Postmedia sees revenue growth driven by digital advertising

Postmedia Network Canada Corp. saw revenue rise to $107.7 million in its fiscal fourth quarter, a roughly two-per-cent jump compared to the same time last year.

The media company, which owns a chain of media properties across the country, including the Financial Post, said the growth was largely driven by a boost in digital revenue, which rose about 34 per cent or $7 million year-over-year, and digital advertising, which was up 38 per cent. Total advertising revenue grew by nearly 11 per cent for the three months ended Aug. 31 and has seen continued improvement in each quarter since the height of the pandemic in the fiscal fourth quarter of 2020.

The company's operating costs also rose by 21 per cent to $18.8 million from a year ago. An increase in compensation expense primarily tied to the Canada Emergency Wage Subsidy (CEWS) and higher digital production costs were among the factors that lifted operating expenses.

Postmedia has recognized $63.3 million in funding from CEWS since the program was announced. With the program ending this week, Postmedia president and chief executive officer Andrew Macleod told the Financial Post that the company will adapt.

“Like every other business in Canada, we have to adjust to a new normal,” Macleod said in an interview following the release of the results. “The worst of the crisis is behind us and I think it's appropriate that the programs are ending and we'll act accordingly and manage the business.”

In an earnings press release, Macleod expressed optimism about the reopening but said challenges remain.

“While we remain optimistic that Canada's economic recovery is underway, as evidenced by Postmedia's 38.4 per cent digital advertising growth this quarter, the systemic industry challenges due to the dominance of global digital giants remain unchanged,” he said. “We look forward to Canada's newly elected government acting swiftly on its promise to address these inequities with a legislative solution.”

Macleod added that diversifying revenue sources will be part of the company's strategy moving forward.

“We'll continue to try to build our digital revenue streams,” Macleod said. “We've announced a parcel delivery business that we're excited about and we'll continue to be efficient in our core legacy businesses print advertising and print subscriptions. But it's a combination of all the things that we've been talking about over the last couple of years.”

For the quarter, Postmedia swung to a net loss of $28.6 million after posting net earnings of $13.5 million in the same period a year earlier. For the full year, net earnings were $33.7 million, up from a loss of $16.2 million for the previous year.