Memo: Postmedia announces restructuring and buyouts
The following memo was sent to Postmedia staff on June 26, 2018 from Paul Godfrey, executive chairman and CEO, and Andrew MacLeod, president and chief operating officer.
Our Strategy is Working
At Postmedia, we have been implementing a strategy to grow new revenues and slow the decline of traditional revenues. The good news is that our strategy is working. We continue to see quarter after quarter of double-digit digital advertising revenue growth and we are, as best as possible, slowing the declines of traditional revenues – including print advertising and subscriptions. Very few, if any, legacy media companies anywhere in North America are having the same successes we are.
In spite of the great traction coming from our new strategies, the reality we must face is that the traditional revenue balloon continues to deflate at a much faster rate than we can inflate the digital revenue balloon. We must stabilize our cost structure across the organization in order to reflect the legacy revenue declines so that we can continue to invest in our digital initiatives.
Reducing our Cost Base
Across the company, we have been implementing programs aimed at strategically managing our cost base including outsourcing production, closing unprofitable operations and changing production schedules to address declining demand.
Today, we are announcing further cost savings initiatives aimed at delivering our total cost reduction targets before the fiscal year’s end. This includes closing unprofitable titles and further cost reduction initiatives aimed at reducing our salary expenses by approximately 10% by the end of our fiscal year – August 31.
This is critical to ensure that we begin our new fiscal year, on September 1, ready to hit the ground running and deliver on our F19 strategy.
Changes in our Community Operations
We are making a number of changes in respect of our community publications which will allow us to focus on areas where we can grow and on publications that have a sustainable path forward.
We will maintain a digital presence but cease print production of The Graphic in Portage La Prairie, Manitoba, the three day per week Northern News in Kirkland Lake and the five day per week Pembroke Observer, both in Ontario. The weekly Herald Leader in Portage LaPrairie, Northern News This Week (Kirkland Lake) and the weekly Pembroke News will all continue to publish and be distributed on the same day they are now.
The High River Times in Alberta will move from publishing two days per week to weekly And retain a website.
We also have made the difficult decision to close some of our community publications. In the coming weeks we will be shutting down the Camrose Canadian and Strathmore Standard in Alberta and the Kapuskasing Northern Times, Ingersoll Times, Norwich Gazette and Petrolia Topic in Ontario. Those at the affected operations will hear further details from their local leaders today.
Reaching Salary Cost Savings Targets – Through Restructuring and Limited VBO Program
In order to reach our salary cost savings target of 10% by the end of our fiscal year, we have undertaken a strategic review of the organization and identified roles to be eliminated. Taking a strategic approach will allow us to begin our new fiscal year better aligned with our overall strategy and with greater operational efficiencies in place. Over the coming weeks, conversations will take place with affected individuals about departure dates and severance packages. It is our intention to have this complete as soon as possible in order to minimize the uncertainty.
There will also be a targeted Voluntary Buyout program (VBO) offered to all unionized staff and all editorial staff (both union and non-union). We are doing this so that those who find the pace of change and dramatic transformation difficult can choose to leave the organization (subject to application approval). We will continue the reorganization of our newsrooms confident that we can deliver what our audiences want with better insights into their needs than ever before.
We are unable to offer to all groups the option of a VBO because the time required to implement such a program would compromise our ability to operationalize and execute on our F19 revenue strategy in our most critical quarter. Those eligible to apply for the VBO program will receive a separate communication with access to application forms and tools. The program is open from now until July 10, 2018.
If target savings aren’t met through the initial VBO program and targeted reductions, further staff reductions will be identified across our operations.
Moving Forward
Taking measures that mean saying goodbye to colleagues and people who are truly passionate about our industry are never easy. We are certainly not alone in this – as we have seen across our industry, and very recently from other media players. But if we intend to survive and create a new model for the new reality, then we must continue to take the necessary steps to focus on areas where we can win and make the tough, yet decisive, decisions about where we need to make changes.
Everyone will feel the impact of these changes as we continue to undergo a significant transformation that affects all areas of our business. We thank everyone for their dedication to our company and this industry through very challenging times. We believe that as we continue to address our structural transformation we can also deliver on our strategy.
We will keep you informed as we move through this program – between now and the end of August – and encourage you to have conversations with your leaders and teams. We must all focus on new ways to deliver on our objectives with the confidence that we can.
