Canada’s largest chain of metropolitan newspapers will close the gates in the new year and ask readers to pay to read their online content.
Postmedia Network Inc. said it would put up paywalls at all of its titles early in the new year, including the National Post, as it reported a $28-million third-quarter loss. The company blamed the red ink on a chronically weak print advertising market, which it now concedes is unlikely to return to its previous levels as companies find new ways to reach customers.
It isn’t the only one coming to terms with dwindling print dollars – New York Times Co. said its ad sales were down more than 10 per cent in the last quarter as it reported an unexpected loss from continuing operations. Unlike Postmedia, the Times was able to offset the print advertising losses with an increase in revenue from its paywall.
The Times’ success with the model – it saw the number of subscribers increase 11 per cent in the last quarter to 566,000 – has emboldened publishers such as Postmedia and The Globe and Mail to turn to metered paywalls to help fund their journalism.
Postmedia is trying to prepare itself for a lower-revenue future. The company revealed Thursday it has cut about $35 million in expenses as it works towards a three-year goal of $120 million.
That lower revenue reality is here now.
Fourth-quarter revenue dropped 5.9 per cent to $190.1 million, according to a Postmedia news release.
Print advertising revenue declined by 8.3 per cent, or $10.1 million, in the quarter while print circulation revenue sagged by 5.9 per cent or $3.2 million.
In comparison, digital revenue only rose by 3.5 per cent, or $700,000.
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In the last fiscal year, Postmedia lost about $58-million in print advertising and only gained $2-million in digital revenue. Mr. Godfrey said the newspaper chain needs to help transition readers away from newsprint and toward mobile devices, where costs are lower and delivery is simplified.
“When you lose a dollar in print you don’t have to gain a dollar in digital. You need about 45 cents,” he said. “You don’t have newsprint costs, don’t have ink and distribution. When you start adding it all up, you begin to close that gap.”