07/10/2012 04:46 EDT | Updated 07/10/2012 04:54 EDT

Postmedia Q3 Earnings: Canada's Largest Newspaper Publisher Widens Loss To $12.1 Million

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TORONTO -- Postmedia Network Canada Corp. said Tuesday it lost $12.1 million in its latest quarter compared with a loss of $2.7 million a year ago, as the newspaper publisher worked to cut costs and transform itself.

"While we continue to face a challenging and uncertain outlook with respect to our traditional business model, we are aggressively launching initiatives that proactively support our transformation from a print newspaper publisher to a digital and audience focused media company,'' CEO Paul Godfrey said.

"The changes we are making will produce a more nimble, forward-looking media company, capable of producing higher quality and better targeted products.''

The loss for the three months ended May 31 amounted to 30 cents per share, compared with a loss of seven cents per share a year ago.

Revenue sank about seven per cent to $212 million for the period ended May 31, from $227.6 million last year, as advertising revenue fell 10 per cent or about $14.5 million.

Postmedia said print circulation revenue fell $2.8 million or 5.1 per cent from a year ago, while digital revenue increased $1.5 million or 6.8 per cent.

Other revenue increased $300,000 relative to the same period last year.

Total operating expenses excluding depreciation, amortization and restructuring decreased $5.3 million or 2.9 per cent compared with a year ago due to lower compensation, and newsprint and distribution costs, which were partially offset by an increase in other operating costs.

The Toronto-based media company said restructuring expenses helped drive operating income down to $4.1 million, $23 million lower than the same period last year.

Postmedia, formerly part of the Canwest media empire broken up in 2010, 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 website.

Earlier this year, the publisher said it was axing several of its Sunday papers and announced plans to cut an unspecified number of jobs in an effort to offset declining ad revenue.

Postmedia said combined with other cost-saving initiatives over the next two quarters, the company expects to save $35 million to $40 million annually.

As part of the changes, the company is expanding 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.

Last month, the company sold its property in Toronto that's home to the National Post and its corporate head office for $24 million to The Rose & Thistle Group Ltd.

The deal includes a lease-back of the property to Postmedia for 18 to 24 months while it relocates to a new building.

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