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.