Postmedia Network announces cost-transformation plan

Postmedia Network Canada Corp. announced plans for a three-year cost-cutting program as it reported a fiscal third-quarter loss Tuesday.

The Toronto-based media company posted a net loss of $12.1 million for the quarter as revenue slipped to $212 million, a drop of 6.9 per cent compared to the same period last year.

The decline was primarily due to an industry-wide drop in print advertising, although Postmedia did report solid growth on the digital advertising side.

Print revenue slipped $14.5 million in the three months ended May 31, a drop of 10 per cent compared to the same period last year, while digital revenue increased $1.5 million or 6.8 per cent.

“The revenue pressure comes mostly from declines in national advertising,” Paul Godfrey, chief executive, said in a note to employees.

“At the local level, we continue to see impressive results from our local digital sales teams.”

Postmedia Network said the initial phase of its business transformation program is intended to reduce “legacy newspaper infrastructure costs.”

It includes three previously announced initiatives: Reducing the scope of its wire service, expansion of editorial services in Hamilton to accommodate centralized production services, and the cancellation of Sunday print editions in three of its newspaper markets.

The company said these initiatives and others will be implemented throughout the fourth quarter of fiscal 2012 and first quarter of the next fiscal year and should generate $35 million to $40 million in cost savings annually.

“We’re taking the best of what we have always been — the power of our brands, the community relationships we have, the value we deliver to marketers — and moving those strengths into a new company, a company that competes and wins on today’s new playing field,” Godfrey said of the com- pany, which turns two this week.

Postmedia Network, which owns 10 major daily newspapers across the country, including the StarPhoenix and the National Post, announced plans to sell its Toronto headquarters for $24 million on June 26.

The proceeds from that transaction, which is expected to close in September, are earmarked for debt repayment.