The head of Postmedia Network believes the newspaper chain’s competitors will soon follow it towards an online pay-per-view model as the industry searches for new digital revenues to offset tumbling advertising sales.
“We were a bit of a pioneer in Canada, but not a pioneer in the industry overall, but I think for us to hit this grand slam that we all want to hit, I think that’s one part of the puzzle,” president and CEO Paul Godfrey told analysts after the company reported fatter profits but falling revenues in its latest quarter.
Postmedia, the former Canwest newspaper company, began experimenting with a “metered” or paywall model that charges readers for online content at two papers, the Montreal Gazette and the recently-sold Victoria Times Colonist, last year.
In October, it said it would roll out a plan to charge all of its digital readers in an attempt to shore up revenue to make up for waning ad sales.
Postmedia is still in the planning stages of introducing its metered system across the chain, but Godfrey said he is encouraged by the success at the New York Times and other papers.
The Wall Street Journal and London’s Financial Times operate this way and the Globe is set to launch a digital subscription service this summer. Torstar, owner of the Toronto Star newspaper, has already begun charging readers for online articles from its Hamilton Spectator daily.
“I wouldn’t be surprised at all to see Torstar and the Globe and Mail within the next year, being on some sort of metered system too,” Godfrey said.
In its earnings report, increasingly stingy advertisers helped pull first-quarter revenues down nine per cent, though profit at the owner of the National Post newspaper rose due to gains from the sale of B.C. newspapers.
The Toronto-based company, sold to creditors as part of the Canwest bankruptcy two years ago, reported Wednesday that revenues slipped to $231.1 million from $254.1 million in the same period a year earlier. Print advertising revenue was down almost 12% to $149.4 million.
The softer ad sales wore into profits, though the results were bolstered by gains from the $86.5-million sale of the Times Colonist in Victoria, the Nanaimo Daily News and Alberni Valley Times as well as community newspapers in British Columbia to Glacier Media in December.
“We continue to feel the effects of a slower than expected economic recovery,” Godfrey said, adding that he also recognizes there is a structural change occurring in the industry.
Meanwhile, the company will also continue to aggressively cut costs in the search for profitability after telling publishers last year to cut costs by as much as 10%, Godfrey said.
The company has cut about 500 full-time jobs, or roughly nine per cent of its workforce, as part of the restructuring.
“We believe there are still some savings,” he said.
“We’re going back to every paper and sort of doing a benchmarking project, we’ll take a look at a department and see if ‘are we doing everything as efficiently as we can, can we save there, can three jobs become two?”
Postmedia has promised in recent months a stronger focus on its digital operations, such as the Canada.com and NationalPost.com websites.