Quebecor Inc. says it’s cutting 500 jobs at Sun Media Corp. and closing two printing plants in Ottawa and Kingston as part of a major restructuring of its newspaper division.

The company said the changes will help cut $45 million a year in costs as it makes sweeping changes at the country’s largest newspaper publisher in response to slowing advertising sales and continuing competition from the Internet.

Quebecor said it would also expand the use of “paywalls,” which require online readers to pay for some content.

About 27 journalists’ jobs are slated to be eliminated as the company centralizes copy editing and pagination functions in Toronto, according to the Southern Ontario Newspaper Guild, which represents some Sun employees.

Up to 100 jobs will be lost when the printing plants in Ottawa and Kingston close, according to the guild.

“We very much regret the impact that this has had on employees who are departing our organization and would like to thank them for their contribution,” Quebecor president and chief executive officer Pierre Karl Péladeau said in a statement Tuesday.

However, he said the company expects conditions to remain challenging going forward and it had to take these steps to preserve the division’s long-term health.

The move comes as traditional print media grapples with a challenging advertising market and increased competition from free online content. Other major newspaper publishers have also cut costs and started to introduce paywalls.

No additional details about the job cuts were immediately available. The company said it would make additional decisions within weeks and implement the changes immediately.

The job cuts amount to roughly 10 per cent of the news media division’s workforce.

“Clearly, this is a blow to journalism in Canada,” said Paul Morse, head of the Southern Ontario Newsmedia Guild, which also represents some employees at the Toronto Star.

“The erosion of these kinds of jobs is a significant problem for newspapers that are going to be dealing with trying to put out quality journalism with workforces that are clearly stretched beyond the limit. . . . This is a terrible day for journalism in Canada.”

Quebecor made the announcement after reporting its third quarter results. The Montreal-based cable and telecom company, whose assets include Videotron cable and the TVA television network in Quebec, reported lower earnings on slightly higher revenues.

The company earned $18.6 million net profit, or 30 cents per share, down 29 per cent from a year earlier. The news media division took a $31.8 million charge to cover the cost of staff reductions.

For the company as a whole, adjusted income from continuing operations rose 30.2 per cent to a better than expected $52.1 million, or 83 cents per share.

Third-quarter revenue rose 4.4 per cent to nearly $1.06 billion despite what it called a fiercely competitive business environment in most of its lines of business.

Telecommunications revenues, its largest segment, grew 7.8 per cent to $659.2 million.

Revenues for its news media division fell 3.2 per cent to $227.6 million.

Within the news media segment, advertising revenue fell 6.9 per cent, while circulation was down 1.1 per cent. Commercial printing revenues rose 13.2 per cent and digital revenues increased 10.6 per cent.

The company said it plans to reorganize its Sun Media operating structure under three pillars, each reporting to a central executive.

As previously announced, Eric Morrison, former president of Canadian Press, would head the editorial reorganization, the company said. Morrison joined Sun Media in September as a vice-president.

Sun Media also plans to use a new advertising strategy, particularly in the Toronto market, offering a combination of traditional print and online products especially to major retailers.

Based on the success of its paywalls at two Quebec newspapers, the Journal de Montréal and Journal de Quebec, the company said it planned to follow suit with the rest of its major Canadian publications before the end of this year.

Sun Media says it’s Canada’s largest newspaper publisher, based on 15.1 million copies of free and paid newspapers published weekly, including the Toronto Sun. It also operates canoe.ca, an internet portal that attracts over 10.5 million unique visitors per month.

Péladeau says the restructuring is regrettable but warranted by changes in the newspaper industry. Sun Media remains committed to its publications, which include the Toronto Sun and other dailies across Canada under the Sun and other banners, he said.

Other newspaper publishers have also announced cost cutting measures and plans to charge for online content.

Rival Postmedia Network Inc., which publishes leading English language dailies, including the National Post, has announced plans to cut spending and pay down debt by centralizing production, publishing some papers on fewer days and selling its Toronto headquarters.

The Globe and Mail asked employees to take four days unpaid leave this summer.

Both companies have starting charging for digital content.

The Toronto Star has announced plans to introduce a digital subscription program next year.

With files from The Canadian Press

http://www.thestar.com/business/article/1286916--sun-media-to-cut-500-jobs