The losses continue to pile up at Postmedia Network Canada Corp. as advertising revenues fell again and a weakened Canadian dollar compounded a $58.2-million loss in the second quarter.
The company is still cutting costs, and has predicted further efficiencies from its planned $316-million purchase of Sun Media's English-language print and digital properties. The owner of Canada's largest newspaper chain now expects to complete the acquisition on April 13, and is counting on the larger scale the deal will bring to improve its fortunes.
"As we ready Postmedia to take on greater scope and scale, with the addition of the Sun Media brands, our focus continues to be engaging audiences across four platforms and providing advertisers with innovative made in Canada marketing solutions," said Postmedia president and CEO Paul Godfrey in a statement.
Postmedia's second-quarter net loss of $1.45 per share swelled from a loss of $25.3-million, or 63 cents per share, in the same quarter of 2014. The difference was due largely to currency pain, as the falling value of the Canadian dollar created a $29-million loss on foreign exchanges, which was $24.1-million more than a year earlier. As of Feb. 28, when the quarter ended, 63 per cent of the outstanding principal on the company's long-term debt is payable in U.S. dollars.
Revenue was $145.4-million in the second quarter, down 10.5 per cent from $162.5-million a year earlier.
A 16-per-cent plunge in print advertising revenue from the same quarter in 2014, felt "across all categories," was the main factor driving the decline, the company said. Digital revenues also fell 2.8 per cent despite the launch of redesigned smartphone and tablet apps at some regional papers over the last year, and print circulation declined 4.3 per cent.
Postmedia, which publishes the National Post and several other large urban papers across the country, no longer expects its advertising revenue to rebound to prior levels. "This shift is expected to continue and appears to be permanent. We anticipate the print advertising market to remain challenging and expect current trends to continue throughout the remainder of fiscal 2015," the company said in a document filed on Thursday.
In that light, it has continued to slash costs to adjust to a new reality, with new steps taken in the second quarter expected to yield $19-million in annualized savings. Since Postmedia announced a three-year "transformation program" in the summer of 2012, it has cut annual spending by $131-million, or 19 per cent of operating costs.
Staff compensation decreased by roughly $5.5-million. In early February, Postmedia eliminated the jobs of several national writers and offered voluntary buyouts to newsroom staff at the Montreal Gazette, Ottawa Citizen and Windsor Star.
The company has also lost access to an asset-based credit facility "as it failed to meet certain financial ratios that are required as a condition of borrowing," according to a statement reporting the quarterly earnings.
James Bradshaw