Postmedia reports $13M profit
CEO Godfrey says efforts for turnaround paying off but cost-cutting isn’t over
Postmedia Network Canada Corp. on Friday reported a $13-million profit in the third quarter of 2017, with digital advertising revenue increasing 22.8 per cent year over year.
The newspaper chain — which includes the National Post and most of Canada’s major urban dailies including the Ottawa Citizen and all Sun publications — is attempting a turnaround in the midst of challenging times for print media as more and more people go online for news. Postmedia in recent months has cut 20 per cent of its salary costs through buyouts and layoffs, which reduced its workforce by about 800 people.
In an internal memo to staff, Postmedia chief executive Paul Godfrey said the company’s focus on new initiatives to increase digital revenue growth is paying off. But he warned that the costcutting is not over.
“It is tremendously exciting to find these new areas gaining traction and continuing to build momentum, no doubt,” Godfrey said. “But we also must continue to transform in order to be a business that supports and sustains a new business model.”
Those buyouts and layoffs, in addition to cuts to benefit plans for employees, helped fuel Postmedia’s quarterly profit. In the third quarter of the previous year, the company reported a $23.7 million loss.
In a conference call with investors Friday, Godfrey said cost-cutting measures undertaken to date in the 2017 fiscal year are expected to save an estimated $75 million annually.
Print advertising and circulation revenue, however, continued their long-standing decline, contributing to an 11.1-per-cent drop in total revenue for the quarter. Revenue from print advertising decreased by $22 million, or 19.1 per cent, while print circulation revenue dropped by $5.5 million, or 8.5 per cent compared to the same period the previous year.
Despite efforts to focus on growing digital advertising, it remains a small part of Postmedia’s overall revenue, accounting for 4.9 per cent of total revenue in the third quarter.
In June, the company announced plans to sell Infomart, its media monitoring and financial data division, for approximately $38.25 million. The sale is expected to close in August.
Postmedia also announced on Friday the appointment of a new executive vice president and chief financial officer, Brian Bidulka. Bidulka was previously the chief financial officer for Research In Motion Ltd. — now known as BlackBerry Ltd. — and deputy chief financial officer at George Weston Ltd.
In the investor conference call, Godfrey said the company’s employees should be proud of the progress made towards Postmedia’s transformation plan during the quarter.
“This has been a quarter where we’ve seen our new strategies taking shape,” he said. “We continue to be challenged on the traditional revenue front. Our focus on restructuring and cost savings initiatives will continue as we lean towards the new business model.” Postmedia News