“Burning cash for years”: a pair acquires Torstar’s eye growth while promising to keep progressive values


Future new owners of Torstar Corp., Canada’s largest and oldest newspaper chain, say they have “no plans” to cut costs and will instead focus on “growth” and “marketing of the incredible brand of Star ”- a marked departure from the declining trajectory that the media company has followed in recent years against a backdrop of industry-wide advertising revenue loss.

“The traditional media are under siege. But we think people will pay for good content, “said Paul Rivett, one of two Toronto businessmen behind the purchase. “What Torstar has owned and owned for over 100 years is fantastic content. What they don’t have is the platform to deliver it. “

On Tuesday, Torstar, just weeks after announcing a further significant drop in quarterly revenues, announced its acquisition by NordStar Capital LP, a company owned by Rivett and Jordan Bitove.

The $ 52 million transaction, which was 67% higher than the 20-day weighted average share price, will involve the company’s equity investment and the liquidation of all Class A and B shares owned by the families founders and other independent companies. shareholders.

“What COVID-19 did to Paul and me is that it strengthened our determination that what the world needs and what Toronto needs and what Canada needs is a factual journalism and stories based solely on the truth. We want to inspire journalists and the editorial group to continue to do a good job, without being distracted from meeting certain quarterly goals, “said Bitove.

Bitove is the son of John Bitove Sr., a Canadian-Macedonian businessman and philanthropist who owns Bitove Corp., one of Canada’s largest restaurant companies. In addition to being a serial entrepreneur and member of the board of directors of the SickKids Foundation, he participated in the founding of the Toronto Raptors, alongside his brother John Bitove Jr.

Rivett is a former president of Fairfax Financial, the insurance and investment giant headed by Prem Watsa.

On Wednesday, he told the Post that Fairfax, which is Torstar’s largest independent shareholder with approximately 40% of the company’s non-voting shares, would have no role in the company.

We think it’s a very complete and fair bonus

Torstar’s share price jumped 50% on Wednesday to 60 cents a share after the privatization deal was announced.

“For a company that has been burning money and has been burning money for years now, and in the context of this market with COVID uncertainties affecting the headline, we think this is a very complete premium and fair, ”said Rivett. “For shareholders like Fairfax, they are taking the money and that makes sense given the premium we have been striving to pay here.”

Torstar had a cash balance of $ 70 million at the end of the first quarter of 2020 and no bank debt, a balance sheet that short seller Jerome Hass of Lightwater Capital Partners called “soft” in light of the 52 million dollars paid by Rivett and Bitove. for the company. “You are actually paying the buyer $ 18 million to take this business out of your hands,” he told the Post. Hass said he had been out of Torstar stock for a decade until the end of last year after the company suspended its dividend.

Although Torstar spent a year and a half embarking on a “digital transformation” aimed at increasing its digital subscriber base, the results have been poor at best. Print and digital subscriber revenues increased only 0.31% in the last quarter of 2019, compared to the previous year. Then the pandemic hit, accelerating the decline in print and digital advertising revenues.

We would not buy paper if it was not progressive

Rivett and Bitove, however, seem unfazed by the state of the media landscape in Canada and the way tech giants like Facebook and Google continue to consume ad revenue, pointing out that good content will eventually prevail and develop the Torstar subscription base.

“What this business really needs is a lot of love, a more patient approach and a longer lead time for someone who can take care of it for maybe three to five years” said Bitove.

Hours after the announcement of the agreement, questions swirled on social media regarding the founders’ commitment to Atkinson’s progressive principles, given that Bitove and Rivett have for years donated to the Conservative Party for provincial and federal levels, according to public information Data.

“We wouldn’t buy paper if it weren’t progressive, let’s put it that way,” said Rivett. “Jordan and I are both first generation immigrants and believe in equality and social justice … but most importantly, the main news in this country comes from progressive journalism.”

Bitove added that they would do nothing to “interfere” with the editorial independence of the newspaper. “Torstar’s investigative journalism and progressive philosophy have brought him to where he is,” he said.

The Toronto Star head office at the foot of Yonge Street in Toronto.

Peter J. Thompson / National Post / File

John Boynton, publisher and CEO of Torstar, said Bitove and Rivett had been very active in preserving Atkinson’s principles and “had done everything possible to declare publicly as such.”

The acquisition will also involve the appointment of former Ontario Liberal Premier David Peterson as vice-president of the company as the custodian of some sort of Atkinson securities. “We don’t want to be a soft and right brand. I fully trust Jordan and Paul’s judgment and commitment to this endeavor, “said Peterson.

John Bitove Jr., a Canadian businessman whose projects have spanned the food, sports, radio, real estate and wireless sectors, says his younger brother, 55, “Participated” in many of its businesses over the years.

“(With) the Raptors, Air Canada Center, the Olympic bids, he was a great winger and now he can lead this important asset,” said Bitove, who is four years older than his brother.

“I actually gave her my Toronto Star paper route when I” retired “delivering newspapers (at the age of 14).”

He described the takeover and privatization of Torstar as “a very complicated affair with a lot of work to do,” adding that Phil Evershed, his partner at alternative asset manager PointNorth Capital, advised his brother and Rivett on the transaction. .

“Paul and Jordan have known each other for over 10 years and have been looking for something to buy together,” said Bitove.

“And now they are going to repair an important Canadian asset.”

– With staff files from the Financial Post

Financial Post

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