Postmedia records 10 per cent rise in digital revenue

Decline in print advertising a trend

TORONTO — Postmedia Network Canada Corp. reported Thursday a net profit of $8.3 million in its first quarter, down from a gain of $28.3 million in the corresponding period a year earlier, when the company booked a one-time boost from the sale of the Times Colonist in Victoria along with other B.C. newspaper assets.

Canada’s largest daily newspaper publisher reported a 10 per cent rise in digital revenue in the quarter, even as declining print advertising — a persistent trend throughout the industry — continued to be a drag on sales.

The company had total revenue in the quarter of $211.7 million, down 8.4 per cent relative to $231.1 million in the same quarter last year.

Compared to the first quarter of 2012, digital revenue was up 9.7 per cent ($2.2 mil- lion) to $24.8 million, while print advertising revenue slipped 11.1 per cent ($16.6 million) to $132.7 million.

Operating income fell to $26.7 million from a year-earlier $34.2 million.

The company is in the midst of a three-year restructuring process intended to address the changing reality of the media industry and cut operating costs by 15 to 20 per cent. It trimmed the size of its Postmedia News wire service, moved editorial production of newspaper pages to a centralized location in Ham- ilton, Ont., and has cancelled the publication of Sunday papers in some markets.

Postmedia said Thursday that as of Nov. 30, the end of its first quarter of the fiscal 2013 year, the company had implemented initiatives that would result in a net annualized cost savings of about $42 million.

“We will continue to identify and implement additional cost reductions through fiscal 2013 and remain confident we will hit the three-year target we announced previously,” Paul Godfrey, president and chief executive, said on a conference call with investors Thursday. “Our focus on reducing legacy costs and paying down corporate debt remains a priority.”

Also, Postmedia held its annual general shareholders’ meeting at its Toronto head office. In remarks to shareholders, Godfrey addressed the company’s move toward a model that includes content paywalls.

Visitors are already required to pay for access to the websites of The Gazette, Ottawa Citizen, The Vancouver Sun and The Province, also in Vancouver, on a metered basis. International visitors to the National Post website are also subject to metered content and the company plans to roll out pay meters for the rest of its newspapers this year.

“Recreating a cost structure that supports a new business reality rather than continuing to subsidize the nostalgia of the former business model is certainly critical,” Godfrey said.

Postmedia Network owns the Financial Post, as well as The Gazette.