Death By A Thousand Cuts

By Robert Tuomi

There could be a whole lotta shaking going on as PostMedia starts to rattle the bushes to find more cost savings. Facing a continuing dire financial situation, the company, which is the parent of the Windsor Star and innumerable other daily and weekly Canadian newspapers, has escalated its current cost reduction measures.

Initially, it anticipated the current round, designed to trim $50 million, would be completed by 2017. It now plans to achieve the goal before summer and, then immediately, commence work on chopping another $30 million.

Its just-released 2016 first quarter financial report shows another in the now customary quarterly losses. This time, costs exceeded revenues to the tune of $4.2 million. There was no good news in the quarter, which ended November 30.

All of its operating segments showed declines.

Excluding sales from its recently acquired Sun Media newspapers, it saw a 17.6% drop in newspaper print advertising revenue. During the period, less people paid to read its papers resulting in a 6.7% circulation loss. Money also dwindled in its digital endeavours where sales dropped by 5.7%.

What is most telling is the company’s financial situation is nothing if not precarious.

Liabilities exceeded assets by $76 million. As PostMedia tries to even out the difference, it faces a Catch-22 situation.

The publisher has managed to sell some of its printing presses to help pay down debt, but contracts with the purchasers, who will print its papers, have seen production costs rise.

In a frank assessment of future prospects, the company’s management fretted about the possibility it might not be able to pay its financing debts. Those holding first and second lien notes need to be repaid $671 million.

If it continues to lose money, PostMedia admitted the, “… indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt agreements.”

So far, PostMedia management has remained tight lipped about how it will squeeze millions more out of its operational costs. In the past, this has included jettisoning staff and selling production facilities.

It has a few to sell locally, including one in Windsor and one in London, which prints both the London Free Press and the Sarnia Observer. Amid falling circulation, the presses are hardly busy.

The Windsor Star prints about 100,000 less papers every week, compared to 2006. Its average daily circulation, according to numbers from Newspapers Canada, has fallen 20% over the past eight years.

During its first quarter restructuring, expenses ballooned by $7.6 million to $11.8 million. This, it says, has consisted mostly of packages to severed employees along with, “… onerous leases related to unoccupied property.”

Most recently, on January 7, as reported by the Globe and Mail, PostMedia, “… closed both of its publications in the Muskoka region, blaming financial losses and low readership.”

The weekly What’s Up Muskoka? and Muskoka Magazine are history, ending the jobs of 26 full and part-time staff.

In the same report, the Globe showed PostMedia shares hovering in the penny stock range, selling for about fifteen cents each. If nothing else, for the price of a coffee at the Star’s News Café, operated by the Green Bean, a nice pile of its shares could be amassed.

As to what will happen to the local paper, definitive details should follow before summer arrives.

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.

About the Author

Robert Tuomi
After initially succeeding as a broadcast journalist and achieving senior level assignments, Robert branched out into marketing communications. As a senior executive, primarily in the high-tech industry, Robert created award-winning and comprehensive, multi-faceted initiatives to enhance sales and expand market awareness for some of the largest companies in their fields. Email Robert Tuomi

4 Comments on "Death By A Thousand Cuts"

  1. The Windsor Star articles are below par, and it would be no loss if they gave us news out of Toronto, that is were our weather forecast comes from daily. The Star never gives us the whole story, only what they want you to know, not like the Windsor Square we are given the whole story good or bad.

  2. I am a lifelong member of this community who started working early in life paying taxes and spending my earnings in and around this community. Later I applied and was able to receive a job at one of our Auto Plants. I was appalled at the windsor star’s attacks on the Unionized work forces in the very community that supported the Star. The windsor star sent out their hired “goons”, gord henderson (GHb) and chris vander dolen (VD) to viciously attack us repeatedly enabling the Big 3 to start pulling out of Windsor and Canada. I and many others stopped buying the Windsor Star. Then watching the eddie francis/windsor star “love in” I knew I had made the right choice. Even the last Federal election in which newspapers across the land were ordered to support the Conservative Party/Harper ticket was an eyeopener to me and others. Frankly, I will never trust mainstream media again.

  3. robert tuomi | 19 January 2016 at 16:42 |

    Update. The Globe and Mail is reporting the 90 job cuts announced January 19 will include one sports writer at the Windsor Star. A new centralized sports desk will apparently produce content for all PostMedia newspapers.

  4. John Skinner | 19 January 2016 at 13:29 |

    My guess would be, this is where the penny drops in as much as some of the ongoing slanted (disgruntled) writers voicing loud, and seemingly frustrated tones of late. They see their city, and their personal worlds crashing in around them, and it’s scary as all get out.

    This is now REAL for them. Gone are the days of a throng of metro reporters having their liquid lunches at the press club overlooking the riverfront. And they have to do with 2 floors of a corner building, sandwich from SUBWAY, and make their own coffee.

    I guess all of that support of Edward and his doings probably wasn’t such a good idea after all. It’s in large part we, in this area, and due to his inability to lead and have foresight are in the spot we’re in. And it’s the Star’s complicit support that helped keep him in office all those years with all the spit shines they did for his actions..

    It’s a dam shame to watch a part of Windsor such as The Star just fall to ruins as their building did. There are a few good hard working people there that deserved better… Mind you, just a few.

    Best of luck to the masses over on the corner. I’d be dreading my pay cheque envelopes from this point on.

Comments are closed.