With a senior executive bluntly stating that they are in “serious difficulty,” the Vancouver Sun and Vancouver Province are instituting a voluntary layoff program aimed at driving “dramatic” staff reductions.
In an internal memo to staff Thursday, Pacific Newspaper Group (PNG) president and publisher Gordon Fisher told employees that the situation facing the two dailies is “much more challenging” than he expected.
“I have become very aware very quickly that there will be no honeymoon period,” said Fisher, who replaced Kevin Bent as head of the Postmedia Corp. division in January. “Future decisions will be hard and must be made with a sense of urgency.”
Fisher said that both the Sun and Province have seen “alarming and unprecedented” revenue declines in recent years, mostly in traditional print advertising. While digital revenues have increased, they are not coming quickly enough to offset the declines in print advertising, he said.
PNG’s year-to-date financials indicated that traditional print revenues had declined 16% through the end of March, with Fisher indicating that there are “no signs” of that trend changing.
“Although much has been done over the same period of time to cut costs, the expense reductions have also come nowhere clear closing the gap,” he said. “If these trends continue, and we don’t find ways to dramatically reduce costs, the answer is clear. The business is unsustainable.”
Ed Strapagiel, a Toronto-based consultant who has spent many years analyzing the daily newspaper industry, said that the double-digit revenue declines are “very difficult” to handle, particularly since traditional newspaper advertising categories like retail are experiencing their own difficulties.
“There’s not a lot of good news in the economy or reasons to be optimistic that things will get better,” he said. “There’s no reason to expect that someway, somehow, print advertising revenues are going to increase substantially.”
Strapagiel said that newspapers in other large Canadian markets – with the possible exception of Alberta and Saskatchewan, where the economy is booming – are destined to experience the same problems as the Sun and Province.
While acknowledging that this is an industry-wide problem, Fisher said that PNG has a cost base considerably higher than the industry average, with production costs that are “dramatically higher” than its peers. He said that the publications are unable to profitably compete in the insert business – where other Postmedia divisions are enjoying “flourishing” revenues – because of their increased costs.
Fisher said that PNG is currently an “anchor” on Postmedia. “We also have much more difficulty seeing the kind of significant reductions other divisions have seen through transformation projects,” he said. “That just has to change if we are ever going to be successful as a business.”
While he leavened the otherwise bleak memo with the assertion that it would be possible to create a “sustainable and re-engineered business model,” Fisher said that it needed to take immediate steps to “stop the bleeding.”
Fisher indicated that the voluntary staff reduction program would be followed by layoffs. “These are not easy decisions, and we do recognize that such programs mean we will lose senior employees with valuable experience as well as more junior staff with future potential,” said Fisher.
The organization’s strategic plan will rest on four key pillars, said Fisher:
• Becoming an audience-first, four-platform organization
• Selling on audience, not on a single platform
• Executing a multi-platform subscription plan under which readers pay for content
•Continuing to aggressively cut costs
The PNG announcement follows yet another round of voluntary layoff programs at publications including The Globe and Mail and Toronto Star, although Strapagiel said such programs tend to have limited success.
“Every employee hopes the other guy is going to volunteer,” he said. “And if you’re working for a major newspaper today, where else do you go? Other newspapers aren’t hiring.”
There are still options for dailies, said Strapagiel, such as reducing the size and frequency of the publication. However, both tend to be considered options of last resort, particularly among broadsheet papers.
“It just breaks their heart to reduce their format or drop publishing dates,” said Strapagiel. “The broadsheet format is regarded as the pinnacle; anything that’s a tabloid is a couple of notches down in status and editorial authority. There’s still that kind of bias among the newspaper industry’s old guard.”
There are precedents of major dailies reducing both size and frequency. Last year, for example, the New Orleans Times-Picayune reduced its publishing schedule to three days a week from seven.
This week, job recruitment firm CareerCast.com listed newspaper reporter as the worst job in America on its 25th annual Jobs Rated Report, citing factors including workplace stress and career prospects.
