Sun deal helps boost Postmedia Q4 revenue
TORONTO — The recent purchase of several Englishlanguage Sun newspapers helped Postmedia Network Canada Corp. boost its revenue in the fourth quarter by 64 per cent and offset declines in advertising, circulation and digital revenue.
Yet times remain tough in the Canadian media business. Taking the impact of the company’s $305-million acquisition of the 170 English-language properties from Quebecor out of the equation, Postmedia’s quarterly revenue dropped 36 per cent.
Looking ahead, Postmedia is banking on a plan to remove $50 million in annual costs to help the company deal with an industry-wide reduction in print advertising revenue.
“We cannot take our foot off the gas with respect to cost savings,” Paul Godfrey, Postmedia’s chief executive, said during a conference call with investors and analysts Thursday.
“We will continue to rethink the way we do business with respect to costs and exploiting new revenue streams.”
Postmedia said in July it hopes to trim $50 million in annual costs by the end of fiscal 2017. Financial results released Thursday show the company has already realized $14 million in net annualized cost savings and company officials expect the cost reductions to be fully implemented well ahead of the 2017 deadline, and possibly during the next 12 months.
Postmedia reported revenue for the three months ended Aug. 31 of $230.2 million, an increase of $83.4 million from $146.8 million in the same period a year ago. The fourth quarter was the first three-month period to capture the full impact of Postmedia’s purchase of the Sun Media English-language assets.
Excluding the newly acquired properties, Postmedia’s fourth quarter revenue dropped by $13 million to $133.8 million.The drop was attributable to declines in advertising, circulation and digital revenue, the company said.
On an operating basis, Postmedia reported a loss of $5.7 million, narrowed from $28.1 million in the same period last year. The improvement comes from the impact of the Sun properties, as well as a decrease in depreciation expense.
Postmedia reported a net loss of $54.1 million for the quarter, compared with a loss of $49.8 million in the same period last year, due to an increase in non-cash losses on derivative financial instruments, as well as exchange-rate losses related to the carrying value of the company’s U.S.-dollar denominated debt.