Postmedia pushing for looser foreign-ownership...
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Jan 30, 2016  |  Vote 0    0

Postmedia pushing for looser foreign-ownership rules

OurWindsor.Ca

Postmedia is pressing its case for an easing of newspaper foreign ownership restrictions as it faces U.S. currency debt repayment burdens CEO Paul Godfrey has likened to a “noose around your neck,” sources say.

They said Godfrey and Postmedia chair Rod Phillips were to have met with a senior political adviser to Prime Minister Justin Trudeau this week to discuss possible changes to long-standing cultural protections that bar majority control of media companies by foreigners.

An industry insider who spoke off the record said the executives believe that if Toronto-based Postmedia is forced to seek creditor protection the company could be broken up, with newspaper assets sold off to U.S. hedge fund creditors in a debt for equity swap.

Under that scenario, bidding would be opened to U.S. and other foreign interests so that holders of long-term Postmedia Network Canada Corp. debt would have a better chance of recouping all or most of their investment.

An easing of the ownership restriction could also alter Tax Act provisions that prohibit advertisers from writing off spending on print advertising if the property is not majority owned by Canadians.

In an interview, Godfrey noted that he is on record supporting lowered ownership restrictions in the newspaper industry, but would not confirm that a meeting was held to advocate for the move.

“I report to my board first and foremost,” Godfrey said Thursday. “What my goals and objectives are for this company will be revealed. . . When I’m ready to say them publicly, I’ll say them publicly.”

Postmedia, Canada’s largest English language news media company and proprietor of broadsheet dailies that include the National Post and the Ottawa Citizen, has, since 2012, retained the services of David Angus of the Ottawa lobby firm Capital Hill Group Inc. Angus is charged with pressing for changes to ownership rules. He did not respond to an interview request.

But observers said the ownership issue takes on new urgency given the woes of the industry and the continued operating losses at Postmedia on a deep slump in print ad revenue and acquisition costs.

Postmedia said this month that it is merging newsrooms and cutting jobs as part of an effort to save $80 million by the middle of next year, while Moody’s Investors Service has further downgraded its ratings on the company, citing a “lack of confidence that [Postmedia] will be able to refinance its 2017 and 2018 debt maturities at par.”

“What’s really hurtful to us (is the) second-lien notes are all in U.S. funds,” Godfrey told The Canadian Press in an interview. “With the Canadian dollar falling the way it’s falling, that’s almost like a noose around your neck.”

Godfrey in 2010 assembled an investment group to bid for the chain of newspapers being sold by financially stressed CanWest and secured backing from investors including U.S. private-equity firm GoldenTree Asset Management, while a dual share structure maintained majority Canadian ownership.

Postmedia in 2014 announced a deal to acquire the English language properties of the Sun Media chain.

NDP industry critic Brian Masse said he’s not sure if newspaper industry issues are front and centre for the Liberal government, but said they should be.

He added that easing of ownership rules designed to guard cultural industries is a “fair discussion to have” in light of the emergence of digital news alternatives, but warned that foreign control could lead to an infiltration of offshore biases into Canadian editorial content.

Toronto Star

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(2) Comment

By Yves | FEBRUARY 01, 2016 11:24 PM
(Corrected) Another 1%er wanting a bailout for past bad decisions that resulted in an organization so loaded with debt thaat there is no value left. The media concentration in the last few decades has left the country with very little local coverage and a centrally controlled viewpoint. Nobody is interested in that as evidenced by the flight of advertisers and subscribers alike.
By Yves | FEBRUARY 01, 2016 11:21 PM
Another 1%er wanitng a bailout for past bad decisions that reulted in an organization so loaded with debt thaat there is no value left. The media concentration in the last few decades has left the country with very little local coverage and a centrally controlled viewpoint. Nobody is interested in hat as evidenced by athe flight of advertisers and subscribers alike.
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