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The Globe and Mail

Torstar's stake sale brings a 'strong financial foundation'

Torstar Corp president and chief executive officer David Holland.

MARK BLINCH/Mark Blinch/Reuters

Five years after Torstar Corp. picked up 20 per cent of CTVglobemedia Inc. - to the confusion of shareholders and industry watchers - current chief executive officer David Holland wiped a vestige of his predecessor's era off the books by handing the investment back to BCE Inc. and Woodbridge Co. Ltd.

Investors were thrilled that Torstar will get $345-million from selling its share of CTV and The Globe and Mail. Torstar shares rose 21 per cent Friday, closing at $12 on the Toronto Stock Exchange.

The opportunities that former CEO Rob Prichard envisioned at the time of the deal in 2005 never panned out, Mr. Holland said in an interview Friday. With the economic downturn hurting ad revenues, Torstar consistently reported losses on its share of CTVglobemedia throughout the recession. While a rebound is under way, the company's share in CTV's losses amounted to $6.8-million in the most recent quarter.

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"The time at which the investment was made, the board was unanimously supportive of it ... we all got into this with our eyes wide open," Mr. Holland said. "The world shifts from time to time, and obviously in the media world it's shifting pretty significantly. We just thought this moment is just a great opportunity for us to realize on the value of CTV, alongside the other shareholders."

Assuming the deal is given regulatory approval, Torstar will receive approximately $300-million from BCE Inc. for the CTV assets. The rest comes from Woodbridge, the Thomson family's holding company, which is taking a majority stake in The Globe.

Mr. Holland said the money will be used to pay down Torstar's debt, a move that another analyst said on Friday would be "absolutely the right move."

"It was a drag on [Torstar's]earnings," said one media analyst, speaking on condition of anonymity. "I think a lot of analysts didn't give a lot of value to [the investment]"

"It's tremendously positive. It's a stake that was purchased some time ago in a different media environment," the analyst said.

Analysts suggested that, once saddled with less debt, the company could look at raising its dividend, and may focus on investing in digital media assets that complement the business more than television assets did.

Torstar also owns a 19.35-per-cent stake in B.C.-based newspaper publisher Black Press. Mr. Holland said the company plans to hold on to that investment.

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"Look, it's not so bad to have financial capability. We'll obviously be reflecting on the various choices available to us, once in fact we've received the proceeds," Mr. Holland said.

"I lived through last spring, when things were obviously more difficult. We navigated through that period. So having a real strong financial foundation is a real asset, and I think that we feel pretty good as to where this could take us."

Read more about the BCE-CTV deal:

  • About the deal: BCE to take full control of CTV
  • Analysis by Derek DeCloet: The new media convergence
  • Timeline: BCE and CTV: A brief history
  • Video: A look at the CTV deal
  • Editor's note: A great vote of confidence for The Globe
  • In quotes: What the analysts say
  • Streetwise blog: A quick look at the BCE-CTV deal metrics
  • PDF: BCE's investor presentation
  • Profile: BCE CEO George Cope

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