Torstar’s Holland doesn’t regret Star Touch rollout
Successor will have to consider future of underperforming product, CEO says
SEAN CRAIG
The outgoing CEO of Torstar Corp., the publisher of Canada’s largest daily newspaper, said he has no regrets over the underperforming tablet edition of the Toronto Star.
David Holland, who will step down from the company on Friday, made the remarks on his final earnings conference call Wednesday. Earlier in the day, Torstar posted its fourth-quarter 2016 results, which fell short of analyst expectations, with declines in print advertising and subscriber revenue outpacing growth at its digital initiatives.
“At least I can say we tried,” Holland said. “I don’t regret trying something that could have had a very positive impact in terms of the outlook for the newspaper.”
The newspaper has spent over $25 million on the app, and as much as $10 million in additional marketing expenses, only to see readership numbers fall well short of expectations.
Holland was frank about the state of the media industry and the underperformance of Star Touch, the Star’s ambitious tablet initiative that launched in September 2015. Holland previously estimated that it would take around 100,000 unique readers using Star Touch three or four times a week in order for the app to break even in 2017. That number has stalled at around 60,000, and the company has begun to significantly wind down the expenses and resources dedicated to the app.
Torstar said it expects to spend $2 million to $4 million on Star Touch in 2017, down from $11 million in 2016. The company also laid off most of its tablet staff last August, two months after tablet editor Jon Filson left the paper.
“My successor will obviously reflect very hard on this,” said Holland. “It certainly did not work out the way we initially anticipated. But we also thought it had the potential to be quite transformative for the economics of the newspaper. I don’t have any regrets and it’s my responsibility.”
Star Touch is now run by Robin Honderich, a former sports reporter and the son of Torstar chairman John Honderich.
Holland first announced his intention to retire last July, but had to push back his final day — originally slated for the fall of 2016 — by several months to accommodate a longer-than-expected search for his successor.
Torstar, which publishes more than 100 community and commuter papers in addition to the Star, said Wednesday it will make an announcement about a new chief executive “very soon.”
The company reported a profit of $1.3 million, or one cent per share, for the quarter ending Dec. 31 — a year-over-year improvement from the fourth quarter of 2015, during which it recorded a $234.5 million loss. However, according to Thomson Reuters’ I/B/E/S estimates, analysts had on average predicted Torstar to pull in eight cents per share.
Whoever takes over will inherit a company in a difficult position, with the erosion of traditional print media revenues to online competition far exceeding areas of new growth. Torstar’s overall revenue for the fourth quarter declined 12 per cent to $188.4 million.
While the company’s digital ventures, notably the online forum operator VerticalScope Inc., increased revenues by 5.5 per cent, print advertising was down 13 per cent and subscriber revenue was down 7.1 per cent. “VerticalScope is growing nicely and making a meaningful contribution to Torstar’s asset and earnings base,” added Holland, who then acknowledged “mixed sentiments” about Torstar’s 2015 acquisition of a 56 per cent stake in the company.
Torstar said it expects overall revenue at its Metroland Media Group and Star Media Group subsidiaries to be stable through 2017.
Holland noted that all Canadian media is struggling to monetize record readerships, which are increasingly platform agnostic, adding “as the paper continues to feel advertising pressure, it would be nice to have a place for people to migrate to that is somewhat similar to the newspaper.”
At least I can say we tried. I don’t regret trying something that could have had a very positive impact in terms of the outlook for the newspaper.