Osprey on the block

Osprey MediaIncome Trust, the holding company for many small newspapers and magazines, has been struggling to retain investor interest in the face of declining distributions. This was not made easier by the government's decision to begin taxing income trusts in a few years.

According to a story in the Globe and Mail and a release by the company, the board of the trust has decided "to proceed with a process to consider and review strategic alternatives that may be available to Osprey to enhance unitholder value" -- in other words, to shop the company around. Likely that two of its largest shareholders -- Ontario Teachers Pension Plan and the Bank of Nova Scotia -- are pressing the issue and would be interested in selling at the right price, somewhere north of some $5 per unit offers that are rumoured to have been on the table for some time now.

The price of the company's units have dropped about 45% since its inception and is now about $5.55. Osprey's original strategy, which was to build a small empire of small newspapers (many of them snapped up after Conrad Black's breakup of Hollinger) and magazines that would spin off regular payments to investors. That's clearly not going to work, now. A tough advertising market meant the company was unable to keep up the cash distributions. One of the possible buyers for the Osprey properties could be Torstar, whose fierce competition in various markets is one of the reasons why the company is in the fix it is.

Osprey bought Town Media, publishers of Hamilton magazine, in 2004; the only national magazine it owns is Vines.

For background on this story, look at earlier posts here and here.