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Vancouver Sun, The Province offering employee buyoutsDARRYL DYCK/The Canadian Press

The Vancouver Sun and The Province newspapers will offer their employees buyouts to deal with "unprecedented revenue declines," their publisher said in a memo to employees that bluntly warned that unless changes were made the papers wouldn't be likely to survive a drop in print advertising.

The papers, both owned by Postmedia Network Inc., have co-existed for decades as separate entities but appear destined to share more resources as the company tries to find ways to cut losses and reinvent them as increasingly digital focused offerings. The memo warns there will be layoffs after the buyouts, for the first time in "many, many years" and asks employees to consider whether they are doing the most they can to help the company turn itself around.

"Please understand that we need your help," wrote Gordon Fisher, who is the general manager of Postmedia's Pacific Newspaper Group. "And if you do anything every day of the week let it be this: ask yourself if you are part of the solution or willing to be part of the solution. If you aren't part of the solution, ask yourself why that is ... we are all fighting not only for the future of the Vancouver Sun and the Province but for the lives and well-being of our families."

The Province was founded in 1898 and has a print circulation near 144,000, while the Sun was founded in 1912 and does about 155,000 copies a day. Mr. Fisher said the chain has no intention of combining the two papers into one product because they cater to such different audiences, but said they are increasingly sharing resources.

"They are different products," he said in an interview. "But we're combining sales forces, handling distribution together and increasingly the newsrooms are working together on their digital product strategies. But we see them as different, and readers choose which they want to read."

Postmedia posted a $14-million loss in its most recent quarter, and is operating under a heavy debt load. But its challenges aren't unique – both the Toronto Star and Globe and Mail have announced buyouts in the last month as they try to bring costs in line with revenue.

Despite growing digital profiles, their operations rely on print advertising to survive – almost 70 per cent of revenue at Postmedia's 10 big-city newspapers comes from printed advertisements.

The chain plans to put up paywalls at its papers in the coming weeks, including the National Post, in a bid to recoup some revenue. The company said last year it wanted to cut about $120-million out of its operating budget in the next three years to deal with structural changes in the industry, and chief executive officer Paul Godfrey said they've already found $58-million in savings through cost cutting.

But he warned that wasn't good enough, a warning echoed by Mr. Fisher Tuesday. Print revenue has fallen about 16 per cent so far this year at the two papers, he said, and hasn't shown signs of improvement.

"Although much has been done over the same period of time to cut costs, the expense reductions have also come nowhere near closing the gap," he wrote. "If these trends continue, and if we don't find ways to dramatically reduce costs, the answer is clear. The business is unsustainable."

Mr. Fisher was transferred to Pacific Newspaper Group in late January, after a stint as vice-president of Eastern Canada and president of the National Post (he also once served as the paper's publisher).  He said a publisher's first note to employees should be one of "good cheer and much hope," but said he couldn't afford to be anything other than open and transparent.

"One of the first things I learned as a young reporter was to not bury they lead … and if there is anyone left who truly believes we can wait this out or rely on hope, you are not mindful of reality."

Gary Engler, vice-president of the Media Union of BC, said the papers "probably have the best collective agreement in North America" when it comes to salary and severance. The company must prove that any layoffs are the result of a permanent industry shift and not solely to pad the bottom line, something he doesn't think will be difficult given the challenges in the industry.

"This doesn't come as a surprise to us," he said, adding the union represents about 600 employees at the two papers. "That memo may sound scary, but if you look at what's going on out there it is actually pretty scary."

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