Postmedia unveils succession plan as it reports profit of $40.3 million

Publisher appoints COO as president; sale of Infomart, digital revenue a boost

Postmedia Network Inc. laid out a succession plan Thursday, while reporting a quarterly net profit of $40.3 million — compared to a loss of $99.4 million a year ago — that was helped along by an asset sale.

Toronto-based Postmedia, the country’s largest newspaper publisher, said it realized a $36.1-million gain tied to this summer’s sale of Infomart, the company’s media monitoring division.

Compared to the prior year, Postmedia’s revenue dipped by 9.2 per cent, or $17.8 million, to $176.8 million for the three months ended Aug. 31.

This was chiefly driven by respective declines in print advertising and circulation revenues of 15 per cent and 7.3 per cent, the company said.

Digital revenue, however, rose about 15 per cent for the quarter compared to the prior year, to $26.3 million, “a positive sign that new customers are embracing our innovative solutions,” Postmedia chief executive Paul Godfrey said in a statement.

In an interview, Godfrey said that the company is still “working on a number of things at this point.”

“I think we have to be very creative,” Godfrey said. “I’ve got a number of creative ideas that we’ll be discussing in the … days and weeks ahead.”

The results come amid the decline of print advertising industrywide and the domination of players like Alphabet Inc. and Facebook Inc. in the digital ad space.

In September, the federal government unveiled a new policy framework for cultural and creative industries, which many traditional media companies hoped would provide some assistance while they made the transition to a digital business model. But the proposed plan was light on help for news organizations.

“However, when you read between the lines, and I guess I have, I think that what we got is an indication that they believe we’re struggling, but we’re not in crisis,” Godfrey said.

“I would beg to differ with them, because no one cuts the number of employees that we have if it was just a bit of struggling.

“I, as a former politician, realize that politicians sometimes react after the crisis takes place in their minds, not before,” he added. “So whether there has to be some major event takes place before they say ‘oh my God these guys really are having a problem,’ I’m not sure.”

Postmedia also announced Thursday that its chief operating officer, Andrew MacLeod, was appointed president of the company, “in a move that formalizes a clear succession plan and acknowledges the collaborative executive structure already in place at Postmedia,” a release said.

“I think Andrew has proven himself to have the potential to grow, to be a chief executive officer, to allow us to work even closer together than we have in the past,” Godfrey said. “I’m an admirer of his talents.”

Godfrey also said the move doesn’t mean he is stepping back, just preparing.

“I think if you’re running a major corporation you’ve gotta plan for the future,” Godfrey said. “My contract runs to 2020, the end of 2020, and I thought it would be a good time to at least advise everyone that there is a potential for a new CEO at some point in the future, yet to be defined.”

MacLeod was named executive vice-president and chief operating officer of Postmedia in 2016, after joining the company in 2014 as its executive vice-president and chief commercial officer.

MacLeod characterized his new role as a “graceful extension” of his working relationship with Godfrey, as they tend to be aligned on most topics. He said Postmedia has embarked on a turnaround plan that has two components, the first of which is support for existing businesses.

“One is, we need to find ways to continue to extend our runway, and in an environment of deep disruption,” he said. The other component, he added, is striking out into new territory.

“Ultimately, you have to start putting blood back into the system with new revenue, or we know how it ends,” MacLeod said.

The end of August also marked the end of Postmedia’s fiscal year, and the company reported net earnings of $44.8 million, compared to a $352.5-million loss the previous year.

Postmedia chalked up the profit to a drop in non-cash impairment charges, to $25.8 million from $267.7 million for the prior year, as well as a $78.6-million gain as a result of exchanging some debt for shares and a $39.9-million decrease in interest expense, with both tied to the company’s October 2016 recapitalization transaction.

In August, the company struck a deal with RICE Group for its Islington printing facility in Toronto for nearly $30.5 million. As well, the company recorded a $24.8-million gain for the year related to cuts made to employee benefit plans.

Although he said he would reserve official comment on the matter until after it is decided, Godfrey also said he was not surprised by a union drive at the National Post, and that he understood why there would be concern given uncertainty and job losses in the industry.

“Everyone has the right to form a union,” Godfrey said.

“I respect that, and we’ll just wait for the results.”