Tenaris ADR Rep 2 Ord Shs T.TS.B

A History Lesson - Torstar/SunMedia/Quebecor

[Mediawatcher]

Hi All,

It was a different time and a different world, but some of the lessons may still apply today.  A refresher:

• October 28, 1998, Torstar announces hostile takeover bid for Sun Media valued at $748 million.  The bid was set to expire on December 23rd;
• November 9, 1998, Sun Media Board of directors urges shareholders to reject the offer;
• In December, bidding against itself, Torstar raises its bid to $891 million to get the deal done;
• On December 8th, Quebecor agrees to pay $983 million while agreeing to sell The Spectator, Record, Reporter and Mercury to Torstar for $350 million.  The deal was done and shareholders were fairly compensated.

The point of this history lesson is that someone else out there may see the larceny being perpetrated on Torstar and Fairfax shareholders and will step in to stop this egregious transaction.

Mark my words, Paulie Walnuts and Fredo will strip what is left of Torstar, pocket the cash and claim they did everything they could but alas it was too late and will toss the keys to the bank appointed receiver.  Hence the stupidity in making the reference to 3-5 years.  Not the timelines of respectful stewards of the Atkinson Principles but rather vulture capitalists.

I have no idea if a white knight will step forward or not, but this deal makes no financial sense.  Sell VertigoScope for 25% of what you paid yields $45 million.  Sell Metroland in total or in parts would yield $40 million.  Sell The Spectator, The Record and the other regional dailies for $15 million.  Sell Blue Ant interest for $3 million.  Sell the interest in Black Press for $2 million.  Sell the Toronto Star for $25 million.  Cash of $70 million.  Total $200 million or $2.50/share.  A long way from the "stretch" of $52 million or $.63.

Someone smart out there will see beyond the pandemic and realize this is a unique opportunity.  The best outcome would be someone committed to investing in editorial content for the long-term and not strip-mining it to turn a quick buck. Honderich didn't look for a Canadian version of Jeff Bezos for reasons he only knows, but he has made such a mess of things he would turn off anyone with half a brain.

You don't have to have Bezos' money to own a news media company.  You have to have vision, courage and common sense - all lacking in the current Torstar universe.  It will require someone with deep enough pockets to withstand the short-term turbulence and not look for success thru cost-reductions in areas that diminish the value to clients.  That formula has been used exhaustively at Postmedia and to some extent at Torstar, without success.

And finally -  the answer isn't in the platform.  It's in creating value instead of decades of destroying it.  It's that simple.


MW