Postmedia posts $22.8M Q4 loss as digital revenues pass milestone

Postmedia Network Canada Corp. reported on Thursday that digital revenue continued to rise, but that it nevertheless took a $22.8-million loss for its fourth quarter amid cost-cutting efforts and an industry-wide decline in print revenues.

The loss for the three months ending Aug. 31 was down from a $40.3-million profit for the same period last year, when the company saw lower restructuring expenses and a benefit from its sale of Infomart, its media monitoring division.

Postmedia, Canada’s largest newspaper publisher, reported revenue of $158.7 million for the quarter, a 10.3-per-cent dip from the previous year, which was mostly due to a decrease in print revenues. Total digital revenue, however, increased by 9.7 per cent for the quarter, rising to approximately $28.9 million. Digital advertising revenue rose by 13.2 per cent.

“We are pleased to report continued traction from our strategy delivering the seventh consecutive quarter of double-digit digital advertising revenue — reaching $100 million in fiscal 2018,” said Paul Godfrey, executive chairman and chief executive officer of Postmedia, in a release.

Along with other traditional media companies, though, Postmedia is still dealing with a market for digital ad dollars that is dominated by internet giants such as Facebook Inc. and Alphabet Inc.’s Google.

In the face of these challenges, Postmedia has been seeking to extend the “runway” of its legacy business and to grow its digital revenues.

“I think we have empirical evidence that suggests we’re doing both,” Postmedia president and chief operating officer Andrew MacLeod said in an interview.

The plan has included cost reductions, with the company announcing in June that it was looking to cut staffing costs by 10 per cent using a combination of voluntary buyouts and layoffs. Postmedia said Thursday that this “initial target” has been met, and that it had realized a one-time charge of $13 million made up of severance pay.

Cost-cutting initiatives undertaken in the quarter were expected to result in around $21 million of net annualized cost savings, according to the company, which said it would continue to try to find ways of reducing expenses.

Godfrey also noted in the release that the company will have, as of this week, redeemed another $8.7 million in first-lien notes, making for total first-lien repayment of nearly $100 million since Postmedia recapitalized in October 2016.

“We know that we can’t do things the way we’ve always done them,” Godfrey added during a conference call. “We have to find new ways to leverage new opportunities, and these efforts must continue.”

MacLeod pointed to the company’s cannabis-related initiatives, which have included the launch of its Cannabis Post newsletter, as an example of such new opportunities.

“Management will be keenly focused on continuing this growth as quickly as possible in the quarters and years to come,” he added.

Postmedia also announced on Thursday that John Bode, the chief operating officer at U.S.-based book distributor ReaderLink Distribution Services LLC, had been appointed to the board of directors of both Postmedia and its newspublishing subsidiary.

According to a release, Bode owned and operated a consulting firm that focused on working with print media companies.

“John’s extensive expertise in industry transformation makes him a complementary and welcome addition to our boards,” Godfrey said in a release.