In 2021, a journalism school dropout turned tech entrepreneur and the former editor of a chain of online city news sites unveiled a plan to fix local news.
Within three years, Overstory Media Group aimed to hire 250 journalists to run 50 news outlets across Canada and fill gaps in local reporting as newspapers slashed staffing, they said.
The company’s co-founders, Andrew Wilkinson and Farhan Mohamed, said Overstory would produce local, in-depth news that didn’t sacrifice quality for quantity.
“We will never seek to maximize profitability over ethics or treating our people and communities right,” CEO Mohamed tweeted on the company’s first birthday.
By that time, Overstory had acquired or created more than a dozen outlets, including its flagship publication: Capital Daily.
Capital Daily was launched by multimillionaire Wilkinson in 2019. In three years, the Victoria publication had gone from a daily newsletter to an important news source, covering councils, police and the pandemic and doing major investigations and winning awards.
It even managed to make money doing it, according to Overstory’s June pitch for $5 million in new investment, reported in the Logic.
Then on Monday, its editorial team was gutted. Overstory fired managing editor Jimmy Thomson and journalists Brishti Basu, Shannon Waters and Jolene Rudisuela, halving its editorial staff.
Mohamed, Overstory’s CEO, and Wilkinson say it was a financial decision. Capital Daily simply wasn’t making enough money from subscribers, the company had expanded too quickly, and they expected advertising revenue was about to drop. In a call with staff, Mohamed told them Overstory forecasted Capital Daily would lose $250,000 in the upcoming year.
The cuts signalled a “reset” in the company’s approach to journalism, he said.
“We thought we figured it out,” Mohamed told remaining staff after news of the firings became public. “It’s clearly not the case.”
The firings also came one day before the media union CWA Canada announced it had signed up a majority of the 30 editorial workers at 12 Overstory media outlets.
Three of the terminated staffers at Capital Daily were on the union’s national organizing committee, sources said.
Mohamed confirmed to The Tyee that he had been aware of the union drive, though the company has denied it played any role in the cuts.
The Tyee has spoken to eight current and former employees of Overstory Media Group, granting anonymity because they fear employment repercussions. The Tyee also obtained recordings of two recent calls Mohamed held with staff.
In the second of those calls, Mohamed said he was convinced the outlet’s focus on long-form journalism wasn’t working. The site averaged publishing about a story a day.
Capital Daily was counting on a mix of contributions from readers and advertising to pay the bills. But Mohamed told staff Monday the business model hadn’t worked, according to one of the recordings.
“It’s clear that people don’t want to pay for the journalism,” Mohamed told staff. “It’s clear that when we’ve gone hard on that, when we’ve gone fully on that, it’s not working.”
Capital Daily has about 1,500 paying supporters, worth about $120,000 a year in revenue, Wilkinson tweeted. Without the cuts, Capital Daily would have expenses of $600,000 this year, he said.
But while Mohamed told staff he would not “devalue” hard reporting, some fear that is what will happen as Overstory prioritizes ad revenue.
“They could be forgiven for reaching for the stars and landing on the moon,” one former OMG employee said. “They can’t be forgiven for destroying their one successful experiment.”
A bold dream for journalism
The idea of Capital Daily, in some ways, began years ago, when Wilkinson dropped out of journalism school at what is now Toronto Metropolitan University.
Wilkinson went on to make a fortune in the tech sector. His holding company, Tiny, was recently valued at just over $900 million. Wilkinson owns 71 per cent, a stake worth nearly $650 million.
But he always maintained an interest in news. When he launched Capital Daily, it mainly collected and repackaged links to stories from other outlets in a daily newsletter. Soon, Wilkinson became serious about making it a real, digital local news publication.
Its first managing editor was Tristin Hopper, a current National Post columnist. In 2020 the reins were handed to Jimmy Thomson, an award-winning environmental journalist whom many credit for cementing Capital Daily’s reputation for thorough, deep journalism. The publication covered health policy, city councils and police and dived into major investigative pieces. It has won Canadian Association of Journalists and National Newspaper awards.
As Capital Daily grew, so did Wilkinson’s ambitions. In 2021, he announced the creation of Overstory Media Group. Its plan to hire 250 journalists across 50 new outlets won coverage in the Guardian.
His co-founder was Mohamed, the former editor-in-chief of the Daily Hive, a news and entertainment media outlet operating websites across Canada and in the U.S.
One former Overstory staffer described the Daily Hive’s model as “cutesy” shareable content. Mohamed said more than once he wanted to turn a new page at Overstory, one source said, and steward news that served its community.
