1. Postmedia, Torstar, and the Halifax Examiner: the economics of the news industry
With 130 newspapers across the country, Postmedia is the largest newspaper chain in Canada. Torstar, owned by Nordstar Capital, is the nation’s second largest chain, owning the Toronto Star and about 70 other papers, as well as a minority stake in the Canadian Press.
On Tuesday, the two companies announced they were in merger talks.
“A generation back, both companies were valued at billions of dollars and the families that owned them were among the wealthiest in Canada. Now, Postmedia’s equity is worth $186-million,” notes Melissa Tate in the Globe and Mail. “Postmedia has $261-million in debt, and lost $36.7-million in the first six months of the year, after losing $26.5-million in the same period a year ago. Over the past six months, the Toronto-based company paid $16.9-million in interest on its loans. The bulk of the company’s debt, $240-million, is at a 10.25-per-cent interest rate.”
“The core rationale for the proposed merger is to create a new entity with reduced debt, national digital scale to compete with the global technology giants and economies of scale in the business model,” said Postmedia CEO in a press release.
The merger contemplates a significant reduction in overall debt through a conversion of a portion of the outstanding debt to equity, resulting in significant economic dilution to existing shareholders. This will result in an overall reduction in debt of the merged entity, providing it with stability to preserve and grow a strong national editorial infrastructure and maintain important brands.
I don’t pretend to understand the workings of hedge funds and private equity firms like those that own Postmedia and Torstar.
But somehow the owners of Postmedia and Torstar will inevitably squeeze more profit out of their operations by firing reporters and closing down papers. And, I’d guess, the new company will then swallow SaltWire, the owner of most newspapers in Atlantic Canada, and squeeze out yet more profit by firing still more reporters and closing still more newspapers.
My university Econ prof told me that Exxon was so big and globe-straddling that it had an entirely separate economics, outside the world of international monetary exchanges, and even the standard definitions of debt and financing. I think that’s basically what’s happening here — there’s a logic to the big finance world that is utterly unavailable to, say, a small shopkeeper or restauranteur. Or a small independent digital news outlet.
In our world, it’s simply money in from sales (subscriptions in the case of the Halifax Examiner), money out for costs (primarily labour, for the Examiner). That’s basically it.
Relatedly, I watched in astonishment as Northern Pulp sought creditor protection in the British Columbia Supreme Court. Northern Pulp said it couldn’t make the payments it owed to creditors, the biggest of which is Paper Excellence, which owns Northern Pulp. As I understand it (but can anyone truly understand this?), Paper Excellence structured the financing of its operations such that it loaned its own subsidiary a gazillion dollars, and then that subsidiary filed creditor protection, which stops payment on all the other money it owes, including, by the way, the $85 million it owes the province of Nova Scotia.
You try that, small business owner.
The Halifax Examiner is incorporated, and I own 100% of its stock. From time to time, I’ve had to loan the corporation money out of my meagre savings, at 0% interest. Imagine if as president of Halifax Examiner, Inc., I filed for creditor protection for the corporation because the corporation couldn’t pay back the loans to me, Tim Bousquet, and therefore, sorry employees, you aren’t getting paid this week. That’s roughly what Paper Excellence is doing.
So again, there’s an economics that the financier class enjoys that simply doesn’t apply to those of us who live in the simpler money-in-money-out world of retail business.
I, of course, make use of what little financing is available to the Examiner — the bank’s line of credit, the federal government’s journalism wage subsidy — but it’s all tied and scaled to direct revenue from subscriptions. I’m not sure I would want it any differently.
Many years ago, I was hired by a small non-profit to clean up its books. The problem, as hard as this is to believe, was that the non-profit had too much money — years before, a few very large private donors gave the non-profit hundreds of thousands of dollars, and in the intervening years, the non-profit simply ignored the money management side of the operation completely, and did what it thought was best with the money. They didn’t even know how much money they had or where it was — it took me a couple of months to track down all the various bank accounts and investments. Worse, the non-profit’s operations were no longer tied to any concern about fundraising. These weren’t bad people — they weren’t spending the money on absurd junkets or whatever — but the operations of the non-profit were utterly disconnected from its mission in the community.
