Postmedia will stop some Sunday papers, cut unspecified number of jobs

TORONTO – Major changes are afoot at Postmedia with the publisher axing several of its Sunday papers and announcing plans to cut an unspecified number of jobs in an effort to combat declining ad revenue.

The moves come as the National Post puts its Monday edition on vacation for the summer, its fourth year of doing so. Local papers in Calgary, Edmonton and Ottawa will lose their Sunday edition.

“There’s still other changes we have to make,” Paul Godfrey, president and CEO of Postmedia, said in an interview Monday.

“We want to use the savings to build up the digital platforms and invest in growth areas of our business.”

The cuts are part of a wider belt-tightening at the company over the past few months, which has included closing its in-house wire service, Postmedia News — which also reduced jobs — and subscribing to The Canadian Press to supplement content.

The changes were made as Postmedia scrambles to grab a piece of the Canadian advertising pie, which is also being pursued by a handful of highly successful online U.S. news properties like Google, the Huffington Post and even Facebook, Godfrey said.

Each of those properties, and several other foreign-owned and controlled digital companies, are gobbling up a significant portion of the country’s advertising revenues, a factor that the government needs to control more closely, he said.

“I know you can’t regulate the Internet, but you could regulate the ability of Canadian advertisers,” said Godfrey, who was once a Canadian politician and also serves as chairman of the Ontario Lottery and Gaming Corp.

“Either take the foreign ownership rules off (for Canadian newspapers) and put everybody else on an equal footing, or put the same rules on these Internet companies.

“All I’m saying is create a level playing field for everybody. If we have certain rules, they should have certain rules.”

A spokesman for CWA Canada, the union that represents Postmedia employees at the Ottawa Citizen, Montreal Gazette and Regina Leader Post, said that the company’s plan to cut dozens of jobs at some of its newspapers is the wrong strategy and will make its situation worse in the long term.

“We understand that Postmedia is facing financial challenges, but we believe the company can only turn things around by investing in its product rather than by cutting jobs,” CWA Canada Director Martin O’Hanlon said.

“If we’ve learned anything over the last few years, it’s that cutting jobs only hurts quality, and that does nothing to attract readers or generate revenue.” O’Hanlon said, noting that the company is struggling with both revenue generation and a heavy debt load.

In its most recent quarter, Postmedia (TSX:PNC.B) reined in its losses, but was hit by a drop in business from national advertisers.

The Toronto-based company, formerly part of the Canwest media empire broken up in 2010, said its net loss was $11.1 million in the three months ended Feb. 29. That compared with a loss of $12.5 million a year earlier when it booked a $1.8-million loss from discontinued operations sold to Glacier Media.

Overall, revenues fell 7.6 per cent to $198.6 million, with the majority of the drop on weaker print advertising, which was down 10.6 per cent or $14.5 million.

Postmedia employees in at least one newsroom were told layoffs would not start until the fall.

In a note to readers on its website, the Edmonton Journal said its last Sunday edition will be June 24. The Ottawa Citizen is scheduled to follow in mid-July and the Calgary Herald at an undecided date.

“News will continue to be updated online, on mobile and tablet so you will continue to receive the very best local news on our digital platforms,” the Journal statement read.

In a memo to staff, Montreal Gazette editor-in-chief and publisher Alan Allnutt said more than 20 editorial positions would be cut in the next few months.

“All roles, from managers on down, will be redefined with a digital focus,” said Allnutt, who added voluntary buyouts will be offered in most departments.

Last week, the New Orleans Times-Picayune — one of the oldest newspapers in the U.S. — announced it will cut back publishing to three times a week starting in the fall.

While Allnutt told staff he doesn’t think the Gazette is at that stage yet, “we are looking at all possible options to reduce cost around print and continue the transition to digital delivery of our products.”

Postmedia owns the Vancouver Province, the Vancouver Sun, the Edmonton Journal, the Calgary Herald, the Regina Leader-Post, the Saskatoon StarPhoenix and the Windsor Star, as well as the online news and information portal.

As part of the changes, the company will expand its Hamilton operations to handle the editorial production of newspaper pages.

Postmedia will also roll out its metered paywall to websites in additional markets with the intention of expanding it across all of its network.

Note to readers: This is a corrected story. An earlier version stated that Paul Godfrey was president and CEO of the National Post.