoldenTree Asset Management has invested in Postmedia since day one. Recently, GoldenTree backstopped the equity financing behind our recent acquisition of the Sun Media properties. With its almost six year investment and continual support, calling GoldenTree a “quick buck” U.S. hedge fund and “asset-flipping Yank” is typical sensationalism and anti-Americanism, but not accurate journalism. Furthermore, GoldenTree is primarily an equity player – the majority of its investment is via equity ownership. Despite repeated assertions by The Toronto Star that the company is using “slash-and-burn tactics” and “milking their remaining assets” in order to make debt payments, that is just untrue.
Protecting Canadian cultural assets through the restriction on foreign ownership is a fair and debatable issue. For Canadian media, one of the primary purposes behind these rules is to ensure that Canadian stories are told by Canadians for Canadians. In every single one of our publications, that is the case. Despite GoldenTree’s significant ownership stake, never once has it imposed any editorial control, asked for any editorial access, or had any say in what we publish. Never once.
When we acquired the English language Sun Media properties last year, it was the best chance for the survival of our brands in a tremendously challenging environment. The merger was approved by the non-partisan Competition Bureau, an independent law enforcement agency.
Postmedia’s corporate debt is an important issue and one the Company continues to focus on. But the fact is that the most important thing right now is to continue executing well on our strategic priorities, several of which are starting to bring in new revenue and larger audiences.
When John Honderich took over as Chair of Torstar in May 2009 (for a timeframe reference, senior management and GoldenTree purchased Postmedia’s assets from creditors a little over a year later, in July 2010), Torstar’s enterprise value was more than one billion dollars versus today's value of approximately $190 million. And a few months ago Torstar announced that it would be cutting its dividend by 50%.
Nevertheless, it is absolutely shocking that The Toronto Star continues to lash out at us. Maybe it still smarts to have lost out on the bidding for our assets nearly six years ago. It is sad to see people stoop so low as to write half truths about our industry. There is an old proverb that says “If you dig a grave for others, you might fall into it yourself”. Wise words.
At Postmedia, we have had to make some difficult decisions including cutting costs and reducing our workforce. But we’re not alone. Just days before we merged our newsrooms in markets where we have two newspapers – because maintaining the status quo was unsustainable – resulting in a reduction of approximately 90 people, Torstar announced the planned closure of a print facility and the loss of nearly 300 jobs. Less than two weeks later, Metroland (owned by Torstar) announced the closure of the Guelph Mercury newspaper, one of the country’s oldest newspapers.
The recent rancorous and spiteful mudslinging from The Toronto Star, is simply unfair and, even worse, it is hurtful to the people working hard every day to reinvent our organization. We are all fighting the same battles.
Many years ago, when I was the Chairman of Metropolitan Toronto, I had a positive interaction with John’s father, Beland. He was fair, decent and tough and at times critical but he was certainly a legend in the newspaper business. I am sure he would have frowned upon the type of journalism printed in the Star on Saturday.
I am incredibly proud to lead this company and come to work every day with the most dedicated, talented and passionate people in the business. The fact is your continued hard work and commitment is not only greatly appreciated but we are beginning to see some encouraging “green shoots” from both an audience and revenue perspective. Thanks again to everyone, across our organization, focused on the success of Postmedia.