Journalism professor warns of cuts to come at Saltwire newspapers after Postmedia purchase

Postmedia's acquisition of Nova Scotia-based newspaper publishing company SaltWire Network is likely to have big implications for its newspapers, warns a journalism professor.

Meanwhile, there are questions about what the sale means for the St. John's Telegram, as the printing press for the newspaper — which has been publishing since 1879 — is not included in the transaction. 

Margot Susca, assistant professor of journalism at American University in Washington, said companies like Postmedia's majority owner, private equity firm Chatham Asset Management, are focused on profit.

"They often use borrowed money to make their deals. They have very little interest in news as a service of democracy. They are looking at profit above all else," Susca told CBC News.

Last week, the Supreme Court of Nova Scotia approved the $1-million Postmedia bid for the insolvent Atlantic newspaper chain SaltWire Network and Halifax Herald Ltd. The sale includes the Telegram.

Private equity firms buy the debt of another company, then another hedge fund firm buys that debt and trade equity shares on the market, she said.

"This is all kind of financial speak to say the real outcome of that ownership is the new firm liquidates assets, closes newsroom and it lays off journalists," she said.

"We've seen that playbook."

Chatham Asset Management owns U.S.-based McClatchy newspaper chain, which includes 30 newspapers. Last year, Susca said, it cut 11 per cent of its editorial staff. Chatham Asset Management also has strong ties to the Republican Party, she said, and pushed their newspaper coverage further to the right.

Susca says she believes layoffs in Atlantic Canadian newspapers will follow the Postmedia acquisition.

"So communities lose that strong local reporting. And I also think that there's a real risk of further polarization at a time that democracies are more and more polarized," said Susca.

However, she said there is reason to be optimistic that new small hyper-local news outlets are being launched in response to news deserts that are sometimes created by the private investment firm ownership of newspapers.

"I also am very hopeful that the solutions will also be there too," said Susca.

CBC News has asked Postmedia and SaltWire for an interview.

Big impact locally

What will happen to assets not included in the acquisition is still unclear.

The SaltWire sale does not include the printing press in St. John's, which is bad news for Craig Westcott, the editor and publisher of the Shoreline, because he uses it to produce his weekly paper, which covers most of the Avalon Peninsula.

"It throws a wrench in the works for us and the other people who depend on it, you know. But we'll still continue on. It's just that for a while we'll have to get printed on the mainland," Westcott told CBC News.

He hopes to find another local printer, as he estimates printing off the island would be 30 per cent to 40 per cent more expensive, and the Shoreline would have to be brought in by the ferry service, which isn't always reliable.

"It'll be a significant hit in terms of costs. We'll probably have to cut back a couple of bodies and we're a small shop anyway, just six or seven people," said Westcott.

Westcott said other papers across North America have fallen on hard times, attributing it to more papers being owned by investment firms, rather than "mom and pop" editors and publishers in their home communities.

"And the ones that are still locally owned right across North America are generally the ones still doing OK. It's these big bandits that try to milk as much money out of that of the local economy as they can that has kind of ruined it for everybody."

Appetite for news

Westcott said the Shoreline's circulation is strong and could reach more readers if he had more resources. He said his paper once had triple the circulation of the Telegram.

"People want the good local news," he said.

Westcott said he'd considered buying his own press but the COVID-19 pandemic made him back away from that plan.

"I'm 60 years old now, I'd rather not be looking at taking on a big major capital investment like this," he said. "But it may have to come to that if nobody buys the Telegram's assets."

The Shoreline's presence is primarily physical, said Westcott — the digital edition is uploaded to the website a week after the print edition comes out.

"That's to protect the value of the print product and to make sure that their advertisers, their ads are seen by our readers because we have a great demand for advertising. We have a great demand for readership."

It would be a shame if the Telegram ceased publishing a physical paper and was solely available online, he said.

"It's hard to believe there won't be a print edition. It makes me sad to even think about it."

Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.