Postmedia reports digital ad revenue growth, despite headwinds
TORONTO Postmedia Network Canada Corp., the parent company of the Financial Post, announced on Thursday that digital advertising revenue grew 10.8 per cent in the fourth quarter, the eleventh consecutive quarter of double digit growth.
At the same time, overall revenue for the quarter declined 8.2 per cent from the same period last year to $145.6 million as a result of the continued trend of lower revenues from print advertising and circulation.
Andrew Macleod, president and chief executive officer of Postmedia, said he is pleased with the results, which demonstrate the company is making progress as it capitalizes on digital revenue opportunities. Still, he acknowledged the declining revenue from legacy print platforms, and the dominance of Facebook and Google in the digital ad sphere, continue to create challenges.
“The headwinds are still there,” Macleod said. “No one is suggesting that we are not dealing with a very disrupted, contracting environment.”
Digital revenue grew to $31.2 million for the quarter and $125.1 million for the year, representing 21.4 per cent and 20.2 per cent of total revenue.
“We expect these digital revenue trends to continue into fiscal 2020 and we continue to believe digital revenue represents a future growth opportunity for Postmedia and as a result we are focused on various new products and initiatives in this area,” the company said in its management discussion and analysis of its results.
For the quarter, print advertising revenue was $57.5 million and print circulation revenue stood at $51.1 million. That represented declines from the same period last year of 16.5 per cent and 5.3 per cent, respectively.
“It’s very difficult to know if that will continue, or if the legacy platforms will find a bottom,” Macleod said. “We don’t have an accurate understanding of where this is going.”
The company posted net earnings for the quarter of $7.9 million, compared to a $22.9 million loss in the same quarter last year.
It also realized a 9.4-per-cent reduction in operating costs in the quarter, or about $14.5 million.
The company said it retired $130.2 million of first-lien debt between October 2016 and August 2019. As a result of a refinancing in September, it now has $95.2 million in first lien notes not due until 2023, and US$120.7 million in second-lien notes that mature in 2024.
Macleod said the company, like other media organizations, has been deeply affected about Google and Facebook, which he said dominates the market for digital ads. “It’s staggering,” he said.
He said it was heartening to see regulators and governments beginning to wake up to the potential threat that such market control poses to democracies. In the meantime, he said Postmedia is focused on figuring out ways to be symbiotic with the two tech giants.