How much time does Postmedia have left? | Ken Whyte Blog | kwhyte.com
Annualized earnings of $38 million on revenues of $788 million leaves a margin of less than 5%, down from 15% at the time of the Sun Media purchase. If current trends hold, Postmedia will be under water by spring. That doesn’t mean the company will close its doors next spring. Expect increasingly savage moves by management over the next 12 months. More cuts to the product, the payroll, days of publication, etc. Expect individual publications to be sold, given away to avoid the cost of a windup, or shut down. Expect what’s left of the Postmedia real estate portfolio to be liquidated. Expect louder calls for a bailout from Ottawa (something that would postpone rather than prevent the inevitable). People who work at Postmedia will wonder how there could possibly be more to cut from the company’s operations after all they’ve given up in recent years but there is always more to cut. Cost-paring will be the last activity to cease at Postmedia. The company’s owners have every incentive to keep it running no matter how painful the ordeal, or how pathetic the product. Ugly as it has been to date, we have only seen the overture at Postmedia. The next twenty-four months will be a horror show. Nevertheless, I expect there will be still be something left of the former empire by 2020 — enough, at least, to fund a retirement package for its CEO.