Torstar Corp. is buying iPolitics Inc., a news website based in Ottawa, in an attempt to bolster the content of the Toronto Star and the company’s other assets as it tries to draw more digital subscribers.
The Toronto Star, like others in the newspaper industry, has been hurt by declines in print advertising and has sought other sources of revenue. In the spring, the Star announced it would begin charging readers for online content, a strategy it had previously tried but dropped.
Around the same time, the Star signed a deal with The Wall Street Journal for business news and announced an expansion of its national presence with additional reporters at its free daily, Metro, in cities such as Vancouver and Calgary.
The iPolitics purchase – financial terms were not disclosed – is the latest step. Founded in 2010 by journalist James Baxter, iPolitics is an online publication that reports on federal politics on and around Parliament Hill and charges about $200 a year for a subscription. Torstar plans to run iPolitics coverage in its papers and on its websites. The deal is set to close on Oct. 1.
“We’re upping our game by investing in and broadening our political coverage in ways that will inform audiences across Canada that are deeply interested in political affairs,” said John Boynton, CEO of Torstar, in a memo on Thursday to company staff. (Mr. Boynton was not available for an interview on Thursday, the company said.)
Mr. Baxter, in an interview, said it made more sense for iPolitics to join a larger, stronger entity.
“In order to scale up a business like this, the costs have gone up dramatically,” said Mr. Baxter, who plans to stay at iPolitics through the end of 2018 and hopes to hand off some of his responsibilities in the meantime. He co-owned iPolitics with his mother, Cynthia Baxter, who is part of the Molson family.
The business side of iPolitics was difficult, even as the company more recently narrowed larger losses of its early years. In addition to subscriptions, the site also sold specialized, in-depth content. Mr. Baxter said revenue grew each year but added, “it was always a struggle.”
Mr. Boynton told Torstar staff that some iPolitics coverage will be part of the Star’s basic online subscription package and that iPolitics' in-depth offerings – “normally reserved for Ottawa’s decision-makers and political stakeholders” – will be part of a premium online subscription.
Janice Neil, chair of Ryerson University’s School of Journalism, said Torstar is increasing the value of its content with added political depth and could be more attractive to national advertisers. “iPolitics has established itself as a great brand – with a very loyal following,” Ms. Neil said.
Christopher Waddell, a journalism professor at Carleton University, said the Star has “come to realize they can’t survive” as “the paper for everyone.” He added that part of the Star’s strategy, including the iPolitics acquisition, is to stake a broader national voice beyond Toronto to take on competitors such as The Globe and Mail.
The iPolitics acquisition comes during a tumultuous year for Torstar. In August, it cut jobs at VerticalScope Inc., an online publisher of sites such as AutoGuide.com. Torstar sold Workopolis, a jobs website, in April. The Toronto Star in June announced a new editor-in-chief, Irene Gentle. She replaced Michael Cooke, who retired after holding the role since 2009.
Torstar is also under investigation by the federal Competition Bureau about a deal with Postmedia Network Canada Corp. in which they swapped more than three dozen local and community papers, and immediately announced plans to shutter the majority of titles.
Analyst Drew McReynolds of RBC Dominion Securities said in August that Torstar is “still early days in the transformation” of the company. In the first six months of the year, Torstar lost $16-million from continuing operations on revenue of $308-million.
“Patience is required,” Mr. McReynolds said in a report to clients when Torstar issued quarterly earnings.
The Star and iPolitics will keep their separate offices in Ottawa, Torstar said. The offices will be run by a separate bureau chief and a separate editor.
Asked whether iPolitics staff will be unionized, Torstar spokesman Bob Hepburn said the company couldn’t comment on business-related questions because the deal has not yet closed.
David Ebner