Postmedia Network Canada Corp. had a $3-million loss in its first quarter as overall revenue declined 8.5 per cent from a year earlier due to lower print advertising and circulation revenue, the company announced Thursday.
The owner of Canada's largest newspaper group, including the National Post, says overall revenue was $156.7 million for the three months ended Nov. 30, down from $171.3 million a year earlier.
The Toronto-based company, like most other producers of newspapers, magazines, radio and television content, has grappled for years with a long-term loss of advertisers linked to the rise of digital alternatives.
Postmedia's long-term strategy has been to tap new sources of digital revenue while reducing expenses at its legacy operations – daily and community newspapers in several provinces – to reflect their declining revenue.
"Our teams are focused on executing on our strategy and this focus is reflected in our digital advertising revenue results," Postmedia chief executive officer Andrew MacLeod said in a statement.
Digital advertising revenue was up 11.1 per cent and overall digital revenue rose $2.8 million to $35.6 million – continuing a three-year-long trend of double-digit advertising revenue growth.
On the other hand, Postmedia's print advertising revenue dropped 16.8 per cent or $12.9 million to $64.14 million and print circulation fell $3.1 million to $50.3 million.
"The industry remains in a difficult and disrupted state as pressure on its legacy foundation is accelerating," MacLeod said.
"Despite these challenges, this established growth provides us with the necessary foundation to transform into a future sustainable model."
Most expense items for the quarter were down or flat year-over-year, but restructuring-related costs were substantially higher at $8.6 million – up from $2.7 million a year earlier.
The company said the quarter included $8.6 million of severance costs, both voluntary and involuntary, with the aim of achieving $10 million of net annualized savings.
Operating income before depreciation, amortizing and restructuring expenses was down only $300,000, helped by an estimated recovery of $2.4 million related to journalism labour tax credits from the federal and Quebec government.
Due to the combined effect of staff reductions and tax credits, Postmedia's compensation expenses fell $6 million or 10.4 per cent from a year earlier to $52.3 million.
Based on Postmedia's current staffing levels, it expects the federal journalism tax credit to be between $8 million and $10 million per year and the Quebec journalism tax credit to be worth approximately $1 million per year.
Postmedia says the quarter's net loss amounted to three cents per share, compared with a two-cent per share loss a year earlier.