Postmedia Network Canada boosts cost-cutting targets
TORONTO • Postmedia Network Canada Corp. announced a new round of cost- cutting Wednesday as the media publisher grapples with industry- wide declines in print advertising, print circulation and digital revenue.
“We are faced with prof ound and confounding change,” in the news industry, Paul Godfrey, Postmedia’s president and chief executive, told shareholders at the company’s annual general meeting on Wednesday. All news organizations are trying to find a new, sustainable business model, Godfrey said, and “nobody has found the magic elixir.” While Postmedia has not had a smooth road, the company has “tried things, and changed things; we have adapted, and will continue to do so as we move toward the future.”
In first-quarter results released Wednesday, Torontobased Postmedia said it has realized $ 32 million in annual cost savings since last July, when it announced a plan to remove $ 50 million in annual expenses by the end of its 2017 fiscal year.
The company is on track to hit that $50 million target by May 31, the end of its fiscal 2016 third quarter. And the company now says it aims to remove an additional $30 million in annual expenses by the end of its next fiscal year, Aug. 31, 2017.
Postmedia reported a net loss of $ 4.2 million, or 2¢ a share, in the first quarter ended Nov. 30, 2015, narrowed from a loss of $ 10.3 million ( 26¢) in the same period of the prior year.
Revenue for the quarter was $ 251.1 million, up from, $ 169.5 million in the prior year. The increase results from Postmedia’s purchase of the Sun papers last year. Excluding the Sun properties, Postmedia said revenue for the quarter was $ 147.4 million, a decrease of $ 22.2 million from last year’s first quarter.
Setting aside the Sun acquisition, print advertising revenue dropped $ 16.4 million or 17.6 per cent from last year’s first quarter, while print circulation was down $ 3.2 million or 6.7 per cent and digital revenue was down $1.4 million, or 5.7 per cent, due to decreases in local digital advertising rev- enue and digital classified revenue, partially offset by increases in digital subscription revenue and other digital revenue.
“Print ad revenue is in decline for everybody,” Godfrey said. “That has an impact, and you have to re- engineer your cost structure to match your revenues coming in. If revenues fall off, we match that with cost. It’s something we don’t like doing, because we impact people’s lives.”
He didn’t detail what areas of the business would be cut, but said executives would aim to eliminate any duplication within the merged Sun and Postmedia operations.
Postmedia has moved to grow its audience by adding a National Post section in some of its local papers. It has also created new businesses, Digital Marketing Services and Postmedia Content Works, to identify new sources of revenue.