We learned this week that Black Press Ltd. and associated companies applied for protection under the Companies’ Creditors Arrangement Act. The BC based company’s main business is print and digital newspapers and magazines operating in Western and Northern Canada and in the USA. This shows companies affiliated with Black Press Ltd.
Interesting to see Black Press involvement in Barbados, a tax haven that is the No. 3 destination for Canadian money being stashed abroad.
Private company Black Press has not reported financial results publicly. Minority owner Torstar provided a partial picture of Black’s financial results. The public company commented on Black Press in its financial statements until private equity firm NordStar Capital completed a take-private buyout of Torstar. The deal was financed by long time Postmedia backer Canso Investment Counsel Ltd, a company also involved with Black Press.
Torstar’s 2019 annual report stated:
Our share of Black Press’ net income was $1.0 million in 2019 (income of $2.3 million in 2018), representing Black Press’ results through November 30, 2019. Black Press has a February fiscal year end and therefore does not have a coterminous year-end with us.
Torstar held 19.35 percent of Black Press so we can extrapolate profits of about $17 million for the western company in the last two years reported. But the value of Black’s media group had been in serious decline. Torstar wrote down its $20 million investment to zero dollars.
Journalist Tyler Olsen reported that Black’s reckless ambition to acquire big city newspapers set the company on a path to financial failure. Olsen believes Black’s largest mistake was its C$187 million acquisition of the Akron Beacon Journal in Ohio. Black ended up selling that newspaper for about C$20 million. The value of the Beacon Journal disappeared but the borrowing Black made to buy the newspaper did not. Interest on debt for this one property approached $20 million a year.
Under current proposals, ownership of Black Press will move to Canso and another private equity firm, Deans Knight Capital Management Ltd. Carpenter Media LLC, run by people from Alabama and Mississippi, will also be involved in the ownership group and is to be operator of Black Press. Carpenter’s outlets are centred in the USA’s southern red states. Their ability to contribute to small-town newspapers in Canada is unclear.
As media ownership becomes concentrated in the hands of private equity firms, journalistic principles and accountability are inevitably compromised. A paper published by the City University of New York discussed this issue:
The historic role of the press as the “fourth estate” encompasses providing checks against the abuse of governmental (and private) power and disseminating to the public informed opinions about the issues of the day, but it can only fulfill this role if it is incorporated into a larger media system that supports these democratic ideals. For this reason, a country is democratic only to the extent that the media are structurally egalitarian and politically salient…
Fundamentally, private equity firms are exclusive highstakes investment groups that manage and deploy massive amounts of private capital…
It is clear that long-term growth is severely undermined when media companies are bought and sold like repossessed houses...
Media control may be worthwhile for the nation’s wealthiest citizens but private and nearly anonymous ownership ensures the interests of the nation are served badly.
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Categories: Journalism
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I was shocked to hear of Black Press’s financial woes. Shocked… but maybe not surprised, as the newspaper business has been knocked off-balance by the internet and social media for the last two decades. The COVID years also did them no good.
I’ll disclose that I was a weekly freelancer for Black Press’s Hope Standard, writing sports columns and doing general photography from the 1980s till COVID cutbacks forced Black Press to kick all freelancers off the books in early 2020.
During my years with the company, I always had the impression that David Black was a shrewd businessman, a “Jimmy Pattison” of the print media business… but I guess food is a need that people will pay for. News (and advertising), well, if they can get it for free elsewhere, you know where the customers will go.
Still, I had the thought that all of his buying of newspapers was a cover for Black’s true focus: the real estate value of the land under the news offices.
The Hope Standard was always in rented space, but the Chilliwack Progress and the Abbotsford News (and Hacker Press) stood on Black-owned land. The Progress building has been levelled and the assessed value of the lot is $1,609,000. The paper now works out of a rented space in a strip mall.
In Abbotsford, the News has also moved into rented space and the news and printing facility on Gladys Avenue has been levelled. BC Assessment has the land appraised at $17,860,000 — and a (likely Black-owned) adjacent property at $1,487,000. There is a plan for a condo development there… but it sits idle. https://www.vancouvernewcondos.com/properties/the-news-urban-homes-in-abbotsford/
I don’t know about the real estate situation in other Black-owned newspapers, but if the land and buildings are owned, there’s value there. There’s also value in all of the newspapers’ archives, which are a great resource for historical purposes — including Ancestry.com.
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Indeed. Real estate is part of what has attracted private equity firms to media companies. During high profit times, those companies tended to own their own properties. But a common action has been for holding companies to strip real estate from operating companies. A number of Black affiliates are described as real estate ventures. I doubt David Black will have to sell his yacht.
Years ago I worked for a company acquired by a new owner. One of the first things done was to transfer ownership of the company’s real estate and require payment of a hefty monthly rental. Also demanded was a substantial monthly “management fee” even though the new owner lived more than 2,000 km away. I had to stop myself from rolling eyes when the new owner told people that he didn’t draw a dime of salary from the place we worked.
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The problem with the newspaper industry is that of off shore ownership, what used to be family owned business are now a corporate entity, ultimately owned by a hedge fund or something along that line.
Many newspapers became a Fox News/Pravda sort of affair, with editorial content catering to advertisers and the “right” politicians.
In short they have ceased to be newspapers and became propaganda sheets.
Real news has become un-news as it doesn’t fit the doctrine of the owners.
Failing to compete against the internet and falling into the “puffery” mode where news releases are treated as real news. In the end, people stop reading, which is a tragedy but sadly the newspapers have brought it on themselves.
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