“The promise when we were hired here was that we’d be able to fill the gap in local news, and do what the daily churn didn’t allow other outlets to do,” one source said.
Overstory never came close to hitting its goal of 50 publications and 250 reporters. But it did create or acquire 12 outlets across the country. It bought the troubled Georgia Straight from bankrupt owners and the Coast in Halifax.
As recently as June Overstory was touting expansion ambitions, pitching itself to prospective investors as “the Chipotle of news,” a reference to the U.S. fast food chain.
One former employee said staff shared the optimism.
“Every day we got emails from readers telling us they value our work. They love what we’re doing in the community. There was a big gap we were filling.”
But in December, Overstory laid off three employees across the corporation, which then had more than 50 staff.
“It’s really shitty. I’m not going to try to sugarcoat anything and make it sound good, because it’s not,” Mohamed told employees at the time. “We made a lot of assumptions with this, with each of these publications.”
But Mohammed said he anticipated no future cuts. November had been the company’s best month on record, he said, even if the next few looked less positive. “I don’t foresee us doing anything else. If it comes to us, there’s going to be as much transparency as can be,” Mohamed said.
Back on the ground at Capital Daily
Capital Daily staff had been told it was breaking even or even making money — not much, but enough to defy trends of layoffs and cuts, sources said.
But four sources told The Tyee that Overstory managers, including Mohamed, had also been telling staff for months to change direction.
Some managers worried advertising revenue wasn’t growing fast enough, the sources said. Others complained the tone of the coverage was too dreary.
They wanted reporters to do more daily news stories, something its journalists did begrudgingly.
Thomson reportedly resisted those pushes; he saw it as a bad direction for the outlet.
Managers felt that would attract more advertising revenue and subscribers, angering journalists who had joined the publication to do in-depth reporting.
“They kept pushing us to do more of the daily reporting and gave us the impression that that’s what they wanted us to do,” one source said. “They wanted us to beat the Times Colonist, beat Chek News, match their reporting, which is not what we were supposed to be doing.”
Capital Daily’s business plan depended on a mix of advertising and reader revenue. The company’s theory was a superior product would quickly win both, a model they could apply to other markets.
“We assumed that once you build up these audiences and make these connections that advertisers would be lining up, and you could convince people to pay,” Mohamed told staff in December.
In company town halls, Overstory shared ambitious goals for growth. One slide from January said the company aimed to double its revenue by the summer.
“It was like, go out there and double the revenue guys! Everyone just kind of rolled their eyes,” an Overstory employee said.
The result, some staff said, was a revolving door of projects that were abandoned when they couldn’t be rapidly monetized. There was a proposal about putting sponsored content in the newsletter, which staff rejected. Capital Daily started an award-winning podcast, then cut it when it didn’t bring more revenue. It also started a newsletter focused on good news stories, then scrapped it after a short-lived effort to monetize it.
The company, some sources said, had told journalists what they wanted to hear when they signed up.
“At the crux of it, the language they were speaking aligned with our values at the beginning,” one former employee said. But once they joined, it talked and acted like a tech firm, with a focus on rapid growth and quick success.
Capital Daily had 55,000 daily newsletter subscribers, impressive in a metropolitan area with about 400,000 people. But Mohamed told The Tyee only three per cent of their readers were “members” who contributed to support the journalism.
“If we lose our advertisers, the business falls apart,” Mohamed told staff Monday. “If we lose our members, we’re still OK.”
In a Twitter post, Wilkinson said Overstory had lost $5 million since its creation. “Most of that was my personal money.” He didn’t provide any breakdown of the losses.
Wilkinson also expressed regret on Twitter. “To be clear: this is our fault: we got too excited about our growth and hired too many people,” he wrote.
“Not fun. News is hard,” he later wrote.
Mohamed told staff the layoffs marked a new direction for the company. “It’s been really clear for a long time that we’re not doing a good enough job,” Mohamed said in the call Monday.
“I am very scared for what the next six months look like. Part of the problem is that everything is driven by revenue. And if we’re not making money, no one can do the work. That’s the bottom line of everything.”
Many staff are unsure what exactly that means for the future.
In a statement to The Tyee, Mohamed affirmed investigative journalism would remain part of the business but said changes are ahead.
“We're trying to make community news outlets sustainable, we've said that from the very start. It's been clear that only focusing on journalism only takes you so far, and generates a small amount of revenue,” Mohamed said in the emailed statement. “The language we've been speaking is sustainability — without that, there's no hope of any journalistic output even happening.”
Some Overstory employees don’t accept that. They were attracted to the company because of its vision.
Now they fear it is becoming the very thing it sought to replace.