TorStar cuts ease pain but print still a drain
No end in sight for decline in ad revenue
TORONTO• Torstar Corp.’s national and local print advertising continued to fall in the third quarter but cost-cutting efforts have been successful in maintaining the company’s cash balances and dividend at an acceptable level, executives said Wednesday.
But they also said cost reduction will remain an important area of focus with no end in sight for a years- long decline in print advertising revenue at Torstar’s flagship Toronto Star newspaper and its Metroland Media Group.
Torstar chief executive John Boynton told analysts on a conference call that he sees cost-cutting as essential to preserving cash flow that’s required to fuel a transformation of the company’s core business.
“In the balance of 2017, we expect to benefit from $3 million in cost-savings related to restructuring and outsourcing initiatives, already undertaken to date, and we expect these cost reductions to offset print ad revenue t rends which we expect (will) continue to be challenging,” Boynton said.
However, Torstar’s unrestricted cash and cash equivalents was down to $ 51.4 million at Sept. 30, from $75.4 million at the end of December, leading ana- lysts to ask whether Torstar’s dividend was under review.
“We’ll keep looking at the dividend and everything’s on the table, but we don’t have any changes so far that are required at this time,” Boynton said.
As of Sept. 30, Torstar had cut about 220 positions. It expects $12.1 million of savings from the cuts in calendar 2017 and $5 million in 2018.
Torstar’s total segmented revenue, which includes its core Toronto Star and Metroland newspaper groups plus a share of revenues from joint ventures and its 56 per cent stake in VerticalScope, fell to $ 164.6 million compared with $181.7 million a year ago. Meanwhile, the New
York Times Co. reported lower- than- expected quarterly revenue and warned of pressure in the ad space that would crimp holiday advertising revenue, sending its shares down more than 5 per cent on Wednesday.
The Times saw healthy gains in digital advertising revenue in the latest quarter but core print advertising revenue, accounting for almost three- quarters of total ad revenue, dropped 20 per cent.
Over t he past several years, to make up for lower print sales, the New York Times has focused on digital and, in the quarter, it added about 154,000 subscribers, boosting its digital subscribers to 2.5 million.
The Times has been attracting more paying online readers through discounts and has been boosting digital subscriptions by tying up with online services such as Spotify. Its Truth campaign, which was launched in response to U.S. President Donald Trump’ s attacks on the newspaper, has also helped drive subscriptions.
Major U.S. newspapers have been building on their online readership since the 2016 presidential election, as they market their unbiased reporting as a sales strategy.