Striving to become a profitable, digital-first media company, Postmedia announced Tuesday that it plans to continue cutting costs in the next few years as it revealed lower second-quarter earnings.
“Going forward we’ll be a smaller revenue company and a smaller expense company,” chief executive officer Paul Godfrey said, adding the company wants to lower its expenses by up to 20 per cent*. “We will be a more profitable company.”
* The target figure is $120 million in three years; about $40 million of that has been achieved so far, the Globe reported
The company wouldn’t elaborate on the next phase of its restructuring, although the executives on an earnings conference call did refer to format changes at some of its print publications, property sales, increased automation of some processes, outsourcing of business functions and further cuts to the work force.
“We’re not ready to state things specifically,” Mr. Godfrey said, adding the company is bound by collective bargaining agreements. “But we are at the point where everything is on the table … it could run the whole gamut. You can just let your imagination go.”
The media company, like others across North America, is reeling from a weak advertising market, which has seen revenue fall sharply at outlets across Canada. For every $7 publishers are losing in their print editions, a recent study suggests they are only earning $1 of digital revenue.
Just six months ago Mr. Godfrey said the newspaper industry’s problems were mostly related to a weak economy, but he conceded Tuesday that the money flowing out of the newspaper industry isn’t likely to come back.
“My gut feeling is this is more structural than the economy,” he said. “We’ve got to build a new company in a different direction … it’s no longer about adjusting costs to revenue declines. It’s creating a new company for the present times.”
The company lost $12.1 million in the second quarter of 2012. In the same quarter one year earlier, it lost $2.1 million. Revenue declined by 6.9 per cent in Q2 2012, but print advertising revenue sank by more than 10 per cent.
While Postmedia’s digital revenues went up almost seven per cent, Godfrey didn’t paint the number as a major victory.
Some related Globe stories:
- June 26 – Postmedia sells Toronto HQ, home of National Post
- May 29 – Paul Godfrey explains the Postmedia strategy
- May 28 – Postmedia cuts more jobs, Sunday editions
And some related blog posts:
- May 10 – ‘Globe and Mail’ to seek furlough volunteers
- May 10 – ‘Globe and Mail’ to introduce metered paywall
- May 9 – About those digital riches for newspapers
- Feb. 17 – John Paton on Digital First
One reason I include the Paton link is that because he is a director on Postmedia’s board. At his Feb. 16 Canadian Journalism Forum talk, Paton warned there would be “blood on the floor” as his own company, Digital First Media Inc., struggled to get costs down to a sustainable level.