Thriving local news outlet gutted after owner fires half the staff during union drive

“When we look at these communities, our goal is to be around for the next 30 or 40 years,” explained Farhan Mohamed in a friendly 2021 Guardian profile. “We think in a generational sort of way.”

As it turned out, the honeymoon was closer to 18 months for the CEO and co-founder (with billionaire Andrew Wilkinson) of Overstory Media Group.

As recently as last year, the pair was promising to revitalize local journalism across Canada and committing to a model that would eschew short-term profit-based thinking. Some wondered aloud if the two men could be the solution to what ailed local news.

Overstory Media Group had grown to include 14 hyperlocal outlets across the country or, in some cases, simply newsletters, each staffed by a handful of journalists.

On Monday, Capital Daily, an innovative and award-winning local outlet in Victoria, B.C., that the Guardian described as Overstory’s “marquee brand,” was gutted.

In a move that sent shockwaves through the country’s journalism community, four of the outlet’s seven full-time staff members were fired, including managing editor Jimmy Thomson.

As many as six other employees or contractors had already been fired or seen their contracts terminated over the past few months at the outlet that routinely punched well above its weight and broke major stories.

According to sources Ricochet interviewed, a slight dip in long-term projected revenue and a union drive might have forced Overstory management to cut.

Ricochet has spoken to several current and former OMG (note: Canada's National Observer is owned by Observer Media Group, which was founded in 2011 and also uses the abbreviation "OMG", but is not to be confused with Overstory Media Group) employees for this story (who have requested anonymity for fear of retaliation), a spokesperson for the newly formed employee union and Mohamed himself. Ricochet also listened to a leaked audio recording of a Dec. 5 all-hands meeting and asked Overstory management about a number of discrepancies between their public statements and what was said on the tape.

Fighting about money

In response to a furious backlash, Wilkinson took to Twitter on Wednesday, telling readers OMG “has lost over $5,000,000 over the past few years and continues to lose money. Most of that was my personal money.”

In several tweets, Wilkinson repeatedly describes the firings as a necessary consequence of the outlet’s failure to make money.

“We made the decision to cut back our expenses due to the fact we were losing too much money,” said Wilkinson in one tweet.

“Chek's revenue also needs to exceed their monthly costs. If enough advertisers don't buy ads on Chek [a TV station in Victoria], they would have to make layoffs too,” he said in another tweet.

“The business only has six months of cash in the bank, so we had to make a decision to make cuts,” he wrote in a subsequent tweet.

For his part, Mohamed first told Ricochet the firings were due to a “change” in Capital Daily’s “financial situation.” When presented with an audio recording of him telling staff at a meeting in December the outlet’s revenue had been steadily increasing for the past two years, he said: “Capital Daily is seeing a 30-45 per cent decline in revenue this year.”

After publishing this article Mohamed contacted CNO to clarify that the precise amount he believes Capital Daily is forecasted to drop is more than $250k this year. Mohamed also sent a link to a public statement now published on the OMG site to "clarify a number of questions our readers and stakeholders have been asking over the past few days."

According to multiple sources with knowledge of its internal finances, the outlet is making $20,000 a month in profit, and the decline in revenue Mohamed is referring to is a projection of what may happen six months or more in the future, based on a dip in advance ad sales.

OMG may be losing money, but Capital Daily isn’t, and even in the worst-case scenario would remain profitable for many months. Mohamed stopped responding when Ricochet asked him about the facts upon which these projections are based.

“It was profitable,” says Martin Bauman, a reporter and spokesperson for the fledgling OMG union. The union plan had been in the works for some time, but the announcement was rushed up to this week in response to the mass firings. Bauman used to work at Capital Daily before being transferred to The Coast, an OMG site in Halifax, last year.

“That was the message I got, consistently. The message within the organization has been, consistently, that Capital Daily is the exemplar for every other publication to follow. They have been held up as the model of success that everyone else should be striving towards.”

