Postmedia reports fourth-quarter loss as print advertising weakens

TORONTO – Weak print advertisement revenues weighed heavy on Postmedia’s fourth-quarter results and the media company says it doesn’t expect any improvement into next year as it works to turn around operations.

The owner of several big city newspapers, including the National Post, Vancouver Sun and the Ottawa Citizen, said Thursday that losses from continuing operations deepened to $35.8 million in the fourth quarter, or 89 cents per share.

That compares with a loss of $28.4 million, or 70 cents per share, in the same period a year earlier.

Postmedia (TSX:PNC.B) said revenues slid to $169.3 million from $190.1 million.

Much of the decline was driven by lower revenues for print ads, which fell 16.2 per cent in the three-month period ended Aug. 31, with the weakness stretching across all of its major advertising categories.

National print advertising fell 20.3 per cent, while retail ads dropped 14 per cent, classifieds were down 16.7 per cent and insert ads declined 7.3 per cent.

“We anticipate the print advertising market to remain challenging and expect current trends to continue into fiscal 2014,” the company said in its financial documents.

Quarterly revenues from sales of its newspapers dropped 3.6 per cent, it said.

Postmedia has been cutting costs across operations as part of a three-year program to transform the money-losing business.

For the year, the company says it has managed to reduce operating costs by about 12 per cent, or $82 million.

Last year, Postmedia put its headquarters up for sale and chief executive Paul Godfrey says he hopes similar transactions will be made across the company’s operations to help lessen the financial strain.

“Moving to more modern lease facilities gives us greater flexibility to embrace future opportunities and it is more in line with our strategy and vision,” he said in a conference call.

“The net proceeds of real estate sales will be applied to debt reduction.”

Postmedia rose from the ashes of bankrupt media company Canwest when Postmedia CEO Paul Godfrey put together a group of investors in 2010.

Since then, the company has been focused on reworking its operations to reduce costs and refocus with a priority on its digital businesses, which include the National Post website.

Some of those changes have included layoffs and buyouts, though the company said those types of expenses were slightly lower in the quarter at $10.7 million, a decrease of $2.3 million.

Postmedia also launched a metered paywall across its newspaper websites, a decision which chief operating officer Wayne Parrish said was never designed to solve everything.

“We don’t see the meter for being a panacea for the challenges of the industry, but we do see it as part of the puzzle,” he said.

“It has allowed us to shift somewhat elegantly away from the level of discounting we’ve had on the print subscription side by persuading those print subscribers to re-up at something closer to the face price for access to the digital products.”

Last month, the company announced it decided to close its Vancouver-area printing plant, a move that comes after it shuttered an in-house wire service last year and expanded its Hamilton operations to handle the editorial production of newspaper pages.

In July, Moody’s Investors Service downgraded Postmedia’s rating to negative from stable due to the media company’s declining cash flow as it transitions to a digital business. Moody’s said the company would continue to face revenue pressure because print revenue is declining faster than digital revenue is increasing.

Shares of Postmedia closed five cents higher at $2.30 Thursday on the Toronto Stock Exchange.

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