It’s tough to be in the news business at the best of times; it’s even harder when the owners of your newspaper are trying to rip each other apart in public.
That’s the situation for the Toronto Star at the moment, where the two co-owners appeared in court Monday fighting over the future of the company.
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The Star was sold by the families that controlled it for decades just about two years ago to a company called Nordstar Capital Inc. In addition to the Star, the company owns several other media outlets and an online gaming company.
Paul Rivett, one of the 50-50 partners in Nordstar, filed an application in court a month ago seeking to dissolve the company over disagreements on how the operation should be run with his partner Jordan Bitove. Rivett made claims that Bitove was going rogue, not engaging in cost-cutting at the Star and not abiding by agreements about the direction to be taken.
“Bitove has ignored Nordstar’s agreed-to prime objective that Nordstar’s business be carried out in common with a view to profit,” Rivett’s court filing said.
Making profits in the news business has always been tough – though The Toronto Sun has a long and positive track record on that front. In a changing business climate, that has become more difficult for even the best operators. At the Star, when Bitove operates as the publisher, it’s a near impossible task.
The Star is no longer backed by wealthy families content to incur losses. The organization no longer has the financial might of the Harlequin romance novels to underwrite it, as the company did from 1971 until 2014 when the brand was sold off.
Now, they need to make it on their own and in a time of declining subscriptions, declining single copy sales at the newsstand and digital revenues not ramping up fast enough, it’s incredibly difficult to keep moving forward without cuts.
Yet, that is what Bitove is promising; he put out a statement just before Monday’s court hearing, effectively stating that he wants to protect the Star from his fellow co-owner.
“I have taken steps to defend against any adverse consequences that could arise from any steps taken by our lender, as a consequence of Mr. Rivett’s actions,” Bitove said in a memo to Star staff sent out just around 10 a.m.
With Rivett asking the court to sell off the whole company, in parts, if necessary, the tension has been high for workers at the paper.
When the deal for Norstar to buy the Star and its affiliated companies went through in 2020, the total price was $60 million. Since then, Nordstar has spun off VerticalScope, a digital media company that raised more than $140 million through a share offering – more than double the price of the entire purchase.
If the Star does end up for sale once again as a result of this, Rivett and Bitove won’t be getting $60 million for it.
Would anyone buy the paper?
There are other media companies interested in all or part of what is on offer – if my bosses on the 12th floor at Postmedia are interested, they aren’t saying – but surely someone would step up to buy the struggling company.
The Star is top-heavy at the moment, they either need to trim – let’s say drop the social justice reporter beat – or they need an owner who doesn’t care about losing money year after year.
As they appeared before a judge Monday, Rivett and Bitove said they would continue with mediation — which had already started before the court filing — and set the legal proceedings aside for now. We will have to wait to see the outcome of those mediation proceedings, but right now, the Star is in focus for all the wrong reasons.
The public is looking at a paper with a big black eye inflicted by their own ownership group. It’s not a good look.