The deepened losses were primarily due to a decrease in print advertising revenue, which has been shrinking faster than online advertising has been able to make up for.
By Tamara Baluja
Revenue dropped 10 per cent with Postmedia Network showing a $14.2-million net loss in the second quarter. The deepened losses were primarily due to a decrease in print advertising revenue, which has been shrinking faster than online advertising has been able to make up for.
"As we look into our crystal ball, we will be a smaller revenue company but as well a much smaller expense or costs company," Postmedia CEO and president Paul Godfrey told investors Thursday. "We have to look at every aspect we do business, including the potential for outsourcing."
Print advertising revenue decreased 13.8 per cent, while digital revenues only showed a growth of 1.7 per cent in the second quarter, relative to the same period in the prior year. Print circulation revenue also decreased $3.3 million, or 6.5 per cent, which was partially offset by an increase by a price increase. Overall, revenue for the three months ending Feb. 28 was $178.8 million, down from $198.6 million.
“Our second quarter revenues fell more steeply than we had anticipated and our industry colleagues are noting similar declines at their operations,” Godfrey said in an internal memo distributed to employees.
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Postmedia brought down its operating expenses by 11.4 per cent. The company is in the midst of a three-year program that was announced last July to reduce legacy costs and Postmedia recently underwent a restructuring program, which resulted in the centralization of some production at a Hamilton, Ont. facility. As a result, Postmedia showed a total savings of $58 million to date.
“While that’s certainly impressive, it’s still not enough,” Godfrey said in the internal memo. “It is no small task to transform a business like ours.”
Some newspapers in the Postmedia chain, including the Vancouver Sun and Montreal Gazette, already have paywalls. Godfrey said the rest of the company is preparing “for full market launch in the coming weeks.”
Postmedia also announced today that Jane Peverett has been appointed its board. She currently serves currently as a director on various corporate boards including Encana Corporation, Canadian Imperial Bank of Commerce, and the B.C. Ferry Authority. The company’s chairman Ron Osborne died suddenly earlier this week in Florida.