A screenshot of the entrance to the Toronto Star at 1 Yonge St. in Toronto.
The entrance to the Toronto Star at 1 Yonge St. in Toronto. Credit: Google Maps Credit: Google Maps

Just over two years ago, two businessmen with no experience in the newspaper business took over control of the Toronto Star. It was Canada’s biggest daily at the time, and its parent company Torstar was a distressed asset. They managed to buy it debt-free for the bargain-basement price of $60 million.

One of the new owners, Jordan Bitove, said at the time: “What this company really needs is a lot of love, a more patient approach, and a longer timeline of someone that can look after it for maybe three to five years.” 

Bitove’s partner, Paul Rivett, apparently didn’t get the memo. He is now seeking a court order to wind up their joint ownership of Nordstar Capital LP, which they formed to buy Torstar, citing “irreparable” damage to the relationship with Bitove. “Rivett and Bitove have fundamentally different and irreconcilable views,” the lawsuit alleges. “Bitove has ignored Nordstar’s agreed-to prime objective that Nordstar’s business be carried out in common with a view to profit.”

From all accounts, there isn’t a lot of love in the Bitove-Rivett partnership, very little patience, and the big machine they were hoping to fly to paydirt ran out of gas half way down the runway. 

At this point we don’t know much more than what you can read in Rivett’s extraordinary request to the Ontario Superior Court of Justice, filed on September 1, that says immediately dissolving Nordstar and selling its assets, including the Star, is the only way to create a clear path forward for the companies under its umbrella. Torstar owns four daily newspapers besides the Star and more than 70 community papers, plus digital properties like iPolitics.

But we do know this: The future of the Star is a contest between two very different men, both children of immigrants: Bitove, an emotional and passionate marketer and promoter who helped bring the Raptors to Toronto, and Rivett, a lifelong “numbers guy” who likes to lurk in the background poring over the balance sheet. Their dispute is really a battle for the soul of a newspaper that once sent Ernest Hemingway to cover war, Nathan Cohen to cover the arts, Milt Dunnell to cover sports, Gordon Sinclair to cover life and cartoonist Duncan Macpherson to lampoon the powerful. 

The court document delves into the erosion of Rivett and Bitove’s relationship, or at least Rivett’s side of it. He claims Bitove changed his mind about previously agreed upon plans and failed to provide a budget for the Star, which he oversees as publisher. Bitove apparently resigned from Nordstar’s board of directors on August 13. Rivett, according to the National Post, turned heads in the Star’s downtown newsroom one day recently, setting up a stand-up work station near the fashion and beauty section. Some thought it a power play, because Rivett rarely ever set foot in the newsroom. 

Rivett has asked the court to appoint PricewaterhouseCoopers (PwC) to manage an asset sale to resolve the “impasse” between the two parties.

There’s an adage in the newspaper business: you’re either in it for the money, or you’re in it for the mission. Nordstar’s fatal flaw was that they never agreed on which one: one partner (Rivett) wanted the money and the other (Bitove) wanted the mission.

It could have been so much more. Masterminded by Rivett, Nordstar began selling off parts of Torstar almost as soon as they acquired it, building up a healthy financial war chest. The company came with $69-million in cash on its balance sheet – more than Nordstar’s purchase price. First to go was a digital marketing service it sold to grocery chain Loblaw Companies Ltd. Then Nordstar split off a digital publishing company called VerticalScope. It went public in 2021 and Rivett kept a 40 percent interest for Nordstar, a stake worth about $180 million based on where the new shares were trading. That alone was enough to pay for Nordstar’s investment in Torstar three times over.

Whatever has happened since is shielded from the public because Rivett and Bitove bought out all of Torstar’s other shareholders and took the corporation private.

Given the sorry state of the newspaper publishing business, the carving up of Torstar can be likened to harvesting a corpse for body parts. You get someone to pay a few million for the kidneys, someone else buys up the lungs, the liver goes for a song, and now’s the time to see how much someone will pay for the heart.

The Star, run for more than 60 years by five families last headed by late publisher John Honderich, tried to keep the lights on by investing in every possible solution, from television ventures, free newspapers, digital platforms and tablet apps. But Torstar continued to sink in red ink, until it no longer had enough cash to pay quarterly dividends. It’s a familiar story. Most media companies lose money because their information competitor, the internet, can deliver news faster, and their advertising competitors, like Facebook, Amazon, Netflix and Google, suck up all the ad revenue.

For the past decade, hedge funds and private equity firms — so-called “vulture funds” — have  snapped up legacy media companies. They buy newspapers at low prices, cut costs, offer loans at high interest rates and feast off the cash flow. Canada’s largest newspaper group, Postmedia Network Inc., is slowly being bled dry by Chatham Asset Management, a hedge fund based in New Jersey.

Lost in the wilderness are mission statements like Bitove issued in 2020: “we believe in the news. With this transaction we can ensure a future for world-class journalists and world-class journalism befitting the paper’s storied history. We are committed to investing in the news business…”

Whatever happens to the Toronto Star—perhaps a coin toss between Bitove and Rivett or, failing that, a public auction—some will think back to the summer of 2020 when Nordstar’s offer for Torstar was about to be put before a meeting of shareholders for approval.

Out of the blue, a lone competitor surfaced with a better offer. Canadian Modern Media Holdings, a group of Durham County businessmen, announced it would offer 80 cents a share, more than Nordstar’s offer of 74 cents, and promised contingency payments to shareholders from future asset sales, which were potentially worth at least another 50 cents. The rival bid would need to gain the support of the controlling shareholders, namely Fairfax Financial—Rivett’s old company—and the Honderich, Hindmarsh, Campbell and Thall and Atkinson families.

The Torstar board said no. The Durham investors went to court to force an auction for Torstar but the court ruled against them.

Now we may finally have that auction, but will there be any buyers? The newspaper that once marched to Holy Joe Atkinson’s dictum of “get it first” suffered the indignity of getting scooped on its own story. The Globe and Mail reported details of the Rivett-Bitove falling-out a full day before the Star’s reporters caught wind of it.

John Miller

From media executive to media critic, John Miller has seen journalism from all sides (and he often doesn’t like what he sees). He draws on his 40 years in news, including five years as deputy...