The red ink at Postmedia Network Canada Corp. continues to deepen as declining revenue, particularly from print advertising, drove a net loss of $49.8-million in the fourth quarter.
Revenue for the fourth quarter of 2014 was $146.8-million, down 13.3 per cent from $169.3-million a year ago. Print ad revenues accounted for much of the plunge, falling 21 per cent to $19.8-million, while circulation revenue dropped 2.7 per cent.
The net loss of $1.24 per share reported on Friday was larger than in the same quarter last year, when Postmedia booked a $47.9-million loss, or $1.19 per share.
The company is in the midst of a substantial transformation. Earlier this month, it announced a $316-million purchase of 175 newspapers and digital properties from Quebecor Media Inc., including the Sun newspaper chain, but the deal awaits regulatory approval. And Postmedia is still in the course of a three-year plan to cut $120-million from its budget, even as it rolls out redesigns at its leading newspapers such as the Ottawa Citizen and Montreal Gazette, unveiling new smartphone and tablet apps.
For the full year ending Aug. 31, 2014, the company's net loss was $107.5-million compared to $160.2-million in the previous year, but last year's figure was inflated by a $100-million non-cash impairment charge.
Revenue for the fiscal year was $674.3-million, down $77.3-million, or 10.3 per cent, from a year earlier.
After announcing the purchase of the Sun papers, Postmedia president and CEO Paul Godfrey said he no longer considers rival newspapers the company's biggest competitors, but sees pressure from online giants such as Google Inc. and Facebook Inc.
But even Postmedia's fourth-quarter digital revenues declined year over year, falling $1.1-million, or 5.3 per cent.
The company's cost-cutting measures in the fourth quarter are expected to reap $3-million in annual savings, however, and it expects to further reduce costs by $6-million to $10-million through the Sun Media acquisition within two years, should it be approved.
"While we continue to see the impacts of a very challenging revenue environment, particularly with respect to declines in print advertising, we are focused on potential growth areas," Mr. Godfrey said in a statement, citing the company's redesign strategy, which will introduce a revamped Calgary Herald next month.
Postmedia's long-term debt sits at $473.8-million, but it expects the purchase of Sun Media properties from Quebecor to improve cash flow and debt ratios. The company will finance its deal by issuing $140-million of new debt to an existing bondholder, Canso Investment Counsel Ltd., and raising the remaining $186-million through a rights offering backed by U.S.-based hedge fund GoldenTree Asset Management.