Torstar ad revenue down, subscriptions up

Pandemic delivers hit to ads, but subscriber revenue resilient

Torstar Corp. continued to see growth in digital traffic and resilience in subscription revenue in the first quarter, while the COVID-19 global pandemic took a bite out of advertising revenue.

The newspaper and digital publishing company, which held a virtual annual general meeting and released quarterly results on Wednesday, announced that it had almost 90,000 digital subscribers to its daily brands news sites, including 32,000 digital-only subscribers. That’s up from 80,000 and 28,000 at the end of the fourth quarter.

“In the first quarter, we continued to make good progress in our transformation,” Torstar CEO and Toronto Star publisher John Boynton said. “We remain encouraged with the results of our focus on total subscriber revenue and in particular with the growth of our digital-only subscriber base and associated revenue.”

Boynton also noted that Torstar recently signed a new agreement to expand its digital marketing products and services. “Through an exclusive agreement with Madwire, LLC, we now offer approximately 10 additional digital advertising and marketing services to small and medium sized clients in Canada,” he said.

Torstar, which publishes a portfolio of newspapers and websites, including the Toronto Star and thestar.com, had a net loss of $23.5 million (29 cents per share) in the first quarter, up from a net loss of $7.4 million (nine cents per share) in the same period last year.

Earnings were boosted by a one-time gain of $18.8 million from the sale of the Hamilton Spectator building and land. That sale closed in the first quarter for proceeds of $24.7 million.

Earnings were also affected by a $25.5-million writedown on the value of Torstar assets, largely because of COVID-19.

As expected, the COVID-19 pandemic and the governmentmandated closure of non-essential businesses in late March had a negative impact on advertising revenue in first quarter, Boynton said, noting that “these trends have continued into April and have created significant pressure on advertising and flyer distribution revenues.”

Revenue for the quarter fell to $92.5 million in first quarter, down 17 per cent on a samestore basis from a year ago.

The company also saw an increase in online readership due to reader interest in the fallout from the pandemic. “Digital traffic to our news sites has increased significantly, and overall subscriber revenues have remained resilient,” Boynton said.

But in a speech at the annual general meeting, Boynton said that increased online readership hasn’t led to a similar boost in online advertising revenue.

“This traffic has ironically not driven digital advertising revenues. This has been negatively impacted by the decisions of some marketers and digital giants that continue to block the placement of ads on any sites even mentioning the word COVID-19,” said Boynton, who issued a plea for chief marketing officers and ad agency bosses to change their policies. “We ask CMOs and agency CEOs to review their blacklist policy with an eye to a more reasonable execution that allows ads on sites that do have the word COVID-19, but carry positive stories as well,” Boynton said, adding that there is “a collective responsibility” to make sure that trusted sites aren’t handicapped during the crisis.

Boynton also pointed to several cost-cutting measures undertaken by Torstar to deal with the decline in revenue. Among those measures was the elimination of 85 positions across the company during the quarter and a further restructuring in early April.

Boynton said the cost-cutting may continue if the crisis persists.

“We have undertaken a number of cost reduction initiatives in response to these pressures on advertising revenues.

“We are monitoring our financial outlook closely and are developing plans to implement additional labour and other cost reductions depending on the length and severity of potential revenue declines,” Boynton said.

Print advertising revenue for papers still operated by Torstar dropped 29 per cent in first quarter compared to a year ago. In the last two weeks of March, however, the drop was 58 per cent.

Flyer distribution revenues dropped 27 per cent in the second half of March. Digital advertising revenue was down 12 per cent in the first quarter compared to the same period a year ago.