Paul Godfrey is stepping back from his role as chief executive of Postmedia Network Canada Corp. after more than eight years, handing the reins to his planned successor during a challenging time for the country’s largest newspaper chain.
The company announced on Thursday that president and chief operating officer Andrew MacLeod, 48, a relative newcomer to the media industry, has been appointed CEO; Mr. Godfrey will remain with Postmedia as executive chair and as an adviser to Mr. MacLeod.
Mr. Godfrey has overseen a tumultuous period at the media company, as the print advertising and subscription revenues that still make up the bulk of the business have been deteriorating significantly. Postmedia has grappled with a heavy debt load and endured severe cost-cutting as it works to remain viable in a digital media world that has sapped the resources of many media companies dwarfed by tech giants such as Google and Facebook. With another major debt payment due in 2021, Postmedia’s new CEO will continue to face similar challenges.
Mr. Godfrey, who turns 80 this weekend, has a contract with the company until the end of next year. In an interview on Thursday, he said he will remain with the company for the rest of his contract.
“I don’t think I’ve got retirement in my dictionary,” Mr. Godfrey said. “It all depends on your health. If I’m healthy, if it’s not here, I’ll be somewhere else.”
Mr. Godfrey had been CEO of Postmedia since its creation in 2010. After Canwest Global Communications Corp. was pushed into bankruptcy, its newspaper assets emerged from restructuring under the Postmedia name, with Mr. Godfrey – who had been president of the chain’s flagship newspaper, The National Post, since 2008 – promising to turn its fortunes around with a much-touted digital transition plan.
But the restructuring also heaped nearly $700-million in debt on the new company, which was acquired by bondholders led by New York-based GoldenTree Asset Management LP. It has reduced debt significantly since then, including a major debt financing in 2016 that wiped out most of the value for shareholders. But it still faced $267.2-million in long-term debt as of Nov. 30, 2018, $20.4-million of which will be redeemed soon, partly through proceeds from the sale of the Ottawa Citizen building.
As it has worked to pay down debt, Postmedia also went through multiple rounds of cost-cutting, many of which occurred after the company bought Sun Media’s English-language news properties in 2015.
“It is not hyperbole to say that Godfrey has been a disaster for the newspaper industry in this country," Martin O’Hanlon, president of the union CWA Canada that represents some Postmedia workers, said in a statement on Thursday that called the job cuts “damaging to our democracy.”
In just more than a year after it emerged from the bankruptcy process, Postmedia eliminated 750 jobs, on top of nearly 1,000 jobs that had been cut between 2008 and 2010. As of Aug. 31, 2011, Postmedia had 4,617 full-time equivalent employees. By Aug. 31, 2018, Postmedia had 2,834 full-time equivalent employees.
“People have written our obituary time and time again. We’ve had to cut a lot of people, and everybody’s working a lot harder,” Mr. Godfrey said. “We’re keeping our head above water. We’re doing as well as we can on this path.”
While digital revenues have grown, they still account for just less than one-fifth of Postmedia’s total revenue in the most recent quarter. On Thursday, the company reported that print advertising revenue fell nearly 14 per cent to $77.1-million, and print circulation revenue fell almost 5 per cent to $53.5-million, in the three months ended Nov. 30, 2018. Total revenue declined to $171.3-million, compared with $189-million in the same period last year. Some of those revenue declines were due to the acquisition and closure of a number of community newspapers in a 2017 deal with Torstar Corp. that is currently under investigation by the federal Competition Bureau.
“We remain confident that this will ultimately result in an exoneration,” Mr. MacLeod said of the investigation. “It’s a considerable burden on the company. But we respect the right, obviously, of the Competition Bureau to go through its process.”
Mr. MacLeod joined Postmedia as chief commercial officer in 2014, after serving as a managing director at BlackBerry Ltd. He was promoted to chief operating officer of Postmedia in 2016.
Going forward, Mr. MacLeod said, the company is reconsidering its approach of focusing primarily on advertising as a way of making money from digital platforms – and is evaluating the possibility of introducing paywalls to encourage digital subscriptions, as competitors including The Globe and Mail and more recently The Toronto Star have already done.
Postmedia will also continue to look for ways to cut costs, Mr. MacLeod said.
From 2012 to 2018, Mr. Godfrey said, he had 41 meetings in Ottawa to push politicians and bureaucrats to provide funding for the media industry. In November, the government pledged $595-million in new funding over five years, which was applauded by Mr. Godfrey and others in the industry who had advocated for such a move.
“It will give us more runway to build to the digital world and increase our ability to compete with Google and Facebook,” Mr. Godfrey said. “If we can’t do it in five years, we’re probably never going to do it.”
Print advertising revenue is still the biggest source of revenue for most newspapers, and will continue to decline, he added.
“If digital doesn’t continue to grow at the same pace, it’s likely we’ll face more consolidation.”