It’s been a dismal start to the year for Canada’s newspapers, and investors see little sign of a turnaround.
Postmedia Network Canada Corp., owner of many of the country’s newspapers, announced in January it was merging newsrooms in cities where it has two papers, eliminating dozens of jobs. Torstar Corp., publisher of the country’s largest circulation paper, closed its printing plant and fired 300. Rogers Media, a unit of Rogers Communications Inc., fired 200 people. The 149-year-old Guelph Mercury shut down its print edition. Some publishers are even suggesting government support is necessary. And that was just in January.
“We’re seeing a further cratering of the daily press,” Ken Doctor, an independent media analyst at Santa Cruz, California- based Newsonomics, said by phone.“The toll that all these years of losses in print advertising has taken is now deadening the enterprises.”
Shares of Postmedia have slumped 86 percent over the past 12 months and Torstar has dropped 70 percent, the worst- performing among their North American peers, including Time Inc., which is down 46 percent over the same period. As the industry struggles with the loss of advertising revenue to the Internet, Canadian media faces additional challenges: competition from a government-funded public broadcasting system and a paucity of big-pocketed individuals willing to come to the rescue.
‘Revenue Pressure’
Postmedia, which counts New York hedge fund GoldenTree Asset Management LP among its investors, has sunk to 15 Canadian cents. Credit-rating firms have downgraded Postmedia’s almost C$700 million ($500 million) in debt and questioned its ability to repay the notes when they come due in 2017 and 2018. Mary Beth Grover, an outside spokeswoman for GoldenTree with ASC Advisors LLC, declined to comment on Postmedia.
“A material recovery in equity value seems unlikely,” Haran Posner, an analyst at RBC Capital Markets, wrote in a note to clients in January. “Revenue pressure continues unabated, and traction with digital monetization remains elusive.” He cut his price target on the stock to C$0.
Torstar’s market cap has shriveled to C$181 million. Still, its debt is lower than Postmedia’s, with a C$138 million loan due in 2020. Eight analysts have the equivalent of neutral ratings on the stock.
“The market is quite accurately reflecting a harsh but inescapable truth: people do not value the thing we are selling at a price sufficient to cover its costs,” Andrew Coyne, one of Canada’s best-known political commentators, wrote in his own newspaper, the National Post, a Postmedia title.
Representatives of Torstar and Postmedia didn’t return requests for comment.