Nordstar to put Metroland newspaper group into bankruptcy, more than 70 weekly papers to go digital only

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Toronto Star publisher Nordstar Capital LP announced plans to put Metroland Media Group, its regional newspaper business, into bankruptcy protection on Friday, a move that eliminated 605 jobs, or two-thirds of Metroland’s work force, and will convert more than 70 weekly papers into digital-only publications.

Nordstar-owned Metroland launched the court-supervised restructuring after suffering what the company called “unsustainable financial losses stemming from the changing preferences of consumers and advertisers.” Court filings show Metroland owes creditors $74.2-million.

“We believe this restructuring is essential to MMG’s long-term health and growth,” Metroland said in a statement.

Metroland’s bankruptcy filing is the latest in a string of setbacks for local news operations in Canada and elsewhere, which have bled revenue as advertising spending and reader attention have migrated to large online platforms. The move means the end of weekly print newspapers in many Ontario cities, including Barrie, Dundas, Oakville, Perth and Renfrew. The company is also exiting the flyer-distribution business.

Between 2008 and April, 2021, around 448 news operations have shut down in 323 Canadian communities, according to the Canadian Media Directors’ Council, an industry association.

“The media industry continues to face existential challenges, largely because digital tech giants have used their dominant positions to take the vast majority of the advertising revenue in Canada,” Metroland said in its statement.

Metroland owes its employees $16-million, according to documents filed Friday by receiver Grant Thorton LLP. In a statement to staff, the company said it will not offer severance or termination pay, because it has “insufficient funds.” About a third of employees losing their jobs work at Metroland’s flyer-distribution operations. Metroland said 68 of the company’s 200 journalists will be laid off.

“We are disgusted and deeply offended by this news,” Carleen Finch, president of Unifor Local 87-M, said in a news release. The union represents 104 of the laid-off workers.

“I’m worried for people’s mental health right now,” Ms. Finch said in an interview.

Coming out of the pandemic, Metroland executives lobbied the federal government for assistance. Among their requests was that the government pass legislation intended to force large tech companies to pay into the Canadian news industry. That legislation, Bill C-18, received royal assent in June, but is being opposed by the tech companies and has not yet taken effect.

The company also tried to win more business from advertisers. But in an e-mail to staff, Neil Oliver, chief executive of Nordstar subsidiary Torstar, which in turn owns Metroland, said the business ran out of sources of funding.

“The headwinds in the industry have been too strong,” Mr. Oliver said. ”On every level, professional and human, this move hurts.”

Friday’s court filing shows Metroland’s largest creditor is Torstar, which is owed a total of $41.6-million. Torstar declined to comment on the debt. Metroland owes $8.4-million to its bank, Canadian Imperial Bank of Commerce. Its printer, Transcontinental Inc., is out $2.2-million.

Toronto-based Nordstar, controlled by entrepreneur Jordan Bitove, will continue to publish seven daily newspapers in both print and digital formats: the Toronto Star, the Hamilton Spectator, the Peterborough Examiner, the St. Catharines Standard, the Niagara Falls Review, the Welland Tribune and the Waterloo Region Record.

Mr. Bitove teamed up with former insurance executive Paul Rivett to purchase Torstar in 2020 for $60-million. In 2022, Mr. Bitove took full control of the publishing business after a falling out with his partner.

Nordstar said in June that it had entered non-binding talks to merge with Postmedia Network Canada Corp., the country’s largest newspaper chain and owner of the National Post and several papers in major Canadian cities. The companies said that a combination was necessary to combat the “existential threat” facing the industry from tech giants such as Facebook parent Meta Platforms Inc. and Google owner Alphabet Inc.

The publishers called off talks in July, with Nordstar citing the “financial uncertainty” of the proposal. Postmedia is laden with debt, and The Globe and Mail reported that the company’s major lender, Chatham Asset Management, wanted to retain a significant amount of debt rather than convert it to equity in the new entity, scuttling the deal.

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Postmedia chief executive officer Andrew MacLeod said at the time that the assertion was inaccurate, and that the deal was called off because of the “unstable landscape as it pertains to Google and Facebook.”

Last year, the federal government introduced Bill C-18, the Online News Act, which is intended to compel tech platforms to strike financial agreements with publishers for posting or linking to their content. Both Nordstar and Postmedia have been strong supporters of the legislation. But C-18 has been met with fierce resistance by tech companies.

Meta began blocking Canadians’ access to news on Facebook and Instagram starting in August, in response to the legislation. Google has said it will do the same on its platforms, unless its objections to the law are addressed.

Nordstar’s decision to move its weekly publications to a digital-only format could save costs, but industry experts say similar strategies have often failed to create profitable, sustainable businesses in the past.

“The problem with that is that audiences see less and less material that’s relevant to their own communities,” said Christopher Waddell, an emeritus professor of journalism at Carleton University. “At some point, the audience says, ‘Well, what’s the point of continuing to subscribe to this?’ ”

With Metroland laying off journalists, the challenge for the company will be to maintain enough local news to entice readers.

“The ultimate focus is the editorial content,” Mr. Waddell said. “It’s not much of a surprise that news organizations are finally making the decision to get out of print media, because the economics just don’t work anymore.”