Revenue from Postmedia Network Canada Corp.’s printed publications continued to fall faster than digital revenue grew as the company reported a smaller quarterly profit on Thursday.
Canada’s largest newspaper chain said it earned $5.8 million, or six cents per share for the quarter ended Nov. 30, compared with a profit of $17.8 million or 10 cents per share a year ago when it benefited from a gain on debt settlement.
Revenue for what was the first quarter of the company’s financial year fell 10.3 per cent to $189 million, compared with $210.8 million a year ago.
“We’re absolutely committed to doing … what we can to keep telling the stories important to Canadians in communities across our country as we transition to a new business model,” executive chairman and CEO Paul Godfrey said on a conference call.
“Looking ahead, we will continue to look for savings and explore every aspect of revenue generation in our evolving business strategy.”
A digital revenue gain of 14.5 per cent or $4 million was more than offset by a print advertising decline of 17.9 per cent or $19.9 million and a print circulation revenue drop of 6.1 per cent or $3.8 million in the three-month period, the Toronto-based company said.
Godfrey said digital advertising was up 17.3 per cent, a double-digit percentage gain for a fourth straight quarter, which shows its strategy to transition from print to online news is working but needs more time to grow.
Postmedia (TSX:PNC.A, TSX:PNC.B) and Torstar Corp. (TSX:TS.B) announced on Nov. 27 a non-cash deal to trade 41 newspapers and close 36 of them, mainly in Ontario regions served by multiple publications, at a cost of nearly 300 jobs.
On Thursday, Postmedia said it had recognized a gain of $4.7 million on disposal of the operations, representing the difference between fair value of the assets acquired and the carrying value of the net liabilities sold. It said it would also book restructuring and acquisition expenses of $5.1 million for the transaction.
It added the estimated “fair value” of all 41 newspapers in the deal was $3.5 million.
It said all but one of the 22 community newspapers it acquired — the Exeter Times-Advocate — will be closed by this month. It also bought and closed two free commuter daily newspapers.
During the quarter, Postmedia reported operating expenses fell $26 million or 13.6 per cent compared with the year-earlier period — it said compensation costs alone were $19.1 million lower.
It said a new round of cost-cutting initiatives that began in September had already trimmed $14 million from future annual operating costs as of Nov. 30.