Torstar rumoured to be looking at Osprey Media

Speculation is increasing that Osprey Media Income Fund, which has been struggling to maintain enough profits to continue paying distributions to its fund holders, may be sold to Torstar.

A story in the Globe and Mail suggests a possible deal whereby Torstar would buy and keep (or fold) various dailies and weeklies that overlap with or fit with its own dominance in south central Ontario. The speculation is that it would sell on the rest of Osprey's properties to Transcontinental Media.

The story hinges, rather tentatively, on owner Michael Sifton's decision to skip an industry conference and stay close to home. Osprey owns a number of magazines, including the former Town Media group, formerly owned by Wayne Narcisco, which includes Hamilton magazine. Its only national magazine is Vines.

[UPDATE] A Canadian Press story Friday said that Osprey may have no choice but to be broken up if a coalition of buyers come forward with the idea of taking what fits with their particular portfolio. On the other hand, the changes in the rules on income trusts may also be giving Sifton second thoughts and he may be looking to his financial advisors to craft him a way to get out of the increasingly unsustainable income trust and into some other financial arrangement.

Sifton had said Wednesday, after the fund's annual general meeting, that Osprey is still keeping its options open, including capital restructuring, or new investment as an alternative to a sale.

The fund's board said in March it would begin the review in light of the federal government's announcement last fall on new tax rules affecting income trusts.

"The process is not just about selling," Sifton said. "It's also looking at capital structures. We're currently an income trust. Maybe there's a different type of vehicle we should be in. That's all the sort of analysis that the committee and the financial adviser will provide. "

"It's not necessarily a sale, it could be just a different capital structure."