Torstar reports $24.3M loss, trims dividend
Torstar Corp. reported a $ 24.3- million loss in the second quarter of 2016, down considerably from $ 53.5 million in the previous quarter, although still significantly more than the $ 1.1 million it lost in the second quarter of last year.
The publisher of the Toronto Star and other media outlets saw its segmented revenue drop 9.5 per cent to $ 196.5 million — it was $216.9 million in the second quarter of 2015. Torstar said the decrease reflected declines of 16.9 per cent in print advertising revenues, a 7.7- per- cent decline in distribution revenues and a 6.1-per-cent decrease in subscriber revenue.
Torstar’s board also announced it will reduce the company’s dividend for the second time in 2016.
Effective Sept. 30, the quarterly payment to shareholders will fall to 2.5 cents per share, or 10 cents per year.
Torstar’s quarterly dividend was previously 6.5 cents in June and March of this year, and was 13.12 cents per share before that.
“There’s always a balance in terms of landing the dividend at the right rate and we thought this kind of was a good balance,” CEO David Holland, who is retiring this fall, said on an analysts call.
EBITDA for the quarter ending June 30 was $ 15.6 million, a decrease of $ 5.3 million from the second quarter of 2015.
Torstar said the decline was in part due to a $1.5-million net investment in Toronto Star Touch, its flagship paper’s tablet app, and a loss of $ 1.4 million in commercial printing contribution from its printing plant in Vaughan, Ont., which the company closed on July 2.
Torstar says about 200,000 people have downloaded the a pp since its launch in September, and Holland told analysts weekly readership is “around the 55,000 to 60,000 range and people are coming to it maybe three times per week. It’s not as quick off the mark as we would have liked but we still believe it could be an important part of our future.”
While revenue declines at Torstar also contributed to the decrease in EBITDA, the company said those were partially offset by $ 7.9 million of net savings from restructuring and $ 4 million in higher contributions from its Digital Ventures, all of which it says came from VerticalScope Inc., the proprietor of online forums in which it acquired a 56- percent majority stake in last July.
Vertical Scope’ s total revenue contribution was $ 16 million, and its U. S.denominated revenues increased 12.3 per cent in the second quarter.
During the second quarter, Torstar’s investment in VerticalScope included $ 26.5 million in non- cash amortization and depreciation expenses, which it says contributed to its net loss. It also incurred $4.5 million in non- cash amortization and depreciation expenses as it outsourced the printing of the Toronto Star to Transcontinental Inc.
Torstar said it expects its net savings related to restructuring initiatives implemented through the end of the second quarter to be $16.5 million in 2016.