POSTMEDIA’S ‘TRANSFORMATIVE JOURNEY’ — A Q&A WITH CEO ANDREW MACLEOD
North American media organizations are facing unprecedented challenges. Almost all are grappling with changes in their revenue models; many have announced layoffs or closures. As Postmedia Network Canada Corp., one of Canada’s largest media organizations, ends one fiscal year and begins another, journalist Jason Young spoke with chief executive Andrew Macleod.
JY: Andrew, after nine months as Postmedia CEO, what are your major observations about the media industry?
AM: The industry is facing a significant disruption. Legacy revenue continues to erode, and as people move to the digital world, it’s very difficult to sustain revenue streams digitally because we have the duopoly of Google and Facebook, and most of the monetization goes to those two players. That’s an industry-wide shift, so I think everyone is faced with the fundamental question of, “How do you create new business models, new revenue models, that are digitally focused?” There’s a hunger for the content we create, and that’s reflected in stable and growing audiences. The challenge is finding revenue models to monetize those audiences.
JY: What would you say Postmedia’s biggest successes have been in 2019?
AM: We’re on this transformative journey about becoming something different that can be successful in a digitally dominated environment. Postmedia’s biggest successes have fallen into two categories. One is our continued transformation to a digitally focused entity. And for us, that’s reflected in 10 straight quarters of double-digit digital advertising revenue growth.
We continue to restructure and transform the business from a corporate perspective. Over the last few years, we’ve paid down 58 per cent of our first-lien debt, well over $100 million. And because of that, (we) have been able to refinance the remaining debt on our company, which is a big vote of confidence from our major stakeholders. All of this resulted in an upgrade from Moody’s Investors Service on our rating and our outlook.
And we continue to produce exceptional journalism. We continue to be recognized at every major awards ceremony and to do amazing, innovative work.
JY: You announced a partnership with The Logic this summer. Why is that an important initiative for Postmedia?
AM: We’re seeing some new models emerge, digitally focused models that create content bundles that focus on specific sectors, and they’re able to grow digital subscriptions. We have a big apparatus that produces content, that bundles content and that knows how to sell subscriptions around content. But people around the world haven’t shown a huge desire to buy digital subscriptions to content providers.
Content bundles that focus on particular areas are finding ways to get traction and scale. Examples of that would be The Athletic and Axios in the U.S., and I think The Logic here in Canada.
We wanted to partner with David (Skok) and his team to innovate around building content bundles focused on particular areas and then monetize them through digital subscriptions.
Lastly, The Logic produces some really great content and there are opportunities for us to share our content with its platform and opportunities for us to take some of the content it produces and bring it onto our platform, so it’s a winwin. JY: You also announced a new entity, Postmedia Politics, and have talked about a shift in direction. What is that about? AM: Ultimately, this is about looking at our business through a corporate strategy lens. Any company in the world seeks to either find a new category or to fill a spot in the marketplace where there’s a vacuum.
We looked at the media landscape in Canada and we found there was a shortage of viewpoints that come from a pro-innovation, pro-free-market, smaller-tax, smaller-government perspective. We saw an opportunity to fill that from a strategic point of view. We (also) have countless data points that say audiences are hungry for political news and we have one of the largest aggregations of journalists in Canada. We wanted to try to find a way to leverage that strength.
JY: Are you centralizing or controlling editorial strategy? Will this approach compromise the journalism at Postmedia?
AM: Let me be explicitly clear, this has absolutely nothing to do with the centralization of editorial strategy. And it in no way, shape or form touches on journalistic integrity or credibility. We want to fill that market opportunity and we want to make sure that we offer a wide range of voices that aren’t always represented in the media landscape.
This is not new. I look at the Toronto Star and the Atkinson Principles and they espouse views around social justice and the necessary role of government. No one is suggesting the Atkinson Principles in any way taint the integrity or journalism of the journalists at the Toronto Star.
It’s simply a framework within which that team operates. We are proposing a similar framework with a similar result: high-quality, integrity-filled journalism. And local properties continue to make local decisions about journalistic coverage. I have absolutely nothing to do with editorial decision-making.
JY: Why do you think some other journalism outlets seem wary of the new direction? I have read articles online that are critical of this new approach.
AM: I look at where the criticism is coming from and, candidly, these institutions or organizations, they’re not fair, they’re not balanced and they don’t espouse accurate reporting. Some of these groups … explicitly state that they organize around a particular point of view, and it’s a point of view that is often about providing a counterbalance, as an example, to corporate-owned media or fostering a very progressive agenda.
I get it. I understand that they have an agenda, and I do understand the agenda is to go out and to try to invalidate the viewpoint of Postmedia.
I can understand why they would attack us as a corporation, but what I find deeply regrettable is that they feel it’s OK to attack the credibility and the integrity of the journalists and the journalism that we produce.
JY: Some people have been critical of the fact that Postmedia engaged a lobbyist to try to get business from the new Alberta government’s energy war room. What is your response?
AM: The critics have an agenda. I do take umbrage at the fact that they want to correlate a business endeavour with the integrity of our newsrooms. People need to understand that we’re facing a systemic disruption, legacy revenue is falling, and we need to find new revenue streams. But that’s the business side of the company; we are talking about commercial content. It has no relationship to editorial decision-making.
In addition, our company and countless other companies in our space have been taking advertising dollars from businesses and governments and political parties and institutions since the inceptions of these companies. That has not and will not somehow change coverage in the newsroom.
We have a commercial side that can help create content and we have a digital apparatus that helps propagate and disseminate content.
That business apparatus is available to any credible institution that wants to work with us. We take a lot of criticism for potentially working with the Alberta government, but we would be thrilled to do the same type of work for the Horgan (NDP) government in B.C.
JY: What are some of Postmedia’s key initiatives for the
2020 fiscal year?
AM: We’re on a journey, we need to transform and we need to learn how to be successful in a digital environment, and we are pleased on a relative basis with the progress that we’ve made. We continue to grow digital advertising. That is a very, very difficult thing to do. You can look at 50 to 100 companies in North America and if they’re not Google and Facebook and, soon, Amazon, it’s highly unlikely they’re growing digital advertising revenue. So we are successful in starting the transformation, but it’s not enough. We’re going to accelerate our transformation; continue to be lean and efficient in our operations; and continue to invest in the transformative aspects of our business that are providing revenue growth.