And they were doing it with in-depth, investigative and long-form journalism and innovative local newsletters.

But all wasn’t well below the surface at OMG. Sources describe an increasingly toxic workplace, with Mohamed interfering in editorial decisions and pushing employees to abandon award-winning, longer-form journalism in favour of short, snappy daily news-type articles. He denied these allegations in response to questions from Ricochet, but comments he made on the leaked recording are consistent with the experiences described by multiple OMG sources.

Many employees and former employees were compelled to sign non-disclosure agreements and non-disparagement clauses, and now fear being sued if they speak out.

Bauman also expressed concern about the expectations being placed on employees.

“Part of this effort by me and my colleagues here for a union is recognizing that there has to be some understanding of what any one of us is actually capable of producing in the course of a day.”

Pivoting to events with millionaires

Within an hour of the Capital Daily firings, Mohamed fired off a joke tweet promoting an upcoming OMG event featuring Wilkinson.

It didn't go over well with observers, eliciting cries of tone deafness.

In December, three journalists were fired from their positions with other OMG properties, making a total of at least seven journalists now fired across the chain in two months. A number of other contract employees have also been let go without replacement as their contracts expired. One OMG outlet, the Burnaby Beacon, shed almost half its staff last year.

Of the three full-time employees remaining at Capital Daily, one is an intern and another is an investigative journalist. Two other OMG employees with distinct newsletters and brands often see their content pulled into Capital Daily newsletters. Wilkinson has claimed them as employees of Capital Daily, but they have not previously worked for the outlet. Mohamed has indicated that he expects the daily newsletter to continue with no reduction in frequency.

“I’ve always loved the news and wanted to give back,” said Wilkinson in a 2021 statement. “Now through OMG, we get to help others create in their community.”

Fired staff were lead union organizers

The plot thickened Tuesday when OMG employees announced they had voted by a significant majority to form a union under CWA Canada.

OMG sources confirmed to Ricochet that three of the four fired employees were part of the union’s eight-person organizing committee. Another was let go late last year.

“It would concern me if in any way it was targeted,” added Bauman, referring to the firing of half the organizing committee. “I don’t know that to be the case, and I would like to assume that this is all just a terrible coincidence of timing, but we will have our lawyers look at this and ask those questions.”

In emailed correspondence with Ricochet, Mohamed denied the employees were fired in retaliation for their union activities.

On Twitter Wednesday, Mohamed said he was unaware his staff were organizing to join a union. Wilkinson, meanwhile, tweeted: “We had heard they were talking about unionizing since spring.” Mohamed did not respond to a request to explain this discrepancy.

Going down swinging

It’s an early December afternoon, and Mohamed is fielding questions about OMG’s latest round of layoffs at a team meeting.

“You are a personality here. You are a brand,” he says. “How do we leverage that? How do we think about you connecting in the market?”

Maybe less journalism is the answer, Mohamed muses.

“Do we need to be publishing X amount of stories on a daily or weekly basis? And if they’re not moving the needle, then why are we doing what we’re doing [journalism]?”

If there’s one perfect example of the shining city on a hill Mohamed wants to build, though, it’s Capital Daily. Because it makes money. He holds the publication aloft repeatedly as an ideal for others to aspire to.

“I’ll take Capital Daily as an example,” says Mohamed. “We were making $500 a month in October/November two years ago. And within two months we were making 10 times that, so we were at $5,000. And today Cap Daily, from an ad revenue standpoint, is doing over $50,000. A month. That happened quickly, so we want to follow that same trajectory (with other outlets like Burnaby Beacon).”

The questions from staff are pointed, but restrained. Then the Capital Daily editor’s turn comes, and Jimmy Thomson launches into a passionate defence of his team and the importance of investigative and long-form journalism.

Six weeks later, Thomson and half his staff were fired.

A longer version of this edited article appeared in Ricochet Media earlier this week.