Torstar sees digital transformation progress in third quarter
Torstar Corp. reported continued progress in its digital transformation strategy in posting its third quarter results. The quarter marked the launch of a digital subscription platform at the Toronto-based media company’s flagship Toronto Star.
The company also advanced its national digital expansion with the introduction of mobile apps for thestar.com’s editions in Vancouver, Calgary, Edmonton and Halifax.
Customized to their unique markets, each edition combines “hyper-local” coverage with the entire content of thestar.com. “We are making very good progress on several fronts,” said John Boynton, CEO and president of Torstar.
Boynton noted the relative stability of subscriber revenue, which represents “a large and more resilient part of our business.”
In an earnings call Wednesday, Boynton said subscription revenues, including digital subscriptions, have become a larger part of the revenue mix at Torstar publications.
That trend is expected to become even more pronounced in future quarters, he said.
Torstar continued to bolster content quality with the acquisition of iPolitics, a leading provider of federal and provincial political coverage, which will be bundled into the Star’s basic digital subscription offering.
In another initiative in boosting online subscriber revenue, Torstar’s thestar.com will soon be offering full access to Wall Street Journal content at a modest charge of about $5 per month in one of thestar.com’s bundling options for customers. The Journal is among the world’s largest providers of global business, economics and current events coverage.
“Every single launch is exceeding our expectations,” Boynton said in the Wednesday earnings call regarding Torstar’s rollout of new products and pricing and bundling options for customers.
Torstar saw only moderate declines in its flyer distribution revenue in its community papers operations. Boynton said, however, “results in the quarter were more challenging,” noting “print advertising revenue trends were more difficult compared to our experience in recent quarters.”
Segmented adjusted EBITDA for Torstar was $1.4 million in the third quarter of 2018, down $9.8 million from the third quarter of 2017.
Profit performance varied across Torstar’s businesses.
The company’s daily brands operations posted a segmented adjusted EBITDA loss of $3.9 million in the quarter, compared with adjusted EBITDA of $1.1 million in the third quarter of 2017. But Torstar’s community brands, a large portfolio of weekly papers, posted continued, albeit lower, profit.
Segmented adjusted EBITDA in community brands was $2.2 million, down $3.4 million compared with third-quarter 2017 results. And profits at Torstar’s digital ventures business, consisting largely of its 56 per cent owned VerticalScope, remained significant with segmented adjusted EBITDA of $5.7 million in the third quarter, down $1.5 million compared with the third quarter of 2017.
Cost increases at Torontobased VerticalScope, which hosts more than 1,000 online community forums mostly in the U.S., outpaced revenue growth as the firm invested in technology upgrades.
Segmented revenue for Torstar was $143.2 million in the third quarter of 2018, down $21.4 million, or 13 per cent, from the third quarter of 2017.
However, on a same-store basis, the revenue decline was 8 per cent, or $11.4 million, accounting for the divestiture of newspaper properties in 2017’s fourth quarter.
Torstar’s segmented revenue for the quarter includes revenue growth of $0.8 million, or 7 per cent, at VerticalScope (3 per cent in USD), compared with the year-earlier quarter.
Torstar ended the third quarter of 2018 with a strong balance sheet, essentially unchanged from the second quarter of 2018, with $48.4 million of cash and cash equivalents and $7.7 million of restricted cash.
Torstar has no bank indebtedness.
The outlook for the company’s future liabilities position was also strengthened in the quarter by the approval by members of Torstar’s defined benefit pension plans of a merger with the Colleges of Applied Arts & Technology Pension Plan (the “CAAT Plan”).
The merger awaits regulatory approval, expected in 2019.