I came away from that experience thinking that non-profits shouldn’t be too comfortable. Yes, some endowment funds and savings can help an operation through lean times and weather unexpected and extraordinary costs, but if a non-profit can’t get sustained financial support from its community, is it really providing any service of value? Put another way: if a community truly values a service, it values it financially.
The Halifax Examiner isn’t technically a non-profit, but we typically don’t make a profit. (In couple of high-growth years we turned a profit, but that money just got plowed back into the business, and there weren’t any dividend payments to me.) As I see it, the same general equation applies: if we can’t get sustained financial support from the community, why are we even doing this journalism thing?
All of that’s a roundabout way of asking readers to support this operation in a sustained financial fashion, with a subscription. You can subscribe here.
2. DJ R$ $mooth
“The longest-running Black music radio show in Atlantic Canada recently celebrated its 25th year anniversary on the airwaves,” reports Matthew Byard:
Ryan Somers, aka DJ R$ $mooth, has been hosting $mooth Groove$ on CKDU 88.1 FM since 1998. The show, which airs every Sunday from 5pm to 8pm, broadcasts out of the Student Union Building on the campus of Dalhousie University.
This item is written by Jennifer Henderson.
Nova Scotia Power told a regulatory hearing before the Utility and Review Board (UARB) it will be “sometime this fall” before the company is in a position to forecast what capital projects it can undertake over the next five years to meet legislated environmental targets to shutter coal-fired generating stations and source 80% of electricity from renewable sources by 2030.
Chief Operating Officer Dave Pickles told advocates representing small business and consumers he is “confident” the utility can meet those targets but that a law passed by the Houston government limiting the size of power rate increases has caused the company “to pause” plans to invest in projects aimed at greening the grid.
Four deferred capital projects under a program the company refers to as the Eastern Climate Energy Initiative include:
• building a new overhead transmission line between Salisbury, New Brunswick and Onslow, Nova Scotia (the existing inter-provincial line has been a bottleneck for years)
• converting a coal-fired station to natural gas
• a battery storage project
• another wind farm
Nova Scotia Power was before the UARB asking the regulator to approve capital spending in 2023 of $166 million of about $382.3 million in total capital spending this year (not all capital spending has to be approved by the UARB.) Total capital spending this year is about a third less than than the company projected last year.
Both citizen and business advocates as well as the lawyer representing the Department of Natural Resources and Renewables pushed senior managers with Nova Scotia Power to tell the regulator when the company would be able to provide details about these projects as well as provide a clear five-year plan for capital spending.
Here’s what Nova Scotia Power COO Dave Pickles said:
Certainly Bill 212 was unexpected and it did require the business to re-assess its investments, what is the best strategy to go forward to make sure we are in line with the requirements of the Bill. This did require a pause… we continue to work with stakeholders but we are not in a position today to give you that final plan… we will be filing the action plan coming out of the Integrated Resource Planning process in mid-July so that will be indicative of the level and type of investments. And then we continue to need the time to explore options with the federal government for funding support.
Company officials reiterated several times a five-year forecast of its capital spending in support of “a clean transition” would be forthcoming this fall.
As the province approaches another hurricane season and Nova Scotia Power continues to work cleaning up the destruction left behind by Fiona, yesterday’s public hearing was also the forum for many questions about how prepared the utility is for the next storm.
While there is consensus storms are becoming more frequent and severe, the company disputed the consumer advocate’s claim that the reliability of the grid is “worsening.”
Company officials claim Nova Scotia Power’s frequency of outages and power restoration times are better than its Maritime neighbours. The truth of these claims is difficult to sort out. It may depend on what time period — over the last three years or the last 10 years — used in making the comparisons.
In his opening statement to the UARB, Nova Scotia Power’s Dave Pickles noted the company has a newly created “Reliability Department” dedicated to ensuring decisions and investments work to harden the grid.
