Glacier Media posts bigger profit in 2019, thanks to sale of Fundata Canada Inc., but still faces huge tax bill

B.C.’s largest publicly traded media company had a pretty good year in 2019, notwithstanding its flagging share price.

Glacier Media posted a $34.2-million profit, up dramatically from the $654,000 in net income in 2018. The improved financial results, which were reported on March 27, came partly as a result of a $47.6-million gain on the sale of its interest in Fundata Canada Inc.

But the Vancouver-based owner of community newspapers, Times Colonist, REW, and other assets has revealed that it's still in a major fight with the taxman.

Canada Revenue Agency has assessed taxes payable—including interest and penalties—of $58.2 million. It related to an unnamed affiliate's scientific research and experimental development tax credits following audits from 2008 to 2017.

According to Glacier, the affiliate has filed notices of objection with the CRA and provincial taxing authorities.

Glacier's management discussion and analysis states that the affiliate has "substantially paid all of the required deposit of $23.5 million", which is recorded as an asset on Glacier's balance sheet.

Glacier has around 2,000 employees and this year, revenues dipped to $184.8 million from $188.4 million in the previous year.

Company highlights included a 15 percent rise in revenue for REW and another subsidiary, Environmental Risk Information Services.

However, Glacier acknowledged that "softness in print community media, agricultural advertising, and the energy and mining business" led to a greater than expected revenue decline in earnings before income tax, depreciation, and amortization (EBITDA).

That was caused in part by a Chinese trade embargo on Canadian canola, which hurt Glacier Farmmedia, and weak energy and mining markets, which harmed the company's Resource Innovation Group.

In addition, Glacier blamed the B.C. government's tax increases on the real-estate sector for hampering consumer spending, adversely affecting advertising revenue in the Lower Mainland.

In the last fiscal year, Glacier spent $19 million buying Castanet Media Ltd.. An additional $3 million is due over the next two years.

This is part of a broader company shift away from print products (as reflected in various newspaper closures) and toward digital assets.

Looking forward, the company said it's "too early" to determine the effect that COVID-19 on operations. But it expects that profitability "will be affected to varying degrees within its businesses".

"The Company is taking a wide variety of measures to protect the health of its staff, help reduce the spread of the virus and maintain the Company's businesses as best as possible," it stated.

Glacier Media shares were trading at 35 cents at the close on March 27, down from a 52-week high of 77 cents.

Update

Glacier Media has temporarily shut down the Vancouver Courier print edition. Staff were told about this on April 1.