Tits Up at Toastmedia: Competition Bureau?! What Dat!?

While it lacks the dramatic flair of last month’s raids on the offices of Postmedia, Torstar and Metroland, the federal Competition Bureau’s latest noose-tightener, a quiet ex parte motion in an Ottawa courtroom, occasions much shitting of bricks at the moribund media mills.

Last November’s woofy paper-swap scheme, in which the two chains traded 41 titles for no cash (because they were of exactly equal value, bien sur), then promptly burned down most of them, left some 300 sluggos sniveling in the snow and local markets neatly divvied up. It also woke up two teams of Kompetition Kops.

The Bureau’s cartels and deceptive marketing practices branch, under acting associate deputy commissioner Pierre-Yves Guay, is sniffing around the Torstar-Postmedia circle jerk as a possible breach of the Competition Act’s anti-conspiracy provisions. That’s a criminal investigation, hence the office searches.

Meanwhile, the mergers and monopolistic practices branch, (associate deputy commish Melissa Fisher presiding) deployed a triumvirate of government legalists (step forward, Steve Sansom, Ian Clarke and Amanda McGarry) in aid of their own regulatory spelunk.

They scored a hit April 4, as Ontario Superior Court Justice Julianne Parfett issued an order compelling Toastmedia, Torstar and its subsidiaries Metroland and Free Daily News Group to cough up a wide-ranging and comprehensive haul of documents within 60 days. The info sought goes back as far as three years, relating not only to the deal, but the operations of the papers, corporate strategy documents, phone logs, etc., etc. It’s the full body cavity search, with the usual warnings about criminal charges for any obstruction.

Lead Bureau investigator Ariane Jaros-Denis filed a brick of an affidavit in support of the court order, noting some that statements from Postmedia require some, er, clarification:

“Postmedia claims that the newspaper properties it acquired are failing businesses, that there are no clear alternatives to the Transaction that would see them continue to operate, and that as a result, there can be no causal link between the Transaction and any anti-competitive effects.”

And yet…

“From schedules 1.1A and 1.1B of the Asset Purchase Agreement, it appears that profitability has improved with respect to certain Acquired Properties. Explain the nature of the improvements in profitability that appear to have been realized for the following Acquired Properties, and why similar savings could not be achieved at other Relevant Newspapers:

“a. The Belleville News, where profitability appears to have increased through reductions in operating costs; and

“b. The Brant News, where a loss incurred in 2016 appears to have been reversed to a profit in 2017.”

Also a matter of some puzzlement to the Bureau are papers where the stated labour costs as a percentage of the total seemed inexplicably low (Metro Winnipeg, Central Hastings News, Frontenac Gazette, Metro Ottawa, Ottawa East News, Ottawa South News) or unusually high (St. Marys Journal-Argus, Meaford Express, Belleville News, Nepean-Barrhaven News).

Investigators have many questions, as well, about the provided printing and distribution costs, and some apparent errors or omissions in the EBITDA statements for selected papers.

Bureau gumshoes would also appreciate it if Toastmedia and Torstar could:

* “Describe the nature of ‘Selling Costs’ that appear in Schedule 1.1-A of the Asset Purchase Agreement for Metro Ottawa and Metro Winnipeg, and explain why no other Acquired property sold by the Company appears to have equivalent costs.”

* “Describe the nature of the ‘administrative costs’ that appear to have been incurred by each Acquired Property.”

* “Explain why the promotion and marketing costs for the Acquired Property Metro Winnipeg appear to have increased from 2016 to 2017…”

And on it goes.

If Paul Godfrey and his gang of goniffs are perturbed and confused by this unwarranted and clearly excessive scrutiny from the Competition Bureau, it’s entirely understandable. They did, after all, inform the feds of their plans a full half hour before they announced their deal with Torstar in November, and argue the piffling value of the pifflesheets ($3.5 million on each side) didn’t even require them to extend that courtesy.

And there’d been not a peep in 2015 when the Bureau waved through Postmedia’s stonking $316-million purchase of the 173-paper Sun Media chain. Cue the newsroom mergers, mass gassings of hacks, doo-dah, doo-dah.

In those days, of course, Postmedia had the advantage of a sympathetic Tory government, which smoothed the way. At the PMO’s urging, a reliable Conservative source told Frank, the Competition Bureau rubber-stamped the deal, even though it created a ridiculous concentration of ownership. Postmedia now controlled two allegedly competing daily papers in five major cities in Canada, plus the Gazette in Montreal.

Completely unrelated to that giveaway was Toastmedia’s unprecedented tub-thumping for the Tories in that fall’s election, with arslikhan editorial endorsements for President Steve chain-wide and deep discounts on yellow front-page wrap-around ads warning, “Voting Liberal will cost you.” (‘me,’ shurely?!–ed.)

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2 comments on “Tits Up at Toastmedia: Competition Bureau?! What Dat!?
  1. John MacLachlan Gray says:

    Taking tips from internet & cell phone providers I see; walking the thin line between convergence and conspiracy.

  2. nosnibor says:

    Was the swapping and then immediate closing of all those papers by the two companies not an immediate indication of skullduggery? I am surprised it took so long for an investigation to start.

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