How much longer does Postmedia have?

I�m rooting for Postmedia. But the latest quarterly results released Thursday don�t offer much hope for the future of the corporation.

Since the company took over the assets of Canwest in 2010, it has gone from weakness to weakness. The problems aren�t unique to Postmedia, of course. Newspapers and other traditional media are being hammered by a loss of audience and advertising revenues.

Postmedia was slow to accept that reality. And its response has been inadequate.

Basically, the corporate strategy is to cut costs, increase digital revenue and try to get readers to pay more for content, whether its delivered by print, online or through mobile devices.

But it�s not working.

In the latest report, revenues are down 9.1 per cent for the quarter. That follows declines of 9.6 per cent for the 2013 fiscal year and 7.4 per cent for 2012. 

Since Dec. 1, 2011, revenue has fallen by $181 million.

The company launched a three-year cost-cutting program in July 2012, and reports it has found $98 million in annualized savings. That�s not nearly enough given the revenue drop. But deeper cuts will reduce quality and service and lead to more revenue losses, a vicious cycle that usually ends badly.

The plan to boost digital revenue has flopped. Digital revenue was down in the quarter.

The effort to get people to pay more for content is likewise stalled. Circulation is down more than 11 per cent compared to a year earlier, and price increases have not been enough to increase revenue.

And people have proved reluctant to pay for online content, despite the introduction of paywalls. 

Postmedia claims 140,000 registered online users, but won�t say how many are paying customers and how many are print subscribers who registered for free access.

In any case, only 5,000 new people signed on in the last quarter, or about 500 per paper over the three-month period. That�s not enough.

Postmedia is hoping that a planned relaunch of the print products and new tablet and smartphone subscription options will turn things around, or at least give management some breathing room. 

If they don�t, the corporation�s future is grim. Based on the current trends, Postmedia is a year or two away from facing major problems in coming up with the cash flow to make the required interest and principal payments on its debt. Asset sales might buy a little more time, but they don't change the fundamentals.