Nordstar, the company that owns the Toronto Star and other newspapers, announced Friday that it will seek bankruptcy protection for the unit that owns more than 70 local newspapers and will eliminate more than 600 jobs in the process.
Nordstar says it is placing its Metroland Media Group division under creditor protection under the Bankruptcy and Insolvency Act as part of a restructuring plan.
The Metroland company owns dozens of community newspapers that are delivered along with advertising brochures. Nordstar says it is exiting the brochure business entirely and converting newspapers to a digital-only format.
The move will mean the loss of 605 jobs or about 60 percent of its total workforce.
‘Unsustainable financial losses’
Metroland said the decision is the result of unsustainable financial losses resulting from changing consumer and advertiser preferences.
“The media industry continues to face existential challenges, largely because digital technology giants have used their dominant positions to capture the vast majority of advertising revenue in Canada,” the company said in a statement.
“The decline of the print and brochure distribution business was significantly accelerated by the COVID-19 pandemic and the reduced use of brochures by both readers and advertisers as a marketing vehicle.”
Under the plan, Metroland community publications will move to a digital-only model.
Meanwhile, the company’s six newspapers, including the Hamilton Spectator, Peterborough Examiner, St. Catharines Standard, Niagara Falls Review, Welland Tribune and Waterloo Region Record, will continue to be published in both print and online.
The decision comes after the failure of merger negotiations
The changes come after the collapse of talks earlier this year between NordStar and Postmedia about a possible merger.
The two companies were in talks about a possible deal that would have seen Postmedia and Metroland Media Group combine forces, while the Toronto Star would be managed by a new company.
Media outlets have been under pressure for years as online giants such as Google and Facebook-owner Meta have hoarded advertising funds.
Earlier this year, Ottawa passed the Online News Act, which will force digital giants to pay media outlets for content they share or reuse on their platforms.
Meta and Google responded to the legislation by announcing that they will block content from Canadian news publishers on their services before the law takes effect.