Postmedia Network Canada Corp. has handed chief executive officer Paul Godfrey a two-year contract extension that will keep him at the helm of Canada's largest newspaper chain through the end of 2020.
Mr. Godfrey, 77, has led Postmedia since its inception in 2010, and was under contract until the end of 2018. His employment was last extended in the spring of 2015.
The company, which publishes the National Post and an extensive network of local and community newspapers such as the Ottawa Citizen and Calgary Herald, has been under intense pressure. Falling revenue combined with the cost of servicing expensive debt had pushed Postmedia close to insolvency.
But earlier this year, Mr. Godfrey secured a lifeline, negotiating a restructuring plan that slashed the company's debt by $307-million and reduced annual interest payments by about $50-million.
"Postmedia continues on its transformation path and Paul, who has led Postmedia since its inception, provides important continuity in leadership," board chair Rod Phillips said in a statement.
The restructuring deal gave creditors 98 per cent of Postmedia's equity in exchange for wiping out considerable debt, all but eliminating the stake owned by existing shareholders in the process. At the time, Mr. Godfrey struck a hopeful tone, saying the deal hailed a "new chapter" for the newspaper publisher, which would "have the ability to invest more" in restoring the business.
But after reporting punishing fourth-quarter results last week – including a $99.4-million loss, a 13.7-per-cent drop in total revenue, and a 21.3-per-cent plunge in print ad revenue – Postmedia is right back to the deep cost-cutting that has been hollowing out its newsrooms over a period of several years.
Postmedia unveiled a new plan to cut 20 per cent of its salary costs, largely through a buyout offer that could pay departing staff up to $150,000 each, depending on the length of their service.
In early October, Postmedia elected three new directors to its board.
The company's largest shareholder, Chatham Asset Management, chose David J. Pecker, the chairman and chief executive officer of American Media Inc., which owns the National Enquirer among other magazines, and human resources administrator Daniel Rotstein. Chatham, a New Jersey-based investment manager specializing in high-yield debt, has become influential in Postmedia's affairs since it traded secured debt for equity as part of the restructuring.
Mary E. Junck, executive chairman of American local news provider Lee Enterprises, also joined the board, while five other directors stepped down.
"The recapitalization of Postmedia was an important milestone and the new board agreed that now was the right time to reaffirm Paul's leadership," Mr. Phillips said in an e-mail.
Mr. Godfrey said in an interview that his extension "was in the works for a while, since these guys came into it."
"This is a challenge, and I'm looking forward to seeing it through," he said.
Mr. Godfrey and his executive team have promised experiments with new digital ventures, which appear to offer the company's best hope for a turnaround. The company struck unconventional deals with two financial technology companies – Agility Forex Ltd. and Mogo Finance Technology Inc. – that trade advertising space in Postmedia publications for a cut of the companies' future revenues. But digital revenue rose only 0.8 per cent in the most recent quarter.
The company had previously slashed $136-million in annual spending costs between 2012 and 2015, and another $75-million since then. Postmedia merged competing newsrooms in cities where it owns two daily papers – Vancouver, Calgary, Edmonton and Ottawa – and axed 90 jobs in the process early this year. Another 139 jobs were cut in June, when the company closed its printing plant in London, Ont.
In total, Postmedia has shed the equivalent of 800 full-time jobs in the past year alone. And the sheer scale of the cuts has raised questions about the company's continued ability to produce meaningful journalism across a national chain of newspapers.
In an interview last month, Mr. Godfrey told The Globe and Mail: "You don't know when you're cutting through the bone until you've done it."