Postmedia Network Canada Corp. announced its results for the second quarter on Friday, delivering operating income of $5.4 million before depreciation, amortization and restructuring costs.
Postmedia, which owns a network of publications and digital properties across the country, including the National Post and Financial Post, reduced operating costs by 7.3 per cent in in the period ended Feb. 29, 2020, while increasing digital advertising revenue by 5.4 per cent.
Overall revenue for the quarter was $134.2 million, down 7.9 per cent from the same period a year earlier. The company said the revenue decline was primarily due to decreases in print advertising revenue of $9.9 million, or 16.5 per cent, and declines in print circulation revenue of $2.0 million, or 4.0 per cent. These losses were partially offset by a digital revenue increase of $1.5 million.
Since the close of the second quarter, Postmedia has been focused on employee safety, delivering critical information to Canadians and putting the company in the best position to emerge from the crisis, said Andrew MacLeod, Postmedia’s president and chief executive.
Despite significant declines in the first two to four weeks of the economic shutdown — which began in March — those losses have not accelerated as the pandemic has worn on, he said.
“We saw a significant drop in revenues across multiple lines of business and I would say we expect those drops to continue, but they have not increased or accelerated,” MacLeod said in an interview. “They’re sizable, they’re material, they’re significant but we don’t have evidence yet that they are accelerating beyond the bottom that they’ve put in. So I think so much of the question now is, ‘What does the recovery look like?’”
Postmedia has never had a larger audience or viewership in its history than at this time, he said.
“And yet, simultaneously, we’ve never been more challenged in monetizing the audience.”
Among the challenges is a reluctance from major advertisers to place their messages alongside news about the pandemic.
The continued dominance of international tech giants in the digital advertising space also remains a concern.
MacLeod is one of a group of Canadian newspaper executives who have asked the federal government to follow France and Australia in forcing Facebook and Google to pay to display their news content.
“If we as an industry need to build a digital-revenue future, that is exceptionally challenging if 80 to 85 per cent of the revenue is leaving the Canadian bathtub before domestic players wake up in the morning,” he said.
MacLeod expects legacy revenue streams to return to a “new normal” that is lower than current levels and believes it is not unreasonable to assume the current crisis might hasten an industry transition toward digital content.
“If that’s true, the strategy we’ve been on, to build a digital-revenue future, is clearly the right one,” he said. “For us it only increases the need to build a digital revenue stream.”
In its earnings release, Postmedia said it has qualified for the federal government’s Canada Emergency Wage Subsidy (CEWS) which provides companies facing financial hardship due to COVID-19 with 75 per cent of the amount of remuneration paid, to a maximum of $847 per week per employee. It applied for the program for the period of March 15 to April 11 in the amount of $7.3 million. For the period of April 12 to June 6, Postmedia expects to receive an additional $13 million to $15 million.
The media company has already announced temporary layoffs for some staff and imposed salary reductions for employees earning more than $60,000. As advertising revenues fell due to the coronavirus pandemic, it also closed 15 community newspapers in Manitoba and Ontario.
Net loss for the second quarter was $12.8 million, compared to $5.1 million in the same period in the prior year.