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File photo of Pierre Karl Péladeau, President and CEO of Quebecor Inc.

Graham Hughes/The Globe and Mail

Canada's largest newspaper chain, Sun Media Corp., is slashing 500 jobs, shutting down two printing presses, and erecting more paywalls as it tries to cut costs by more than $45-million to deal with declining advertising revenue for its printed papers.

Some of the chain's biggest names were dismissed Monday, including the Toronto Sun's senior associate editor Lorrie Goldstein, a 34-year veteran of the paper, as Sun's parent company Quebecor Inc. reported third-quarter results that saw profit for the Montreal-based telecom and media company fall to $18.6-million or 30 cents a share from $26.1-million or 41 cents in the same period last year.

The axe is falling hard at the Ottawa Sun, where editor-in-chief Mitch Axelrad was shown the door and most of the copy editing and pagination functions will be outsourced to another location in the Sun chain. The paper will also shut its printing press. Its publisher left last month.

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The presses will stop rolling as well at the Kingston Whig-Standard, which has shrunk by about two-thirds since Sun Media took it over in 2006. That sent the city's mayor to Facebook and Twitter to protest what he said would be the loss of 40 jobs.

"This is a terrible day for quality journalism in Canada," said Paul Morse, the president of the Southern Ontario Newspaper Guild, which represents 600 union members at 13 Sun Media papers.

Quebecor did not provide details of the cuts, but said they are part of a restructuring that will consolidate all editorial and sales functions under three executives. English-language editorial activity will be overseen by Eric Morrison, the former CTV broadcaster who was recently hired as senior vice-president of editorial. Mike Power will head up Ontario sales, while John Caputo will handle all Western Canada sales.

"This restructuring is regrettable but warranted by changes in our industry which force us to align our cost structure with the new reality," Quebecor chief and Sun Media president and chief executive officer Pierre Karl Péladeau said in a statement.

"Ultimately, this leaner structure will not only be more efficient, but more importantly will focus people on their core competencies," he said in a conference call with analysts. He added the company's experience with paywalls at its Journal de Montréal and Journal de Québec newspapers "are very encouraging, so we will follow suit with the rest of our major Canadian publications before the end of the year."

That follows announcements by Postmedia Network Inc., owner of the National Post and nine other Canadian dailies, and the Toronto Star to build paywalls around their properties. The Globe and Mail introduced a paywall last month.

Sun Media publishes 36 paid-circulation daily newspapers and six free dailies in nine of Canada's 10 largest cities. At the end of last year, it employed 5,680 people.

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Last month, Sun Media let go five regional publishers and replaced them with sales managers whose primary job will be selling ads across a large area.

For the third quarter, Quebecor Inc.'s adjusted profit from continuing operations reached $52.1-million or 83 cents a share, compared with $40-million or 63 cents in the same quarter of 2011. Revenue was up 4.4 per cent in the quarter to $1.06-billion. "The corporation continued its growth in the third quarter of 2012 despite a fiercely competitive business environment in most of its lines of business, Mr. Péladeau said in a statement.

Last month, Quebecor boosted its stake in Quebecor Media Inc. to 75.4 per cent from 54.7 per cent with the $1.5-billion purchase of a major portion of the Caisse de dépot et placement du Québec's interest in the privately held media unit.

Editor's note: Mike Power will oversee Ontario sales. An incorrect name was used in a previous version of this article.

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About the Authors
Senior Media Writer

Simon Houpt is the Globe and Mail's senior media writer, charged with covering the industry's transformation. He began his career with The Globe in 1999 as the paper's New York arts correspondent, covering the cultural life of that city through Canadian eyes. More

Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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