If you had bought $1,000 worth of Postmedia Canada shares on July 4, 2011, you could sell them today for $8.82—a decline of 99.1% in four and a half years.
The company, which publishes such papers as the National Post, the Ottawa Citizen, and the Calgary Herald, trades today at 15¢ per share. Excluding its recent purchase of Quebecor’s Sun newspapers, revenue fell $22.2 million in the quarter that ended November 30. This period included a national election, normally a bonanza for newspapers. Nevertheless:
- Print advertising fell $16.4 million or 17.6 per cent
- Print circulation fell $3.2 million or 6.7 per cent
- Digital revenue fell $1.4 million, or 5.7 per cent.
Postmedia had already announced plans to cut $50 million by this summer. It now plans another $30 million in cuts by the end of August, 2017.
Brown: This part surprised me, Jen. Digital revenue down 5%. And that’s gotta be something that is not just a PostMedia problem. That I think should scare to anybody in the industry down to their bones.
Gerson: I gotta be honest with you, the decline in digital revenue doesn’t surprise me. This is what I think a lot of people don’t understand about the decline of the newspaper industry… It is not that we are losing readers; it’s that our business model is what we are losing. And our business model was based on advertising.
So one of the things that’s happening is that we’re now no longer competing with other newspapers and other organizations for advertising dollars. We’re competing with Google and Facebook. And I will tell you right now, Google and Facebook can offer advertisers things that right now newspapers cannot.
So the revenue decline for print newspapers continues apace, and now digital revenues are falling too, as advertisers shift their spending to Google and Facebook.
In the wake of Postmedia’s earnings report this week, RBC Dominion Securities cut its price target for the company’s shares to zero.
Zero. As in worthless.
On social media, the fallacy endures that management greed is causing the Halifax Chronicle Herald’s problems, or that cost-cutting has degraded the newspaper so much readers no longer care. The Postmedia numbers show a much wider problem.