Toronto Star owner cutting 600 jobs at regional papers, seeking bankruptcy protection for unit

Nordstar, the company that owns the Toronto Star and other newspapers, announced Friday that it is seeking bankruptcy protection for the unit that owns more than 70 local newspapers and axing more than 600 jobs in the process.

Nordstar says it is putting itsMetroland Media Group division into creditor protection under the Bankruptcy and Insolvency Act as part of a restructuring plan.

The Metroland business owns dozens of community newspapers delivered alongside advertising flyers. Nordstar says it is getting out of the flyer business entirely and converting the newspapers to a digital-only format.

The move will mean the loss of 605 jobs or about 60 per cent of its total workforce.

'Unsustainable financial losses'

Metroland said the decision is a result of unsustainable financial losses stemming from the changing preferences of consumers and advertisers.

"The media industry continues to face existential challenges, largely because digital tech giants have used their dominant positions to take the vast majority of the advertising revenue in Canada," the company said in a statement.

"The decline of the print and flyer distribution business was significantly accelerated by the COVID-19 pandemic, and by the reduction of flyer usage both by readers and advertisers as a marketing vehicle."

Under the plan, Metroland's community publications will move to a digital only model.

Meanwhile, the company's six daily newspapers, including the Hamilton Spectator, Peterborough Examiner, St. Catharines Standard, Niagara Falls Review, Welland Tribune, and the Waterloo Region Record, will continue both in print and online.

Move comes after failed merger talks

The changes follow the failure of talks earlier this year between NordStar and Postmedia concerning a potential merger.

The two companies were in talks regarding 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.

News outlets have been under pressure for years as online giants like Google and Facebook owner Meta have scooped up advertising dollars.

Earlier this year, Ottawa passed the Online News Act, which will force digital giants to pay media outlets for content they share or repurpose on their platforms.

Meta and Google responded to the legislation by announcing they will block content from Canadian news publishers from their services before the law comes into force.