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Postmedia newspapers, including the National Post and Ottawa Citizen are shown with Quebecor Media's Ottawa Sun on Oct. 6, 2014.

Justin Tang/THE CANADIAN PRESS

Falling print advertising revenues weighed heavily on the latest results from Postmedia Network Canada Corp. but the newspaper publisher reported a slightly smaller first-quarter loss compared with last year thanks largely to an Ontario tax credit and reduced expenses related to restructuring.

The media company, which owns of several daily newspapers and websites including the National Post, says it lost $10.3-million in the quarter, or 26 cents per share. That compares with a loss of $11.8-million, or 29 cents per share, a year earlier.

Overall revenue dropped 12.6 per cent to $169.5-million — mostly because of weaker print advertising sales, which plummeted 20 per cent to $93.1-million.

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Print circulation revenues were also down, falling about four per cent to $47.4-million, as Postmedia countered a decline in sales of newspapers with price increases.

Digital revenue from advertising and subscriptions on websites and other electronic media, grew three per cent to $24.3-million.

Operating income, filtering out factors such as restructuring costs, depreciation and amortization, came to $45.6-million, which held relatively steady with a year ago.

Operating expenses were reduced on lower costs for newsprint, paper distribution and employee compensation, though production costs went up after the company outsourced production of the Montreal Gazette and Calgary Herald.

Postmedia's largest operating expense category was compensation, at $54.1-million, but it was down 26.8 per cent compared with a year earlier — in part because of a $13.8-million Ontario digital media tax credit. Excluding this recovery, compensation expenses fell by $6-million or 8.1 per cent compared with a year earlier as a result of lower salary and benefits.

Postmedia has been undergoing a three-year turnaround plan, which includes cost-cutting and greater emphasis on digital forms of publication in keeping with a broad trend shift in consumer and advertiser preferences.

In the latest quarter, Postmedia reduced restructuring items to $4.2-million from $20.1-million a year earlier.

In October, the company announced a deal to buy the assets of Sun Media from Quebecor for $316-million, which it intends to finance through a combination of debt and equity financings and proceeds from the sale of real estate in Montreal and Calgary.

"Management's significant focus now is on working through the regulatory approval process with the Competition Bureau for the Sun Media acquisition, working on the integration plan and, subject to regulatory approval, ultimately welcoming new brands and new audiences into the fold," said Postmedia president and CEO Paul Godfrey in the results.

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