Postmedia Network posted a $25-million loss in the second quarter.
The following is a memo sent by Postmedia CEO Paul Godfrey:
Today we announced our company’s financial results for the second quarter of our 2014 fiscal year – December 2013 to February 2014. You can view the full details of the quarterly results at Postmedia Link or www.postmedia.com.
Revenue for the quarter was $162.5 million, a decrease of $16.3 million (9.1%) relative to the same period in the prior year. This decrease was primarily due to a decline in print advertising revenue of $15.5 million (14.7%) with the declines occurring across most categories. Print circulation revenue decreased $0.3 million (0.7%) and digital revenue decreased $0.2 million (0.7%) relative to the same period in the prior year.
We are seeing similar effects on print advertising revenues as our industry peers. Our strategy is focused on developing new products and reengineering the way we produce and distribute content. The transformation program that we launched in July, 2012 is helping us to focus on changing our cost structure in order to support a new business model.
The transformation program, which focuses on significantly reducing our legacy costs – by 15-20% over three years – has resulted in additional savings from this past quarter of $11 million which brings the total expected net annualized savings of the program to date to $98 million or 14% of operating costs.
Additionally, we currently have several high value real estate holdings on the market and while we can’t speculate on their ultimate selling price, once they are sold we will apply the net proceeds to pay down debt.
When we begin launching our new products later this spring it will set us on a new course to be closer to our audiences with innovative new offerings for both audiences and advertisers.
Our work on audience analytics has helped to hone our four platform strategy and as we look at each of these platforms individually: Print, Web, Tablet and Smartphones we see emerging opportunities for each.
Our newsrooms across the country, once very siloed and dispersed, now operate as One Newsroom with super-city desks at each of our newspaper sites, centralized layout and copy editing takes place at Postmedia Editorial Services in Hamilton, and across our operations platform specialists ensure that the content we create is presented in a way that leverages the best of the platform while addressing the specific preferences of the audience that comes to that platform.
This new approach will also allow us to harness the power of our mobile audiences, which continue to grow at an accelerated rate and now account for a majority of our digital traffic.
Our paid content subscribers, now more than 140,000, will find richer content presented in a more engaging way and we believe more of our online visitors will be motivated to sign up.
And our loyal newspaper audiences will continue to enjoy a premium product which is also being reimagined with them in mind.
This new vision touches every corner of our company, with people from each of our operations contributing to its success. As we begin to roll out the first of our new products in the weeks ahead I hope you’ll take the time to explore the new offerings and congratulate those who worked tirelessly to bring it all to life. It will be an exciting year ahead as we see our brands launch in new and reimagined ways with our audiences and advertisers and fully leverage the endless possibilities ahead of us.
Our quarterly teleconference for investors and analysts will take place today at 3:00pm ET. For those who are interested, the slide presentation for this call is available now at http://www.postmedia.com/