Postmedia Network Canada Corp. reported a net loss of $20.6-million for the third quarter Thursday as it scrambles to cut costs quickly enough to match a continued decline in advertising revenue.
The Toronto-based newspaper chain said revenue for the period fell 10.8 per cent to $171-million, down $20.8-million from the same time last year.
The owner of the National Post and another nine metro dailies across the country said print advertising revenue slipped 16.5 per cent to $94.7-million while digital ad sales dropped 4.3 per cent to $23.1-million. Revenue from print circulation was also down slightly to $49-million.
Those declines were offset in part by efforts to rein in spending on expenses such as compensation, newsprint and distribution, which were down $13.7-million or 8.6 per cent to $145.3-million for the period.
Postmedia is in the midst of a three-year cost transformation program aimed at cutting 15 to 20 per cent out of its budget and said Thursday it found $8-million in annualized savings in the third quarter. That brings total annual costs cut to about $106-million, or 15 per cent of operating costs since introducing the initiative almost two years ago. The company's long-term debt now stands at $472.3-million.
The company has outsourced page production and printing at many of its publications, most recently announcing in May that it reached an agreement with TC Transcontinental Printing to begin printing the Montreal Gazette in August. Postmedia is also looking for buyers for some of its real estate holdings, including the Calgary Herald building and a printing facility in Surrey, B.C.
"We continue on the path of redefining this company by focusing on transforming legacy costs and reimagining what our products will look like in the future," Paul Godfrey, president and chief executive officer, said on a conference call Thursday.
He noted Postmedia took an important step in the quarter through the launch of its multiplatform model for the Ottawa Citizen, a redesign strategy it plans to roll out across seven of its other publications over the next year or more, beginning with Montreal and Calgary markets this fall.
The newspaper industry as a whole is grappling with persistent declines in traditional print revenues as advertisers now have myriad cheaper options to reach their audience through digital platforms.
Torstar Corp., which owns the Toronto Star and the Metro chain of commuter dailies, said in May that revenues at its newspaper division fell 14.6 per cent in the quarter to $211.3-million largely based on print sales declines. Torstar said Thursday it will cease print production of the Metro papers in Regina, Saskatoon and London, Ont., laying off 25 employees as it focuses on larger markets.
Postmedia says it still sees digital advertising as a growth area and the strategy it is testing at the Citizen – which offers a tailored product for mobile, tablet, web and print editions – is aimed at delivering specific audiences for advertisers interested in reaching targeted demographic groups.
Postmedia's quarterly loss of $20.6-million compares to a loss of $103.3-million in the same period last year when it recorded a $93.9-million non-cash impairment charge related largely to a steep writedown in goodwill due to increased revenue uncertainty.