TORONTO — Postmedia said Thursday it plans to reduce its salary costs by 20 per cent through voluntary staff buyouts, adding that layoffs are possible if that target isn't met as it announced net losses that nearly doubled in its most recent quarter.
Staff have until Nov. 8 to apply for the buyouts, the company said, with reductions coming from all levels and operations.
The newspaper chain announced the cost-cutting measure as it reported a fourth-quarter loss of $99.4 million or 35 cents per diluted share. That's up from a loss of $54.1 million or 19 cents per diluted share for the same period a year ago.
Newspapers boxes sit outside Postmedia's headquarters in Toronto. (Photo: Globe and Mail via CP)
Revenue for the quarter ended Aug. 31 totalled $198.7 million, down from $230.2 million. Postmedia attributed most of the revenue loss to a 21.3 per cent drop in print advertising and eight per cent fall in print circulation.
For its full financial year, Postmedia said it lost $352.5 million or $1.25 per share on $877.2 million in revenue. In the previous year, it lost $263.4 million or $1.98 per diluted share on $750.3 million in revenue.
"We must accelerate the transformation of our business operations to align our cost structure with our revenue outlook,'' CEO Paul Godfrey told analysts and media in a conference call.
Under the buyout plan, employees are eligible to receive three weeks' pay for every year worked, up to a maximum of 78 weeks, said Paul Morse, president of Unifor Local 87-M, which represents some Postmedia employees. The offer is capped at $150,000, he said, and will be paid as a salary continuance, rather than a single payment.
"The real problem with Postmedia is its debt."
About 4,000 full-time equivalent employees work for Postmedia, said Phyllise Gelfand, the company's vice-president of communications, in an email. That's down from 4,733 as of Aug. 31, 2015, according to company documents.
The newspaper industry has struggled with declining ad revenue for years, but 2016 has been particularly brutal for the business.
But the president of CWA Canada, a union representing about 6,000 media workers, said Postmedia is using declining print advertising as a scapegoat for the financial problems caused by its large debt.
"The real problem with Postmedia is its debt,'' Martin O'Hanlon said in a statement.
Postmedia papers. (Photo: Mark Blinch/Reuters)
Postmedia completed a restructuring earlier this month that reduced its total debt by about $307 million and its annual cash interest expense by approximately $50 million.
In January, Postmedia cut 90 jobs and merged newsrooms in four cities, but maintained separate newspapers in each location following its acquisition of Sun Media's English-language newspapers and digital properties last year.
Those layoffs were part of cost-cutting measures as the company aimed to reduce its annual operating expenses by $80 million. Postmedia said Thursday it's just $5 million shy of reaching that goal, which it expects to do by the end of the first quarter of its 2017 financial year.
The anticipated buyouts or eventual layoffs are "incremental'' to that target, said chief financial officer Doug Lamb during the conference call.
Godfrey told analysts and the media when the debt restructuring plan was announced that the company still had work to do to operate in a challenging industry — a sentiment he echoed Thursday.
"While the debt burden has been significantly reduced, we continue to operate in a very disrupted industry,'' he said. "Competitive pressures and revenue challenges persist.''
He said the company is trying new initiatives to bring in revenue.
This year, the company struck deals with three financial technology companies, Agility Forex Ltd., Mogo Finance Technology Inc. and FundThrough, for revenue in exchange for ad space.