From his office window, Mark Lever has a view of Halifax’s picturesque Northwest Arm, an Atlantic Ocean inlet dotted with small boats and bordered by some of the city’s glitziest houses.
His view also includes a smattering of pickets on the sidewalk below, including one man standing next to a flag calling for a boycott of the Chronicle Herald, the flagship news organization within Lever’s growing publishing business.
The Herald’s unionized newsroom workers have been on strike since January 2016. On July 13, the Nova Scotia government announced that an Industrial Inquiry Commission will attempt to push the two sides to an agreement through mediation.
“After 18 months with no resolution, it is clear this is an exceptional circumstance that needs action,” Derek Mombourquette, the province’s acting labour minister, said in a statement.
The impasse has not prevented Lever from significantly expanding his empire.
In mid-April, as the labour standoff neared its 500-day mark, he announced the purchase of Transcontinental Inc.’s 28 Atlantic publications, including the Cape Breton Post, The Guardian in P.E.I., and The Telegram in St. John’s, Nfld. The deal also included four printing plants.
Once the transaction was complete, Lever combined the Herald’s seven existing publications and the Transcontinental properties under a new umbrella: SaltWire Network Inc., over which he presides as chief executive officer.
Lever finds himself at the centre of a struggle that nearly all news publishers are up against, trying to revive businesses with long histories and deep community ties that have seen advertising revenue vanish due to the twin forces of technological change and economic uncertainty. Like several other organizations, Lever believes the way out is by scaling up, calling the Transcontinental acquisition a “calculated risk” that he believes will help the company weather the internet storm.
But critics question whether Lever’s timing, and whether taking such a risk — in the middle of a labour dispute — is in the best interest of the Herald’s employees.
“We believe being in 25 communities is a big strength,” Lever said in a rarely granted interview. “Our strategy is to tell stories that no one else can, and no one else is equipped to.”
The price of the acquisition was not disclosed at the time of the sale. However, Transcontinental recently noted in a quarterly report that it received $25 million in the second quarter of 2017 by selling some of its assets. The bulk of that figure was connected to the Herald deal.
“We were basically told when the negotiations started that the Herald would be hard-pressed to make the next payroll if they didn’t do something drastic,” Frank Campbell, vice president of the Halifax Typographical Union, said. “Then to find out they had the wherewithal to come up with … $25 million to purchase 28 Transcontinental publications — our reaction was that we were duped.”
But Lever says the dispute over the Herald’s collective agreement and Transcontinental deal are related: “They are both about our sustainability into the future.” He added that while the strike has been difficult, it is necessary to get the company’s costs in line.
“Do your research. Try to find another company our size that has a defined benefit pension plan.”
The Herald has struggled to adapt to the internet age, with circulation, ad dollars, and revenue all dropping as readers and advertisers move increasingly online. “They’re all down in recent years,” Lever said. He noted that circulation traditionally accounted for a third of the company’s revenue, but has grown to about 50 per cent of revenue because of print advertising declines — both in terms of volume and rates.
And as with most companies focused on text-based journalism, digital advertising dollars are not fully replacing the traditional print ad dollars that are disappearing.
The company has asked the union for a longer work week, from 35 hours to at least 37.5 — it originally asked for a 40-hour week — a union-sponsored defined contribution pension plan, and wage and job cuts, which would see the work force decrease from 61 people to 29.
“I do not have the resources to end (the strike). We can only end it with a deal that sets us up for future success,” Lever said. “I cannot write a cheque we cannot cash.”
The union, meanwhile, has proposed an immediate five-per-cent wage reduction, a 25-per-cent reduction in reporter starting salaries, and reduced vacation time. Campbell said some members might accept severance packages, but not without knowing the exact details, and not without a tentative deal to consider.
The provincial government will begin mediation between the two sides in August. If that fails, commissioner William Kaplan — who most recently mediated the Canada Post labour dispute — will issue non-binding recommendations to the province’s labour minister.
For its part, the Herald said it was “puzzled” by the announcement of an inquiry, which was requested by the union.
“An Industrial Inquiry Commission is considered a ‘final option’ available to the minister, yet the union has not moved a single complaint forward through the Labour Relations Board,” Ian Scott, the Herald’s chief operating officer, said in a statement.
“We have offered Herald journalists the best newsroom salary and benefits in Atlantic Canada’s newspaper industry, and our offer is still on the table today. We have also made it clear we are willing to resume talks at any time.”
In the long term, Lever said the new publications will help the company expand its advertising reach and coverage market. More immediately, the acquisition adds new businesses to “generate more cash to pay for the massive investments that are required for a business like ours to transition (into) a valid digital enterprise.”
“Certainly the future for us is digital,” he said. “Understanding how to make money in that space is ultimately the question we’re all asking.”
Whether the business model will be advertising-driven or subscription-based is a question the company hasn’t answered yet.
But the Transcontinental acquisition should not be seen simply as a short-term doubling down on print journalism, Lever said. “It’s doubling down on local storytelling — whatever platform.”
“I believe telling local stories in Gander and in St. John’s and in Corner Brook and Summerside and Sydney are going to be what supports this network,” he said. “Not amalgamating. Not putting the same copy in every paper.”
That means there likely won’t be cuts and layoffs at the newly acquired publications, Lever said, in part because those properties have already been “cut to ribbons.”
“There’s still a heartbeat but the patient is open on the table and in desperate need of a transfusion,” he said of the acquired papers.
“Some of my critics would suggest that I’m destroying local journalism … (But) some of these daily newspapers — provincial capital daily newspapers — have (already) fallen below what I would say is the standard for a minimal viable product.
“So we’ve added pages to those papers. We’re hiring reporters.”
Lever, 47, took over as chief executive at the Herald in 2012, after his marriage to Sarah Dennis, whose family has owned the newspaper for more than a century. His business past and inexperience in publishing have been consistent points of criticism over the years.
An ex-tennis pro, Lever was previously president of Marjam Tennis Inc., a tennis club that filed for bankruptcy in 2010, owing creditors more than $2.1 million. “The lesson … is that you have to be conservative in a business in your cash management,” he said of the bankruptcy.
“You can’t fund expansion with money you hope to make.”
His early efforts at the helm of the Herald were marred by setbacks as well, with the failed launch of the Cape Breton Star, a free weekly paper meant to compete with the Cape Breton Post. He blames the “pro-union mentality” of Cape Breton, where he grew up.
“The Star, in the end, was the only publication in our network that was materially affected by the strike. We lost most, if not all, advertising revenue in the early days after the strike started.”
Campbell, the union vice president, said there is little respect within the union for Lever’s management approach. “He has no experience in newspapers,” he said. “He’s in the position he is because he married the heiress to the company.”
But Lever insists his outsider status is a positive. “I think this business needed a perspective from the outside,” he said. “‘We’ve always done it that way’ is a very common refrain, not just at the Chronicle Herald but at other legacy media companies.”
Lever also argues that his past business failures are assets that will help SaltWire, since he’s learned to recognize and understand major problems before they become unfixable.
“Having been in the poop before, you … want to try to do what you can to avoid that,” he said. “The trust that my wife has put in me here … you can’t let that trust down.”
Sitting in his office, with his back to the pickets below, Lever said: “I don’t want to say I’m motivated by fear, but (by) hope for success in the future. I don’t want this to end on my watch.”
Special to the Financial Post