Government mulls future without newspaper giants

As the print media industry copes with mounting revenue declines, layoffs and quarterly losses, the Trudeau government is considering what the landscape would look like without the country’s two largest newspaper companies.

Heritage Minister Mélanie Joly’s office confirmed to the Financial Post that the Department of Canadian Heritage “regularly does industry-specific environmental scanning” that includes the hypothetical scenarios that Postmedia Network Canada Corp. and Torstar Corp. will cease operations.

“The way Canadians access content is changing with new platforms and technologies,” said a spokesperson for Joly. “The shifts that are happening as a result are significant. One of the objectives of our Canadian content consultations is to assess how to best support the production of news information as well as local content that is credible and reliable.”

Spokespeople for both Postmedia and Torstar declined to comment for this story.

The government is holding crosscountry consultations with indus

try groups as part of a sweeping review of Canada’s $48-billion broadcasting, media and cultural industries, the results of which could have tremendous impacts on the struggling bottom lines of Postmedia and Torstar.

Emails and documents obtained under the Access to Information Act show that bureaucrats at the Department of Heritage have been preparing assessments of markets

that would lose significant media coverage if either company were to cease publishing.

Postmedia publishes the National Post and is the only publisher of daily broadsheets in many of Canada’s largest cities, including Calgary, Edmonton, Vancouver and Ottawa.

Faced with a 13.7 per cent decline in revenue, and a 21.3 per cent decline in print advertising revenue, Postmedia reported a $99.4-million loss in the three months ending Aug. 31, significantly more than the $54.1 million in the same period the previous year. Last month the company, which employs approximately 4,000 staff, announced it intends to cut hundreds of positions by reducing its salary costs by 20 per cent.

Torstar publishes Canada’s largest daily circulation newspaper, the Toronto Star, as well as the Hamilton Spectator and the Waterloo Region Record, and more than 100 community papers.

This month Torstar reported an adjusted third-quarter loss that exceeded analyst expectations, as its operating revenue fell 12.6

per cent, to $162.1 million, and its print advertising revenues fell 16.1 per cent. The company has laid off more than 350 staff in 2016.

Officials from Postmedia and Torstar have testified before the House of Commons standing committee on heritage in recent months. The companies urged Ottawa to consider policies that could assist their struggles as digital disruption continues to hammer their legacy businesses, and as they explore ways to monetize content online.

“The erosion of print revenue has been dramatic,” Postmedia CEO Paul Godfrey told the committee in May. “The picture is ugly, and it will get uglier.”