To that end, Pickles told the Board Nova Scotia Power has been purchasing larger and taller power poles as well as a different type of insulator to withstand more severe storms. The company is also participating in discussions with Electricity Canada aimed at sharing new technologies to adapt to climate change.
Nova Scotia Power states the number one cause of power outages is trees falling on power lines. Pickles told the UARB that while the company spends between $20-$25 million a year clearing trees along one thousand kilometres of power lines; “Nova Scotia Power is nearly doubling our annual investment over the next five years,” he said.
In both the company’s written and oral statements, Nova Scotia Power has rejected a suggestion from the consumer advocate’s consultant that the power company could benefit from hiring an outside expert to evaluate whether it can do more to boost the overall reliability of the grid.
This morning, the Premier Tim Houston’s office issued a screed damning the carbon tax. It will come as no surprise that the screed does not contain the word “rebate,” so I’ll turn it over to Richard Starr:
There has been all kinds of flak thrown up about the issue since the Trudeau government decided back in 2016 to put a national price on carbon. Many, including some environmentalists, question its effectiveness in reducing emissions. The jury’s still out on that. Others, mostly in the oil-producing provinces, see the tax as an all-out attack on the fossil fuel industry – despite the fact that oil and gas production continue to increase. But the telling argument, the bread and butter one we hear constantly, is that the tax will just make life miserable – or worse – for ordinary folks. In an article in the Chronicle-Herald last weekend Tim Houston is quoted twice saying the tax would have a “devastating impact” on Nova Scotians in general and “many families that are struggling.”
Presumably Houston (along with the Conservatives in Parliament that he hardly knows) is finding support for his doomsday scenario from a couple of recent reports from the Parliamentary Budget Office (PBO). Those reports cast some doubt on the Trudeau government’s claim that because of rebates – the feds call it the Climate Action Initiative – 80 per cent of Canadians covered by the federal carbon tax would get more back in rebates than they paid through higher taxes.
The PBO essentially agreed with that claim, finding that for all provinces and most income groups, reimbursements offset both the direct and indirect impact of the tax. The estimated annual average net benefit to households by the time the tax reaches $170 a tonne in 2030-31 would range from a high of $776 in Alberta to a low of only $33 in Nova Scotia.
The main reason for the big difference between Nova Scotia’s average of $33 and Alberta’s $776 is that energy exporting Provinces will have some of the tax paid by importers of their products whereas in Nova Scotia most of the carbon tax will be paid by people who live here. Nevertheless, despite the modest overall net benefit for Nova Scotians, the two lowest income quintiles – the “struggling families” Houston champions when it suits him – do okay. PBO projects a net benefit of $353 to the lowest 20 per cent, $278 to the next lowest.
Rebate cheques are supposed to start landing in tax filers’ bank accounts or mail boxes two weeks after the tax comes into effect on July 1. The rebates – actually (P)reimbursements – will be worth $279 for a family of four. A similar amount is supposed to arrive in October and early January. That’s nearly $900 over the next six months to offset a per-litre tax increase of 14.3 cents (plus GST) in carbon tax.
By my crude math, someone would need to put 50 litres in the tank three times a week between July 1, 2023 and April 1, 2024 before they exhausted the rebates. Looking at just the summer months, the $279 (P)reimbursement that’s coming soon will enable a family of four driving a 10k/litre gas guzzler to enjoy 18,000 kilometres of happy motoring before the carbon tax starts to bite. Devastating, Mr. Premier? Maybe to the environment.
Starr isn’t a huge fan of the carbon tax. As he points out, families like his and mine will get a rebate cheque of $186 next month, and a lot of people will spend the money by driving somewhere.
The goal of the carbon tax is build incentives for the use of renewable power. Maybe that will work as hoped for. But even if not, it’s hardly the disaster Houston paints it as.
5. COVID vaccines
I’ve been following the COVID issues more closely than most, but this press release about vaccinations is about as clear as mud to me:
Nova Scotia has accepted the National Advisory Committee on Immunization’s (NACIs) latest recommendations for COVID-19 vaccines.
