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The Globe and Mail

Postmedia signs three-year deal with The Canadian Press

Postmedia Network Inc. will cut 25 jobs at the Postmedia News division, which provides stories to its chain of daily papers, including the Ottawa Citizen, Vancouver Sun and the National Post, as well as company websites.

Adrian Wyld/The Canadian Press/Adrian Wyld/The Canadian Press

Postmedia Network Inc. will shutter its breaking-news wire service and sign back up with The Canadian Press in a bid to save money and shift the news organization's focus toward opinion writing and local news.

The newspaper chain – which is struggling with $516-million in debt and lost $11-million in the most recent quarter – said it will cut 25 out of 58 jobs in its Postmedia News division. The Ottawa-based division was founded in 2007 and provide breaking news stories to the chain's 10 daily papers, which include the National Post, Ottawa Citizen and Calgary Herald.

The division was founded by former owner Canwest Global Communications, which decided it was paying too much for the national news provided by The Canadian Press and sought to replicate the service in-house

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The decision to shut the division is the most recent of the company's cost-saving plans at a time of declining advertising sales. Chief executive Paul Godfrey said last month that Postmedia also wanted to sell its Toronto headquarters and move into something smaller, as he announced the implementation of paywalls at the company's Ottawa and Vancouver daily newspapers.

Mr. Godfrey, who took over at Postmedia when it emerged from bankruptcy in 2010, said the previous owners made a mistake when they decided to strike out on their own. The three-year deal with CP has been in the works for 18 months, which means it was one of Mr. Godfrey's first undertakings when he took over the company.

"To be honest I've always been a fan of the Canadian Press," he said. "So I would have continued to be a fan if I had been at CanWest. I'm not sure there's a need for competition in this area – not only is it expensive to run, Canada is only so big a country."

Mr. Godfrey said "commodity news" shouldn't be the newspaper chain's focus, something Postmedia identified in a memo to employees as stories about "committee meetings and day-to-day happenings."

"This puts our content development focus squarely on our core competencies: distinct voices … and local issues covered by our award-winning teams of local journalists along with distinctive reporting, commentary and analysis of national and international matters," the internal memo stated.

When the Postmedia papers left The Canadian Press, the wire service was a collective owned by its members. CP has since been purchased by The Globe and Mail, The Toronto Star and Gesca Ltée.

Mr. Godfrey said having a new ownership structure appealed to him, but wouldn't elaborate on terms of the deal. "From a financial point of view we are very pleased with this," he said.

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CP has 176 full-time employees, and co-president Jim Jennings said there are no plans to hire more journalists. But the deal will mean that the newly privatized company will post a profit this year.

"It allows us to continue our turnaround," he said. "We've established ourselves as a viable business, transitioning from a co-operative to a for-profit operation, and it's just one more step in the restructuring we've undergone in the last year."

With files from reporter Simon Houpt

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