TORONTO - Postmedia Network Canada Corp. (TSX:PNC.A) expects the squeeze of lower advertising revenues to continue to weigh on the publisher of the National Post and various other Canadian newspapers this year.
After the company reported weaker profits on Thursday, president and CEO Paul Godfrey said Postmedia will push ahead with its long-term reorganization.
"Print ad revenue internationally has been in decline and we're suffering from the same illness all other newspapers are suffering with, everywhere," Godfrey told analysts on a conference call.
"We will continue to transform our organization with the objective of building a more profitable company."
Canada's largest publisher by circulation of paid English-language daily papers has made sweeping changes as it tries to cut print-related production costs. The plan has included a shift away from print and the introduction of metered websites that encourages frequent readers to buy a subscription.
In the first quarter, Postmedia net income fell to $8.3 million from $28.3 million a year earlier, when it booked gains from the sale of its Times Colonist daily newspaper in Victoria and a number of smaller B.C. newspapers.
Operating income was down to $26.7 million from $34.2 million.
The Toronto-based publisher's revenue also fell, dropping to $211.7 million in the three months ended Nov. 30 from $231 million a year earlier.
Print advertising revenue slipped to $132.7 million from $149.4 million, negatively affected by lower classified advertising that stretched across key markets, like real estate to automotive and employment, Godfrey said.
"We expect the print advertising market to remain challenging for the balance of fiscal 2013," he added.
The company's digital advertising sales partially offset the weakness, rising to $24.8 million from $22.6 million.
The quarter spanned a three-month period that included the back-to-school and Thanksgiving periods and the lead-up to Christmas and the new year — all important shopping periods that usually generate advertising revenue from retailers.
Last May, Postmedia decided to cancel an in-house wire service, Postmedia News, and permanently axed Sunday papers in Calgary, Edmonton and Ottawa.
As part of the changes, Postmedia expanded its Hamilton operations to handle the editorial production of newspaper pages.