NACI now advises that bivalent mRNA COVID-19 vaccines, which target the original and Omicron strains of the COVID-19 virus, can be used for the primary series. Previously, bivalent vaccines were only offered as booster doses.
Going forward, bivalent vaccines will be the only type available to people over the age of five years. If a person started their primary series with an original mRNA vaccine, a bivalent vaccine will be used to complete the series.
For children aged six months to four years, Moderna’s bivalent mRNA vaccine will be offered for their primary series, but both Moderna’s and Pfizer’s original vaccines will continue to be available.
NACI also advises that there is no longer a preference for the Pfizer vaccine over Moderna’s for the primary series in children aged five to 11 years.
As of Friday, June 30, only people aged five and older who have not received their first booster dose will be able to get a booster over the summer. All other Nova Scotians will not be able to receive an additional dose at this time.
People who have not been vaccinated continue to be eligible to book their primary series of COVID-19 vaccine and a booster dose.
I think that means that even though it’s now been exactly six months since I had COVID at Christmas, I can’t get my next booster.
6. Maritime Launch pays Lindsay Construction, sort of
Maritime Launch Services has “issued an aggregate of 2,875,000 common shares on May 5, 2023, at an issue price of $0.16 per share to several of its arm’s-length service providers in exchange for previously rendered services,” reports Space Daily.
It’s not unusual for cash-strapped startups to pay contractors with stock issuances. In this case, the bulk of the stock — 2,031,250 shares, valued at $325,000 in total, subject to a four-month plus one-day hold period. — went to Lindsay Construction Limited; the “previously rendered service” was presumably construction of the road into the MLS site and of the tiny concrete pad that is supposedly the launchpad.
Here’s what that means:
• MLS doesn’t have enough cash on hand to pay for the relatively minor construction already completed. By MLS’s own figures, total construction of the spaceport will cost $275 million, and so getting from not having enough cash for a $325,000 construction project to having enough cash for a $275 million construction project will presumably involve either a great deal of future investment or loans based on project income projections.
• Conversely, Lindsay Construction evidently thinks there’s value in the stock, which speaks to that company’s faith in the MLS project. For what it’s worth, the stock was issued on May 5 at 16 cents a share, and today it is trading at 19 cents a share, so Lindsay has already seen about a $61,000 increase in the value of the stock, although that can’t be realized until it can sell the stock in September.
Spring Garden Road is a filthy disgusting mess
In December, in a piece I titled “Argyle Street is a filthy disgusting mess,” I called out the deplorable state of Argyle Street, which was marketed as the jewel of the city. When built, we were promised that the street would be so attractive that conventioneers from across the world would be captivated by its beauty and talk us up to folks back home.
However, I wrote:
Consider the Bramptoner who comes to Halifax for the International Society of Widget Salespeople convention and takes a break from that asshole speaker from Maple Ridge and decides to flirt with the hawt middle manager from Saskatoon instead because you never know, you play your cards right you might get lucky, and so they head outside to sit on this:
“On second thought, I think I’ll head back in and listen to that asshole from Maple Ridge,” says the hawt middle manager.
What’s that widget salesperson going to tell their friends and workmates back in Brampton about Halifax then?
“I didn’t get laid because the city of Halifax doesn’t give a shit about maintaining its streets.”
That’s some great civic promotion.
The real test of the city, however, is not what the conventioneer from Brampton thinks, but rather how it treats its own citizens.
And there’s no more important pedestrian-oriented shopping district for Haligonians than the recently “streetscaped” Spring Garden Road.
“I appreciate what was built: wide sidewalks, narrowed street, abundant seating, interesting materials,” writes Stephen Archibald of Spring Garden Road. “And what is no longer there: no overhead wires!”
But to me it feels like the space is not cared for or valued. Many of the surfaces are really grimy and dirty. There are good practices that can keep sidewalks and building facades clean, but they have to happen often. Very often.
