Memo detailing changes was sent to Postmedia staff on Oct. 20. 2016.

The following memo was sent to Postmedia staff on Oct. 20. 2016 from Paul Godfrey, president and CEO.

Today we announced our Company’s financial results for the fourth quarter of our 2016 fiscal year – June to August 2016. You can view the full details of the quarterly results at Postmedia Link or www.postmedia.com.

Revenue for the quarter was $198.7 million as compared to $230.2 million in the prior year, a decrease of $31.6 million (13.7%). The revenue decline was primarily due to decreases in print advertising revenue of $26.4 million (21.3%) and print circulation revenue of $5.6 million (8.0%). Digital revenue increased by 0.8% in the quarter.

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $16.6 million (8.0%) for the quarter, relative to the same period in the prior year. The decrease was primarily related to cost reduction initiatives implemented prior to August 31, 2016.

Last month we completed the Recapitalization Transaction that we announced in July. This significantly improved our capital structure and ultimately extends the runway to allow for our new initiatives to gain traction without the tremendous debt pressure. But while the debt burden has been reduced and the ever-looming threat of enormous debt payments has been sidelined we are left with the most significant threat to our business – declining revenues.

Competitive pressures and significant revenue challenges persist which means we must also continue to transform our business operations to align our cost structure with our revenue outlook.

Today we announced a staff reduction program aimed at reducing salary expenses by 20%. The initiative includes a Company-Wide Voluntary Buyout (VBO) Program. The reductions will come from all levels and operations across Postmedia. Managers will have more information available to share with their teams and on tomorrow’s webcast you’ll have the opportunity to hear more and to ask questions. Application forms for the VBO Program can be found on Postmedia Link.

What we do know is this: the pace of change will continue to be swift. The disruption we speak of so often is absolute. We know this won’t be easy but we must rise to the task. We need to be a leaner, fitter and faster business so that we can survive in a rapidly evolving marketplace – one that has evolved at a lightening pace.

The Postmedia that we are building toward will be a smaller company focused on executing on initiatives that have returns we can invest into our future. We’re trying new things and giving our new initiatives time to develop which is critical to our future-focused business model.

As we look ahead it’s to a two-fold approach to our revenue strategy – both to extend the legacy runway and our traditional revenues and evolve our business model from selling audience to selling performance marketing solutions and outcomes. And we need to accelerate these strategies while we are significantly transforming our business.

Across our company are thousands of talented and dedicated people who have been working tirelessly to get us to where we need to be. We have innovators and leaders working in new ways toward new objectives. In the coming weeks we will be saying goodbye to many colleagues and friends and that will be tough. But it’s a necessary step for our survival.

On behalf of our board of directors and senior management team to everyone across our company – in every region, representing any of our more than 200 brands, working in all facets of our operations – you have our tremendous thanks.

H.G. Watson was J-Source's managing editor from 2015 to 2018. She is a journalist based in Toronto. You can learn more about her at hgwatson.com.