Opinion: The fall of Canada’s razzle-dazzle paper. Can it find glory again?

The burly man banged on the door of apartment No. 5 at 1 Ainmillerstrasse in Munich. It was March 11, 1966, at the height of the Cold War. A tall blond woman opened the door, took a step back – and waited for the bullet. It didn’t come. The man was a reporter from the Toronto Star, not an assassin sent to silence her.

At that moment, the reporter knew he had the greatest scoop of the year – maybe in the history of Canadian newspaper publishing.

The woman was Gerda Munsinger, a prostitute and alleged Soviet agent from East Germany whose affairs with at least two senior cabinet ministers in the government of John Diefenbaker were monitored by the RCMP for security breaches. She had been reported dead, but that was just a cover-up. Her preferred lover was Pierre Sévigny, a war hero who had lost a leg in battle and was Diefenbaker’s deputy defence minister. An audio recording of one of his trysts with Ms. Munsinger began with a mysterious thump. The RCMP later learned it was the sound of Mr. Sévigny’s artificial leg hitting the floor before he hopped into bed with her.

The reporter was my father, the late Robert (Bob) Reguly. The type size used in the headline for his story was normally reserved for events such as the end of world wars. “Star Man Finds Gerda Munsinger,” it blared.

The story, Canada’s first sex-spy scandal, triggered a political firestorm and guaranteed the Star’s reputation as Canada’s premier razzle-dazzle paper and scoop machine.

When I was a newbie back in the mid-1980s, I desperately wanted to work for the Star. Every young newspaper reporter did. It was where Ernest Hemingway got his start and it was Canada’s liberal voice, thanks to the Atkinson principles, named after Joseph E. Atkinson, its legendary publisher who died in 1948 and was known as “Holy Joe.”

The principles stood for workers’ rights, public ownership, town planning, sturdy Canadianism, the right to economic security and the free flow of information – everything I believed in, still do. They caught the public’s imagination, and the Star became the country’s most powerful paper, even though it was never national, as The Globe and Mail was.

It also made a hell of a lot of money and could afford to finance investigative journalism, open foreign bureaus, send hit squads of reporters to the world’s hot spots and cover Toronto and Ottawa better than any competitor. Its illustrious writers included Pierre Berton, June Callwood, Lou Marsh and Peter C. Newman. Its editorial cartoonist until 1993, Duncan Macpherson, was a genius.

I was offered a job once at the Star but turned it down. By then, in the late 1980s, I was the New York correspondent for the Financial Post (now the National Post) and could not have been happier. And by then the Star was beginning to fade as a journalistic force. A decade later, it was engaged in a fierce newspaper war with The Globe, the National Post and the Toronto Sun and was barely holding its own. Then came the internet and social media. No paper initially adapted well to the digital onslaught, but the Star truly botched the challenge.

Part of the problem was a series of arrogant bosses; they wrongly assumed the competition would duly vanish, allowing the paper to resume its natural dominance. Certainly the ownership structure was a burden. The five families who owned almost all the voting shares – the Atkinsons, Hindmarshs, Campbells, Thalls and Honderichs – were always squabbling over strategic direction, executive appointments and dividend payouts. It was the Honderichs (Beland and later his son John) who managed to put everyone in their place and win the keys to the executive suite.

The Star’s late lunge into the digital game was a disaster. The tablet experiment flushed about $50-million down the toilet. Online subscriptions proved to be a hard sell.

The younger generation of Star owners seemed to lose interest in the business – until the losses mounted and the dividend payments ended last year, after which they were eager to get out at any price. In 2000, Torstar, the parent company, had a market value of $1.7-billion. By this year, it was a penny stock.

This week, Torstar finally gave up. It agreed to sell the business to NordStar Capital, formed by entrepreneurs Jordan Bitove and Paul Rivett, for $51-million, of which a mere $6-million will go to the families.

I know nothing about Mr. Bitove and Mr. Rivett, though their lack of experience in running media companies does not bode well. They will have to purse a death-or-victory strategy; tinkering will not suffice. Torstar chairman John Honderich has known for years that it was pretty much game over for the company and has been begging Ottawa for handouts.

Fortunes will have to be invested in the Star’s digital strategy. There is one scenario that has some chance of working: Combine the ailing National Post and its business section, Financial Post, with the Star, then kill the National Post and keep the Financial Post. As The Globe has learned, if there is one product readers will pay for, it’s high-quality business coverage.

NordStar downplays rumours that it wants to combine Torstar with National Post owner Postmedia Network Canada. But the two media groups will soon have a link: Canso Investment Counsel, Postmedia’s main lender, will also finance NordStar’s purchase of Torstar.

But what about the Atkinson principles? The NordStar team has vowed to respect them, which could be an opportunity for a Star-owned Financial Post. It could be converted from the champion of the overdog to the champion of the underdog and go after the new generation of readers and entrepreneurs, who don’t all worship at the altar of shareholder returns. They are interested in a more inclusive form of capitalism, one that lifts all boats, not just those of CEOs, and respects the environment.

And, oh, big scoops would help. In the end, firing up readers is what counts, not the delivery method. For the Star to succeed, it needs to be a razzle-dazzle rag again.

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