Ad revenue was down once again for Postmedia in Q2, though it is seeing signs of hope from a burgeoning parcel business.
Excluding the impact of the Brunswick News acquisition, revenues declined by 7% year-over-year, with a 10.1% drop in ad revenue and a 12.8% drop in circulation revenue. When including Brunswick News, total revenue increased by 9.1% year-over-year, but ad revenue was still down by 3.2% and circulation revenues were down 7.2%.
Parcel distribution continues to be the bright spot for Postmedia thus far this fiscal year, and is an area of rapid expansion for the company. Revenues in the quarter were $11.76 million, compared to only $589,000 in the same quarter the prior year. The company says parcel services, along with digital advertising and digital subscriptions, will be growth priorities for the remainder of the year.
“Economic uncertainty persists and Postmedia, like countless other corporations, is aggressively managing our costs to reflect this challenging environment,” said Andrew MacLeod, president and CEO of Postmedia. “We are using this opportunity to proactively transform our business to architect a sustainable news media model for the future. In spite of the difficult environment, we continue to see positive early indications of growth and opportunities from digital subscriptions and parcel distribution.”
The quarter ending Feb. 28 also included several cost reduction measures at Postmedia, including laying off a significant number of its editorial staff, moving several publications to online-only models and reducing its real estate footprint.
Operating expenses actually increased by 6.8% in the quarter, though when excluding the Brunswick News acquisition, expenses were down 10.1%, with reductions across categories. The company expects efforts taken this quarter to result in $22 million of net annualized cost savings; when coupled with similar initiatives undertaken in Q1, it expects the saving to reach $40 million.
The operating loss for Postmedia was $530,000, compared to $2.68 million in the same quarter the prior year, though when excluding Brunswick News, Postmedia had operating income of roughly $800,000. Net loss in the quarter was $20.8 million, compared to $22.1 million in the same period in the prior year.
