Postmedia Network Canada Corp. has announced chief executive Paul Godfrey's successor, naming a fast-rising executive its "designated survivor" should any unexpected change occur at the company.
Andrew MacLeod, 46, will add Mr. Godfrey's president role to his current work as chief operating officer. But his promotion does not signal that Mr. Godfrey intends to leave the company early, the CEO says. The rest of the executive team will report to the joint office of the president and CEO. Mr. Godfrey's tenure as CEO, which began in 2010, is scheduled to last another three years. "You don't wait until the end of 2020 when you're walking out the door. You do it well in advance," Mr. Godfrey, 78, said, describing Mr. MacLeod as his "designated survivor." "I won't be abdicating. We'll be working together. … I have every intention of fulfilling the terms of my contract."
Priorities for the country's largest newspaper chain are to find new revenue streams and to continue to cut costs. While Postmedia has seen growth in digital revenue, like many print-media companies, that growth has been outpaced by declines in print. Print advertising revenue fell 15 per cent in the fourth quarter compared with a year ago and print circulation revenue dropped 7.3 per cent, the company reported on Thursday. Digital revenue increased 15 per cent compared with the same period last year.
"It's really about trying to find ways to reinvent yourself in an environment that's very much dominated by these large apex predators, the Silicon Valley players," Mr. MacLeod said. "How do you learn to co-exist with the dominance of Google and Facebook?"
Digital media will account for more than 45 per cent of total advertising spending in Canada this year, according to media-buying firm GroupM. The vast majority of that digital advertising is done with Google and Facebook, leaving companies that invest in creating content scrambling to convince advertisers that they are a worthwhile investment – even without the scale or the breadth of consumer data that those digital giants offer.
As advertising revenues have slipped, media companies have been cutting back on expenses to try to keep pace with the transition. On top of that, Postmedia has been grappling with paying down long-term debt, which according to its results on Thursday, sits at $261.8-million. The company's newsrooms were consolidated in the wake of the purchase of the Sun Media newspaper chain; hundreds of jobs have been cut in recent years; and employee benefits were cut at its non-unionized newsrooms earlier this year. Last month, in what they called a "hell freezes over moment," a group of newsroom employees at the National Post announced an effort to unionize.
"We don't like doing cost cutting, but we also realize the cost base must somehow fit in with the revenue base of the company," Mr. Godfrey said.
In August, Postmedia sold its Infomart business to Meltwater News Canada Inc. for $38.3-million, and announced a deal to sell a Toronto printing plant to Rice Group for $30.5-million. The money was put toward the company's debt. The Infomart sale helped Postmedia to a $40.3-million profit in the quarter, compared with a $99.4-million loss in the same period last year. Revenue for the quarter fell to $176.8-million, down from $194.6-million last year.
"Our entire industry is in a state of pretty deep disruption. … You have to fundamentally think about how you're going to survive," Mr. MacLeod said. "That creates tension in any executive environment. … We have a lot of healthy tension as we evaluate our various options and initiatives."
Mr. MacLeod has swiftly moved up the ranks at Postmedia since leaving Blackberry in 2014 to join the company as chief commercial officer. He was promoted to chief operating officer last year. Postmedia awarded retention bonuses valued at $900,000 to Mr. Godfrey and $425,000 to Mr. MacLeod late last year.
"Not being from the media industry, I came in with fresh eyes," Mr. MacLeod said. "We've made some good strides trying to change the culture, the environment, and the speed at which we're operating."
Postmedia supported the appeal by industry group News Media Canada for support from the federal government to help sustain the costs of journalism. In her speech last month outlining a vision for Canadian cultural policy, Heritage Minister Mélanie Joly announced she would modernize the Canada Periodical Fund, but said that the government does not believe in bailing out news organizations.
"I think the government believes the industry is struggling," Mr. Godfrey said. "With all the cuts we've made; and the possibility of more in the future; and a shrinking print aspect of it; and with Google and Facebook taking [the majority] of all digital display advertising – their definition of struggling is our definition of crisis."