National Post (National Edition)
Postmedia to cut more costs after $26.5-million loss in Q2
TORONTO • Postmedia Network Canada Corp., Canada’s largest newspaper company and the owner of the National Post, announced Thursday it will pursue deeper cost-cutting measures, fewer than six months after it rolled out plans to slash company-wide salary costs by 20 per cent.
At the same time, the print media publisher reported a loss of $26.5 million in the second quarter of its 2017 fiscal year, with revenue decreasing 13.5 per cent year-over-year to $180.8 million for the three months ending Feb. 28.
The company’s core revenue streams in newspaper publishing continued to deteriorate amid a struggling industry climate, with print advertising revenue down $25.2 million or 22.6 per cent, and print circulation revenue down $5.5 million or 8.7 per cent.
As with other legacy media companies with struggling print revenues, Postmedia has pegged much of its forward-thinking business case to the hope that digital earnings pick up the slack from its declining income streams.
However, while there was a modest digital revenue growth of 10.3 per cent in the quarter, that produced $2.6 million in additional earnings, far less than the combined $30.7 million decrease in print revenue streams.
Citing the company’s revenue declines, Postmedia chief executive Paul Godfrey made the announcement in a staff memo Thursday morning that the company will look “to find additional cost savings and reduce our overall cost structure.”
“The ongoing pressures we face from declining legacy revenues demand a twofold approach — first: doing everything we can to manage and stabilize those declines and second: aligning our cost structure with new revenue realities,” Godfrey said.
Postmedia’s recent salary cuts, which the company said were successful following a series of buyouts and layoffs across the country, have been successful in achieving significant cost reduction: Postmedia spent $76.7 million on compensation in the second quarter of 2017, about 15 per cent less than the $90 million it spent in the same period a year before.
However, those cuts have also reduced the resources at Postmedia’s newsrooms across the country to record lows, with the National Post losing 25 staff to buyouts in December and the Vancouver Sun and Vancouver Province newsroom preparing to see 29 newsroom staff depart through layoffs later this month. Additional staff were lost in other departments as part of across-the-board reductions.
Other papers across the Postmedia chain, including the Ottawa Citizen, Montreal Gazette, Windsor Star, Saskatoon StarPhoenix and Regina Leader-Post, have also seen significant cuts in recent months. Last year, the newsrooms of the company’s broadsheet and tabloid papers in several cities, including Edmonton, Calgary, Vancouver and Ottawa, were merged in order to consolidate resources.
Postmedia did not specify what future cost-cutting measures might look like, although the second quarter saw year-over-year reductions in spending on newsprint (down $642,000 or 5.7 per cent), distribution (down $3.3 million or 8.3 per cent), and other general operating costs (down $5.1 million or 13.4 per cent).