Postmedia losses widen on weaker ad sales

Postmedia Network Canada Corp.says its losses deepened in the fourth quarter as revenues dropped 13 per cent, weighed down by weaker print and digital advertising sales.

That compared to a revised net loss of $47.9 million or $1.19 in the same period a year ago.

"While we continue to see the impacts of a very challenging revenue environment, particularly with respect to declines in print advertising, we are focused on potential growth areas," Postmedia president and CEO Paul Godfrey said in the earnings announcement ahead of an afternoon conference call with analysts.

Plans to buy Sun Media

Postmedia has been reworking its operations under a three-year turnaround plan.

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Earlier this month it announced a deal to buy the assets of Sun Media for $316 million from Quebecor.

Postmedia plans to finance the acquisition through a combination of debt and equity financings. They include the issuance of an additional $140 million in senior secured notes and a rights offering of subscription receipts for shares in the company.

The company also plans to make up to $50 million for the transaction through the sale of real estate in Montreal and Calgary.

"We believe the proposed acquisition of the Sun Media assets will strengthen (Postmedia) and the future of the news media business in Canada putting us in a better position to compete against non-traditional competitors including foreign-based digital giants," Godfrey said.

Ad revenue down

For the year, Postmedia reported a loss of $107.5 million, less than the previous year when it booked a $160.2-million loss.

• The problem with paywalls

However, the tighter losses were due to a $100 million non-cash impairment charge booked in fiscal 2013, related to a production facility that was up for sale and other costs tied to goodwill and intangible assets.

Revenue dropped 10.3 per cent to $674.3 million, pulled lower by a 15.7 per cent decline in print advertising revenue and a 3.9 per cent drop in digital revenue.

Subscribers to its digital platform helped partially offset the overall revenue declines, the company said.