Postmedia plans to cut staffing costs

Print ad revenue falls, quarterly loss deepens

TORON TO • Postmedia Network Canada Corp., Canada’s largest newspaper company and the owner of the National Post, says it intends to reduce staffing costs by 20 per cent after it reported steep declines in revenue and print advertising in the fourth quarter of 2016.

The publisher booked a loss of $99.4 million in the three months ending Aug. 31, compared to $54.1 million in the same period the previous year. Revenue in the quarter fell 13.7 per cent to $198.7 million, compared to $230.2 million in the prior year. The company said the primary cause of this was decreases in print advertising revenue, which fell $26.4 million or 21.3 per cent and its print circulation revenue, which fell $5.6 million or eight per cent.

Postmedia is offering voluntary buyouts across the company through a reduction program, which chief executive Paul Godfrey said on an investor’s call is intended to “align our cost structure with the revenue outlook.” Postmedia currently has approximately 4,000 employees.

Staff will have until Nov. 8 to apply for the buyouts, and if the 20-per-cent target isn’t met by that date, the company added that it may pursue layoffs.

“The Postmedia that we are building toward will be a smaller company focused on executing on initiatives that have returns we can invest into our future,” Godfrey wrote in a memo to staff. “We’re trying new things and giving our new initiatives time to develop which is critical to our future-focused business model.”

For the 2016 fiscal year, Postmedia’s net loss was $352.5 million, compared to $263.4 million in the previous year. The company said this was due to an increase of $114.7 million in non-cash impairment charges and an increase in its interest expense.

Part of Postmedia’s hope for the future is expanding its online portfolio to capture a greater share of Canada’s burgeoning digital advertising market. Canadian Internet ad revenue grew to $4.6 billion in 2015, up 21 per cent and more than $800 million more than a year ago, according to the Interactive Advertising Bureau of Canada. However, much of that market is dominated by large multinationals such as Google and Facebook, with newspaper and media companies struggling to keep pace.

Postmedia saw a 0.8-percent increase in digital revenues in the quarter.

At 6.1 million, the company ’s combined media network draws the largest number of weekly digital readers among major Canadian newspaper companies, according to research firm Vividata. Torstar brings in 4.3 million and The Globe and Mail has digital readership of 4.5 million.

Postmedia has increasingly embarked on more digital ventures, which management said will be a core part of the company’s growth strategy. Marketing partnerships with fintech companies Agility Forex Ltd. and Mogo Finance Technology Inc. were launched this year, as was a digital lab at Kitchener, Ont.-based startup incubator Communitech.

“As we look ahead it’s to a two-fold approach to our revenue strategy — both to extend the legacy runway and our traditional revenues and evolve our business model from selling audience to selling performance marketing solutions and outcomes,” Godfrey wrote in his memo. “And we need to accelerate these strategies while we are significantly transforming our business.”

Postmedia also recently completed a major restructuring of its debt. Under a court-approved corporate plan of arrangement, the company removed $307 million in debt and $50 million in annual cash interest from its books through a debt for equity swap.