Garbage containers are essential, but if they leak gunk onto the sidewalk there is an additional disgusting mess.
Many businesses have clearly not bought into the cared for streets concept. An obvious “crime scene” are the long dark trails left by restaurant waste bins dragged daily to a garbage truck. It is obvious who is creating that stain and that they do not care.
This is not rocket surgery. Last weekend, I noted that even in the midst of a military insurrection in Russia, Rostov-on-Don’s streets were cleaner than Argyle Street in Halifax:
I managed a few retail businesses when I was younger. The very first order of business every morning was to go out to the sidewalk and sweep up the mess to some distance either way in front of my shop. In winter, I’d shovel the snow completely off the sidewalk in front of my shop and the shops on either side. Even now, after a snowfall I shovel all four corners at the intersection near my house.
But on Spring Garden Road, most business owners are clearly uninterested in cleaning the sidewalk in front of their shops. So far as I can see, no business at all on Spring Garden Road does any meaningful snow clearing in front of their shop — not to mention that exactly $0 of the money businesses pay to the Business Improvement District goes toward paying anyone to shovel out the intersections.
And the city government is no better.
At night, most European cities have crews of workers armed with brooms, hoses, and presser washers cleaning the pedestrianized areas of the city, such that by the morning shopping hours the streets are sparkling clean. And due to strict labour codes and unionization, labour costs in Europe are much higher than in Canada, so cost is not an excuse.
In the 1970s I lived across the street from Mills, a big shop that was just east of Birmingham St. Early every morning their maintenance man, who was a bit of a character, would wash the sidewalk in front of the store. He would chat and banter with people walking to work and create a sense of a community well cared for.
I rarely walk the business district of Spring Garden these days. It feels like it is struggling and I do wish it well.
Do we give a shit about the appearance of our city or not?
The evidence is: we don’t.
Solar Butterfly exhibit (Thursday, 10am, Killam Loop) — the first stop on a North American tour
Equitable Futures: A public discussion of public health (Thursday, 5pm, Room 301, Halifax Central Library) — “a Café Scientifique to learn from/with the public how to address systemic fault lines and struggles of the public health system exacerbated by the COVID-19 pandemic;” more info here
Accelerating Worker Ownership: A Strategy Session on Co-operative Development in the Digital Economy and Beyond (Thursday, 1pm, online) — Zoom workshop; info and registration here
Hardscrabble Diamonds (Thursday, 4pm, MM 214A, McNally Building and online) — book launch of Colin Howell’s Hardscrabble Diamonds: Postwar Baseball in New England and the Maritimes, 1945–1960
In the harbour
05:30: Baie St.Paul, bulker, arrives at anchorage from Charlottetown
06:00: Aquijo, yacht owned by German billionaire Juergen Grossmann, who made his fortune in steel and tobacco, moves from anchorage to Foundation Wharf
10:00: Queen Mary 2, cruise ship, with up to 2,620 passengers, arrives at Pier 22; this is an unscheduled stop in Halifax due to a medical issue, on an cruise from Southampton, England to New York
11:00: MSC Alyssa, container ship, arrives at Pier 42 from Montreal
11:30: Queen Mary 2 sails for New York
11:30: One Owl, container ship (146,412 tonnes), sails from Pier 41 for New York
11:30: Morning Calypso, car carrier, sails from Autoport for sea
15:00: Atlantic Sun, container ship, arrives at Fairview Cove from Norfolk, Virginia
16:00: AlgoScotia, oil tanker, sails from Imperial Oil for sea
16:30: MSC Alyssa sails for sea
01:00 (Friday): Atlantic Sun sails for Liverpool, England
08:30: Seven Seas Navigator, cruise ship with up to 550 passengers, arrives at Sydney Marine Terminal from Halifax, on an 18-day cruise from New York to Reykjavik, Iceland
17:30: Seven Seas Navigator sails for Corner Brook
I was going to write about “the stress of running an independent news organization” — I even had that headline written — but as time passed this morning, I just found it too stressful to write.