More Canadian newspapers will close in the next few years but printed news will still exist 10 years from now, Postmedia Network Inc. CEO Paul Godfrey said in an interview on Tuesday.
“I think newspapers, the numbers will shrink, but I think there will still, in the next decade, be print on paper,” he said.
Last week, Postmedia (TSX:PNC.A, TSX:PNC.B) and Torstar Corp. (TSX:TS.B) announced they would trade 41 newspapers and close 36 of them, mainly in Ontario regions served by multiple publications, at a cost of nearly 300 jobs.
The deal was condemned by media unions and journalism professors and federal Heritage Minister Melanie Joly tweeted that selling the newspapers and shutting them down the same day was “cynical and disappointing.”
Her comment was “unfortunate,” Godfrey said.
“It wasn’t cynical at all. It was lifesaving,” he said.
“Some of those communities can’t afford to have competing newspapers because there’s just not enough ad revenue to support them. Eventually, they’d all fold, instead of just some of them.”
He said he doesn’t think Torstar got the better end of the deal, even though it is keeping open four of the seven small daily newspapers it bought from Postmedia, while Postmedia is closing all but one of the community newspapers it bought from Torstar.
The companies were very careful not to discuss what each was planning to do with the assets it was buying, Godfrey said.
“The fact is collusion is just not legal so what we were very, very careful to do was not to speak to each other about what the end result was going to be,” he said.
“Look, we have enough trouble running one newspaper chain and deciding what to do. What they do we always considered is their business.”
The Competition Bureau has said it will review the transaction, without revealing the specifics of the review for confidentiality reasons.
Godfrey said the cost savings and improvements in efficiency from the closings will lengthen the “runway” Postmedia needs to try to transform itself into a healthy digital news organization.
He said he applauds the Quebec government for its plan to spend about $36 million to help newspapers in the province, including about $19 million to aid their transition to digital platforms, adding similar support is needed from the federal government.
Earlier this year, a report from the Public Policy Forum called for a federal sales tax on foreign companies selling digital subscriptions in Canada and a $400-million fund to help finance reliable news and information.
In June, the House of Commons heritage committee also issued recommendations on how to save the industry, including a five-year tax credit to compensate print outlets for a portion of their digital investments.
But in September, Joly unveiled a cultural strategy criticized by industry for lacking measures that could boost newspapers. She said Ottawa had no interest in bailing out industry models that are no longer viable.
Last Friday, the Globe and Mail unveiled a redesigned daily newspaper printed on narrower paper and with fewer but thicker sections to save money on newsprint and printing.
Godfrey said Postmedia is considering following suit but no decision has been made. He added it’s not clear if it would be possible for its publications to change paper widths on the printing presses they employ.
Torstar holds an investment in The Canadian Press as part of a joint agreement with a subsidiary of the Globe and Mail and the parent company of Montreal’s La Presse.
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