In 2008, Canwest Global Communications CEO Leonard Asper was perplexed. His business—once Canada’s leading media company—was failing, and he didn’t know why. Canwest stocks, once trading at $20 a share, were down to 60 cents. The purchase of Alliance Atlantis’s broadcast division, widely regarded as a savvy business move, hadn’t brought Canwest the boost he expected. Instead, Asper was facing nearly a billion dollars of debt.
This became the catalyst for the Postmedia Network—the largest instance of newspaper consolidation Canada has ever seen. Some claim the conglomerate is a malignant force in Canadian journalism, lumping newsrooms together so they can be controlled and cut with convenience, while others consider consolidation a natural occurrence in a struggling industry. But whatever the case, evil or not, Postmedia remains the product of a company smothered by debt—and one that appears to be headed toward a similar fate.
The breakup of Canwest in 2010 was the largest sale of media assets in Canada to date. While its broadcast arm went to Shaw, a group of Canwest’s creditors headed by Paul Godfrey acquired the company’s print publishing branch. They called themselves Postmedia—a name chosen because, according to Godfrey, it “reflects where we have been and where we are going.”
“This is a difficult day,” Asper said as his company was dismantled. “I’m most concerned about the impact on employees. It will be minimal, but there will be an impact. I regret that. I don’t feel great about that.”
While Asper’s bad feeling was well warranted, the impact on journalists and former Canwest employees would hardly be minimal. Just one year into its life, Postmedia was already experiencing financial difficulties. Anxious about going into the red, Godfrey announced the elimination of 500 full-time jobs, or about 9 percent of his workforce, expecting to save around $30 million per year.
But regardless of Godfrey’s expectations, by the end of 2011, Postmedia was losing money. The company unveiled a cost-cutting plan to transform Postmedia from a print-based to a digital-first media company. This plan came with further cuts—the loss of 25 editorial positions across the network’s 10 papers, as well as the cancellation of Sunday editions at the Edmonton Journal, Calgary Herald and Ottawa Citizen. Then, as losses continued to grow, Postmedia eliminated the publisher position across all 10 papers.
Over the course of 2012, Godfrey received a 50 percent raise, taking home $1.7 million. That same year, his company’s losses neared $100 million. “I have no apologies to make to anyone on that,” Godfrey said of receiving a raise as his company plummeted. “No apologies whatsoever.”
Last year, Postmedia became the largest newspaper owner in Canada by purchasing 173 Sun Media publications from Quebecor. It now controls just under 50 percent of all Canadian daily newspapers. Between its 2010 birth and the Sun deal, Postmedia had cut 2,900 jobs—over 50 percent of its total workforce. Yet, years after the merger, Godfrey would claim, “the people at Sun were so happy to join us.”
Postmedia took on $140 million in new debt to finance the Sun deal, now owing $652 million to its creditors. “I think it probably bought us three to four years,” Godfrey said of the merger. And time, for Postmedia’s creditors and especially for Godfrey, is money.
In several major Canadian cities, Postmedia now owns multiple papers—broadsheets and tabloids. Earlier this year, Godfrey cut 90 editorial positions, merging newsrooms for papers in the same city. In Ottawa, for example, the highbrow Citizen and trashier Sun are now, in all respects except appearance, the same.
Postmedia currently loses over $120 million a year—a figure that has grown exponentially since 2012. Much of the company’s debt becomes due in 2017 and 2018, which will make surviving into the 2020s nearly impossible for the sinking news empire. For Canadian journalists—practitioners in an industry that may soon kill a second major conglomerate in the past decade—the death of Postmedia may seem more end than new beginning. But, while the companies that own it can (and, in many cases, will) go bankrupt, journalism is more than a business, and it never can.