Why Consolidation Will HappenHi All,
Those who invested in reading the article I recently provided the link to will know that consolidation is inevitable in Canada. Toronto neither needs nor can sustain 4 daily newspapers and that's been a fact for over a decade. Postmedia bought Sun Media and has done some consolidation in cities where the broadsheets competed with the tabloid, but there are still additional rationalization opportunities in Canada. Torstar in the usual tradition botched their deal with Postmedia, but they got a taste of the art of the possible.
When someone like Golden Tree looks at Canada they see the land of opportunity and Fairfax as an ideal partner. Their significant shared interests in Torstar and Postmedia makes the current Torstar share price ridiculous. Think of the approximate value of Torstar as follows:
VS - $125 million
Metroland Media - $75 million
Dailies including the Star - $75 million
Blue Ant, Black Press - $20 million
Cash - $55 million
Total Value - $350 million
This is why the Voting Trust isn't panicking because they haven't completely squandered the inherited fortune. They certainly have destroyed massive amounts of shareholder value, but they know in the absence of debt they still have some time before they are deemed mentally incompetent and are shown the door.
The share value should be north of $4 if the organization was run by executives who don't share the same management skills as chimpanzees on crack. Time will resolve this, but $.44 does not reflect the reality of the value of the company. That presents a buying opportunity for investors who can be patient.
MW