Torstar sees progress in digital evolution, subscribers

In reporting its second-quarter financial results, Torstar Corp. said it was pleased with the progress of its transformation and push toward digital subscriptions.

“I am very pleased with the progress we are making across many fronts in laying the foundation for our transformation plan,” said John Boynton, president and CEO of Torstar.

“While we’re in the early stages of the transformation, signs of progress are already evident.”

In recent months, Torstar has rolled out a major national expansion of thestar.com and an exclusive content arrangement with the Wall Street Journal. The company also made increased investments in investigative journalism and in local and hyperlocal content.

“What is less obvious but critically important,” said Boynton, “is the progress we are making in the areas of data infrastructure, advanced analytics capability, single sign-on/identity management, paywall/subscription platform implementations and customer life cycle management capabilities. While we are in the early days of a comprehensive multi-phased transformation plan, signs of progress are clear.”

Those initiatives are required to drive Torstar’s future digital subscription revenue, by providing high quality, easily accessible content on all digital platforms, that is highly focused on customer needs and interests.

In an earnings call Wednesday, Boynton said Torstar is using its data initiatives to “find better ways to surprise and delight our customers and help our advertisers meet their needs. Our greater data capabilities will enable us to best ensure the relevancy of advertising to customers.”

Boynton said that Torstar data will not be sold to outside parties, but is for internal use only to better serve Torstar customers and clients. Social media companies have come under fire for selling customer data to third parties.

In the second quarter of 2018, Torstar segmented adjusted EBITDA was $27.8 million, an improvement of $9.8 million from the same period a year earlier. Second-quarter EBITDA included the benefit of a $15.8-million digital media tax credit.

While Torstar might be eligible for additional, though likely smaller, benefits from that program in future, Boynton emphasized that these have not been factored into Torstar’s revenue projections.

Segmented revenue in the second quarter was $160.7 million, down $20.1 million, or 11 per cent, from the second quarter of 2017.

Revenue performance in the quarter was affected by the 2017 sale of properties in a transaction with Postmedia Network Inc.

On a same store and comparable timing basis, segmented revenue in the quarter declined by $9.9 million, or five per cent.

While the print advertising climate remains challenging, local advertising categories were more resilient in the quarter, experiencing more moderate declines, and subscriber revenue was almost flat on a year over year basis.

Torstar said it expects a continued slight decline in subscriber revenue over the second half of 2018 as the company focuses on digital initiatives.

Torstar is a leading Canadian media firm, with major daily newspapers including The Toronto Star, the Hamilton Spectator, The Record in Kitchener-Waterloo and more than 80 local and hyperlocal community newspapers across Southern Ontario.