Torstar posts losses as print ad revenue falls year-over-year

Torstar Corp.,reported a loss in its fourth quarter as revenue continued to decline sharply year-over-year especially in terms of sales of print advertising space to national accounts.

The publisher of the Toronto Star, other newspapers and a number of digital or online properties, said it lost $3.1-million loss attributable to shareholders for the three months ended Dec. 31 or four cents per share.

That contributed to a $31.5-million loss attributable to Torstar shareholders for the full year, which compared with a loss of $29.2 million in 2017, when Torstar had an $8.7-million profit in fourth-quarter.

On an adjusted basis, Torstar says it earned a profit of 15 cents per share for the quarter, down from 32 cents a year earlier but above analyst estimates.

Analysts on average had forecast $143.58 million in revenue and nine cents per share of earnings after adjustments, according to Thomson Reuters Eikon.

Senior executives of the company told analysts Wednesday that national print advertising plunged at both its "daily brands" and "community brands" segments, while print advertising from local accounts fell at a slower rate.

National advertising down

National advertising in the fourth quarter at the daily segment, which includes the Toronto Star, was down 37 per cent compared with a year ago, while national print advertising at community newspapers was down 31 per cent.

National advertising print revenue represented only 11 per cent of daily brands revenue and four per cent of community brands revenue in the fourth quarter.

Fourth-quarter revenue from local advertisers compared with a year ago was down 19 per cent at the daily segment and 10 per cent at the community segment.

Operating revenue for the fourth-quarter totalled $144.9 million for the quarter, down from $169.3 million a year earlier.

Full-year revenue was down 11.7 per cent, falling to $543.4 million from $615.7 million in 2017.

Torstar chief executive John Boynton acknowledged during the call that conditions in the print advertising market continue to be challenging, but there's been progress in its ongoing shift to new sources of revenue.

"After a year of very hard work required to lay the foundation to support key advances in data and digital subscriptions, and digital advertising capabilities, we are now beginning to see initiatives roll out in the marketplace," Boynton said.

New restrictions on free content

Among other things, he noted that TheStar.com had signed up 10,000 digital-only subscribers in the first full quarter since Torstar imposed new restrictions on free content available from its flagship publication.

"We were very pleased in the fourth quarter and we continue to be pleased," Boynton said. "All of the metrics are, we think, bringing in a very, very high-value customer."

He also said that Torstar will invest about $8 million in 2019 on the technology required to transition to a new business model for generating revenue from readers (or customers) and advertisers (or clients).

"All of the future strategies are based on collecting first-party data and using it for subscriptions on the consumer side and for advertising performance effectiveness on the client side," Boynton said.

In addition to its main publishing business, Torstar owns a 56 per cent interest in VerticalScope, a Toronto-based digital media company that operates as an "associated business" under independent management.