(WINDSOR, ON) – Could the end of the Windsor Star, as a stand-alone newspaper, be on the horizon? The just released fourth quarter results of PostMedia, its parent, are dismal.
So much so, its management added an extreme caution to its financial statements.
The company has considerable debt obligations, totalling $646 million. As an abundance of caution, it advises there is no guarantee it will be, “… able to generate sufficient cash to service all of our indebtedness and [we] may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.”
Some of the expected manoeuvres, should it face substantial liquidity problems could force it to, “… reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance indebtedness.”
In the quarter, which ended August 31, despite adding a number of newspapers, bought from Quebecor, the company continued another in its never-stopping string of quarter-by-quarter losses. This time it was $54.1 million in the red, up from $49.8 million last year.
A revenue jump to $230 million, an increase of $83.4 million, was largely attributed to the Sun chain and not through selling more of its original news products. Revenue from its pre-purchase assets, compared to last year, actually decreased by $13 million, continuing a trend it can’t seem to shake.
Because of this, its many newspapers are increasingly read by less customers and, at the same time, attracting less advertising.
Its digital properties are also not doing well. As it was releasing its results, Postmedia cancelled a new product it developed, an early evening tablet news edition available from some of its papers.
It is also costing the company more to print its news.
The company sold off many of its printing presses and now pays others to do the job. Its finances are so bleak, its expense reduction efforts in the quarter were literally wiped out because of production outsourcing.
Not including the impact of the Sun acquisition, it was able to reduce payroll costs, “… newsprint and distribution expenses of 11.9%, 18.7% and 4.8%, respectively.” However, printing its papers saw increased, “production expenses of 34.0%.”
In the midst of this financial maelstrom, Postmedia has been trying to cut as many expenses as possible and has entered, yet another, round of austerity to further shave millions from the cost of its operations. Results of its expense reduction and better asset utilization are clearly visible at the Star where, this month, it eliminated a number of the paper’s sections and took to using content from other PostMedia publications.
In an obvious attempt to reduce news gathering costs, whole sections of the paper were eliminated, including its national and world news, and replaced with inserted content from PostMedia operations such as the London Free Press.
Despite the changes, it does not seem to be acquiring new advertisers, the lifeblood of the paper. Its new National Post section of October 19 was spread out over eight pages with virtually no advertising, aside from a one-eighth bottom page banner on the front page.
Without question, the company is in a serious, although so far manageable, financial situation. But, its future is clouded.
How its continuing losses will impact the local paper remains to be seen. It could dictate more serious job and operational cuts and, possibly, an end to the paper as a free-standing unit. This might require it to be merged with other PostMedia papers such as those in Sarnia, London, and Chatham-Kent.
Robert Tuomi can be heard at 8:30 pm every Monday evening and noon every Wednesday co-hosting Talkin’ ‘Bout Windsor on CJAM 99.1 FM. Listen on demand to previous episodes or catch the discussion live and join in. Talkin’ ‘Bout Windsor is broadcast every Monday and Wednesday to the Windsor and Detroit listening area and streamed online at CJAM.