TORONTO – A larger operating loss, weaker loonie and tightened spending by advertisers combined to drag Postmedia Network Canada Corp. deeper into the red in the second quarter.
The publisher of the National Post and other newspapers, as well as digital content, reported a $58.2-million loss for the second quarter, which was nearly double $25.3-million loss booked for the same period last year.
Postmedia (TSX:PNC.B) (TSX:PNC.A) said Thursday that its operating loss more than doubled to $10.9 million and it booked a higher foreign currency exchange loss of $29 million due to a decline in the Canadian dollar.
About 63 per cent of Postmedia’s long-term debt is denominated in U.S. dollars, which exposes the company to fluctuations in the loonie’s value.
On a per share basis, Postmedia’s quarterly loss was equal to $1.45 per share, compared with a loss of 63 cents per share in the same period last year.
Over the quarter, Postmedia revenue dropped by 10.5 per cent from a year earlier to $145.4 million, with print advertising revenues falling 16 per cent.
Postmedia said it continues to see a shift of advertiser money away from traditional print publications to social media sites and search engines, a long-term trend that has been made worse by “periods of economic uncertainty.”
“This shift is expected to continue and appears to be permanent,” the company told shareholders in its financial report.
“We anticipate the print advertising market to remain challenging and expect current trends to continue throughout the remainder of fiscal 2015.”
Digital revenues have also been under pressure, falling by 2.8 per cent in the period, as both local advertising and classified revenues weakened.
Subscription revenue from its web and tablet platforms grew by $600,000 over the same time last year, the company said, though it doesn’t outline how much money its generates from its digital readership.
The company said digital subscriptions are a “future growth opportunity” and that it’s focused on the rollout of “various new products and initiatives in this area.”
Last month, Postmedia received approval from the Competition Bureau to buy Sun Media’s English-language newspapers and digital properties for $316 million. The acquisition is expected to close on Monday.
Postmedia has anticipated cost savings of up to $10 million from the merger, though executives suggested it could wind up saving more.
“Although we intend to keep all the properties in the major urban areas open, we feel that we will get synergies,” Postmedia president and CEO Paul Godfrey told analysts on a conference call.
Postmedia executives plan to keep the newsrooms of each media outlet separate, but consider merging various other departments, including advertising, IT, finance, production and distribution, Godfrey said.
“If we’re able to accomplish that, especially in the production area, we should have some properties for sale,” he added.
Postmedia has a tentative plan to reveal more details about the combination of its operations with Sun Media during the third quarter.
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