Loss shrinks as cost-cuts temper decline in print revenue

TORONTO Postmedia Network Canada Corp. shrunk its quarterly loss to $1.3 million from $28.5 million a year prior, as digital revenue growth and cost cutting tempered continued declines in newspaper advertising and circulation revenue.

Canada’s largest newspaper company, which owns more than 160 brands including the Financial Post, reported Wednesday that its operating expenses for the three months ending Feb. 28 dropped by $36.2 million (21 per cent) due to cost reduction initiatives and a $17-million tax credit from the Ontario government.

Overall revenue, however, fell 10.8 per cent to $157.6 million from $176.7 million a year prior. The drop was attributed to declining print advertising and circulation revenue, which respectively fell 18.8 per cent to $70 million and 7.9 per cent to $53.6 million.

Digital revenue grew by 10.1 per cent to $26.4 million. Chief executive Paul Godfrey said this marked the fifth consecutive quarter of doubledigit growth in digital advertising revenue.

“We continue to execute on a strategy that is delivering results,” Godfrey said on a conference call with analysts, adding he was pleased by the digital revenue growth.

During the quarter, the company said it implemented initiatives that will cut net costs by $5 million annually.

In late November, Postmedia and Torstar Corp. traded 41 papers and subsequently closed 36 of them, a move that will result in $5 million in annual cost savings for both companies. The Competition Bureau is investigating the transaction.

The deal between Canada’s two largest newspaper companies comes as the industry copes with structural declines in print advertising revenue.

Over the past five years, advertising spending has shifted online from print and television.

Digital giants Facebook Inc. and Google Inc. captured an estimated three quarters of the roughly $5 billion spent on digital ads in Canada last year, according to the Canadian Media Concentration Research Project.

“Postmedia, along with the entire industry, continues to lobby all levels of government to seek out support of our transformation, new digital initiatives and ultimately the preservation of distinctly Canadian brands and voices,” Godfrey said.

He said he hopes Quebec’s latest budget, which included efforts to help news media, will inspire other provinces and federal government to do the same.