Q4 loss at Postmedia blamed on drop in ad revenues

TORONTO — Postmedia Network Canada Corp. reported a fourthquarter net loss of $35.8 million, up from a $28.4-million loss a year earlier, as revenues from print advertising and digital properties declined at a faster pace than cost reductions.

The owner of Canada’s largest chain of English-language daily newspapers, including the National Post, had a 10.9 per cent drop in quarterly revenue, down $20.8 million to $169.3 million in the quarter ended August 31, as the decline in print advertising continued to hamper the publishing industry.

“The revenue environment remains challenging,” president and chief executive Paul Godfrey said Thursday. “This is reflected in our operating results.”

Print advertising revenue for Postmedia dropped 16.2 per cent, but total digital revenue also dropped, sliding 2.4 per cent, compared with the year earlier period.

This was offset as Postmedia continues to cut back its total operating expenses, which were down 9.8 per cent in the fourth quarter, compared with a year earlier.

The larger net loss was mainly due to an increase in operating losses of $13.9 million and a non-cash impairment charge of $6.1-million, which was partially offset by decreases in operating expenses.

Godfrey said in an internal memo Thursday that while Postmedia has made “important strides on cost reductions, revenue continues to fall at an accelerated rate.”

“Industry wide and across North America we see a business model that is profoundly changed ... What this all means is that we must continue the radical transformation we began a few short years ago. A transformation through which our business redesign recognizes the reality of the environment we operate in today.”

People are buying fewer newspapers and Postmedia was the first major publisher in Canada to move to an online pay model, he added.

Postmedia has already announced that it plans to sell its printing facility in Surrey, B.C. as well as the Calgary Herald building in Alberta. Properties which Postmedia owns in Ottawa and Montreal could also be available, Godfrey said during Thursday’s conference call.

“As we look to consolidate duplicated services and reduce legacy costs, we have the opportunity to take a strategic look at these assets,” Godfrey said.