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Rod Phillips, right, is shown with Paul Godfrey on March 11, 2013. As the former chairman of Ontario Lottery and Gaming Corp., Mr. Godfrey was instrumental in hiring Mr. Phillips as chief executive officer of the Crown agency 2 1/2 years ago.

PETER POWER/THE GLOBE AND MAIL

Rod Phillips, the former top executive of Ontario's lottery corporation, is now at the helm of newspaper company Postmedia Network Canada Corp.

Postmedia announced on Wednesday that Mr. Phillips has been appointed chairman of the board, effective immediately. The new job reunites Mr. Phillips with his close friend, Paul Godfrey, Postmedia's chief executive officer.

This time around, however, their roles are reversed. As the former chairman of Ontario Lottery and Gaming Corp., Mr. Godfrey was instrumental in hiring Mr. Phillips as chief executive officer of the Crown agency 2 1/2 years ago.

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Mr. Godfrey clashed publicly with Ontario Premier Kathleen Wynne, until she fired him last May. Mr. Phillips followed him out the door last month.

In his new job, Mr. Phillips is taking a huge pay cut. The previous chairman of Postmedia earned $270,000 a year, according to the company's most recent information circular.

Mr. Phillips' compensation "will be in accordance with our existing compensation structure," said Postmedia spokeswoman Phyllise Gelfand.

Mr. Phillips was paid $672,989 in 2012, including a bonus of $297,989, ranking him the province's 12th highest-paid public sector employee. He left the OLG before receiving his bonus pay for the fiscal year ending March 31, 2014.

Postmedia has not had a chairman since last April, when Ron Osborne died in his sleep at the age 66, the result of coronary artery failure. The widely-respected executive also served on the board of RioCan Real Estate Investment Trust with Mr. Godfrey. It was Mr. Godfrey who brought in Mr. Osborne as chairman of Postmedia.

Postmedia announced that Mr. Phillips is one of two new directors. Martin Nisenholtz, a former senior adviser to the New York Times Co., has also joined the board.

"These appointees bring impressive experience in business transformation and modernization and are both experts on matters of industry evolution," Mr. Godfrey said in a statement.

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At OLG, Mr. Phillips was to execute a sweeping modernization at the agency, which had promised to raise an additional $1.3-billion annually for the province by building more casinos and privatizing lottery operations.

While the strategy was endorsed by the previous Liberal government under Dalton McGuinty, Ms. Wynne has charted a decidedly different course from her predecessor. Government sources have said Mr. Phillips worked well with Ms. Wynne and complied with her mandate for the corporation, including dialling back the aggressive modernization plans, and incorporating the horse-racing sector into OLG.

Mr. Phillips is getting into the newspaper business at a particularly difficult time. Postmedia, the country's largest publisher of metropolitan daily newspapers with titles such as the Vancouver Sun and Ottawa Citizen, has been aggressively restructuring to deal with a shrinking print advertising market that has hobbled publishers across North America.

The company lost $11.8-million in the first quarter ended Nov. 30, 2013, largely because of restructuring charges. On Tuesday, Postmedia News announced that it is laying off five members of its parliamentary bureau and offering voluntary buyouts to employees at some other newspapers.

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