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Paul Godfrey, then Gazette publisher Alan Allnutt

Since Postmedia Network was formed nearly two years ago, our company and our industry have been undergoing a significant transformation.

Changes we have made so far have come from the review of all of our operations so that we can leverage the strengths that we have, address any weaknesses and identify our most competitive areas.

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Early on we centralized our finance operations, leveraging our strengths as a large company, and now provide greater service to our markets and to our clients while operating more efficiently. More recently we moved our commodity news requirements out of house having identified that commodity news is an area where we cannot be competitive.

While the changes we have been making are about creating the company we need to be, it also means changing the way we have done many things in the past. While some areas are expanding, some roles across our operations will be eliminated. The only way we can be competitive is to create a new company that leverages its history and moves aggressively into the future.

We are continuing on this path and looking to further reduce our print-related infrastructure costs, build out our digital platforms and invest in growth areas of our business. We know that print advertising revenue decline is ongoing across the industry. And a lot of the lost revenue in Canada is going to foreign-owned and controlled digital companies who, without any regulation, are accessing Canadian audiences and eroding Canadian media revenues.

The way we produce our newspapers can be a strategic advantage for a company of our size and over the last few years, Postmedia Editorial Services in Hamilton (PES) has expanded services to our newspapers by providing a majority of their pagination and layout. We are now further expanding our PES operation to accommodate the editorial production of more of our newspapers' pages allowing our newsrooms to concentrate on the creation of local content. Creating compelling content is still a major focus at Postmedia Network and we are proud of the exceptional work appearing on our print and digital pages every day.

Along with moving editorial production out of our local newsrooms, each of our operations will implement various programs aimed at reducing print-related infrastructure costs with a focus on investing our energies and resources in digital platforms. Three of our newspapers – Calgary, Edmonton and Ottawa – will stop producing a Sunday edition, having identified that subsidising this publication day is simply no longer practical. National Post, as it has for the past three years will suspend summer Mondays and look closely at its publication schedule going forward.

Our audiences move across platforms with great ease and we have seen continued audience growth on our newspaper websites. Our tablet apps and mobile optimized sites are gaining traction as we continue to develop unique experiences for engagement across all of our platforms.

The insights we have gained and the transformation we have undertaken over the last two years continue as we prepare to enter our new fiscal year in September. We know that we must accelerate the pace of change so that the new company we are creating is the strongest, most future-focused and successful that it can be.

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To: The Gazette staff

From Alan Allnutt

Date: May 28, 2012

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Further to Paul Godfrey's Business Update, I wanted to briefly discuss how the budgeting process and the changes mentioned by Paul will affect The Gazette.

As some of you may have read last week, the venerable Times-Picayune of New Orleans, a 175-year-old newspaper, has decided to print only three times a week beginning this summer. This is further evidence that media companies across North America face major challenges as a result of significant declines in print advertising. Their solution may seem radical to some, but they are simply making a business decision to focus on their digital platforms four days a week and cut printing and distribution costs.

We don't think we are at that stage yet, but we are looking at all possible options to reduce cost around print and continue the transition to digital delivery of our products.

Our budgeting exercises in recent weeks have shown us that doing nothing is not an option.

Yes, we have made very significant progress in cutting our so-called "legacy costs" by reducing operating costs at the plant and by reducing unprofitable circulation. But looking out another 12 months, we feel we must find further efficiencies in order to remain financially stable and to continue serving our local community.

The editorial department will be undergoing more transformation in the next few months and more than 20 positions will be removed from the newsroom. All roles, from managers on down, will be redefined with a digital focus. We are also looking at changes to the weekday paper sectioning, as well as the number of presses we use to print it each day.

In other departments we will continue our efforts to find new ways of doing things more efficiently.

As we told members of the Guild executive earlier today, we will be offering voluntary buyouts in most departments. More details on this program will be forthcoming in the next few days.

If The Gazette and Postmedia are going to compete into the next decade, we must find ways to be more nimble while remaining profitable. That means constant change. And while change can be frightening for all of us, it can also be exciting and lead us to a brighter, more stable future.

Please keep the lines of communication open – if you have any questions, contact your managers or me directly.

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