Postmedia (PNC.B) trades 98% of the company for debt

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In a move that’s so ‘wow’, I can barely fathom it, dysfunctionally-run newspaper conglomerate Postmedia (PNC.B, but don’t bother trying to buy shares as they’re largely decorative at this point) has agreed that it will trade 98% of itself to second lien debt holders in return for debt restructuring.

I don’t know what’s more incredible – that current shareholders agreed to lose 98% of their holding in the company, or that the deal values the company at a laughably large $345 million.

Postmedia CEO Paul Godfrey (who, in the spirit of full disclosure, I used to work for at Postmedia) has presided over a 75% devaluation of the company, even after spending hundreds of millions of dollars buying competing newspapers, closing down newspapers, selling real estate and trimming the workforce back to a skeleton crew.

His concept has always been, if we buy enough stuff, people will HAVE to advertise with us, rather than rebuilding his sales division with people who are actual trained sales people, not ‘the guys who used to take the classified orders’. The other side of that plan has been to pay the people who create the content Postmedia wraps its ads around.. to leave, reasoning that readers don’t actually care about original, award-winning reporting more than they do the Sudoku.

I have so many Postmedia stories (and Canwest stories before that), it could fill a book, but the one that is most indicative of why the company is a black hole for capital is the one where the CEO asked for a little help from the workers.

Back when I worked at the Vancouver Sun, I responded to a Paul Godfrey all-hands email wherein he asked for anyone who had ideas on how things could be improved to contact him directly, in confidence. I sent him 30 pages on what was going horribly wrong in Vancouver’s Postmedia operations, from sales staff not selling past the first week of every month because it would screw up next month’s quota, to the best sellers having their commission capped out, to the worst sellers being rewarded with cushier jobs, and projects that could bring new money into the company being shut down before they started because sales thought they’d be ‘too hard’.

I also shared a bunch of local projects that we’d started, that were bringing in cash and readers, but that were constantly being threatened with shutdown by a central office that cared more about not being in control of the regionals and looking bad by comparison, than it did making actual money.

He called me up, full of praise, told me he wanted more and would keep it in confidence and this was great.. then he dumped it on the local publisher’s lap and said ‘deal with this.’

That was the last time I got any projects started at Postmedia. I literally had my boss’ boss tell me, “Take your very generous paycheque, sit in the corner, and shut the fuck up.”

The last six months I was at the company, I did nothing but mess about on Facebook. I had one project approved out of 24 proposed in that time. And those projects that did get up and running? That were making money and drawing readers?

They’ve all been shut down since.

So, yeah, Postmedia is fucked.

Some will say the newspaper business is fucked in general, but that’s not the case. Newspapers make money just fine, when they’re smartly run, when they bring new ideas, when they excite readers, when they lead the local news conversation.

And when they don’t have to repay a billion dollars of debt racked up by the arseholes who bought them.

— Chris Parry

 

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