(Adds details from conference call, analyst and union comment,
By Alastair Sharp
TORONTO May 7 A grim newspaper advertising
market continued to hit revenue at Torstar Corp,
publisher of Canada's largest-circulation daily paper, in the
first quarter, the company said on Wednesday as its journalists
mounted a protest against cost-cutting measures.
In its quest for cash, Torstar said last week it would sell
its Harlequin romance-novel publishing business to News Corp for
C$455 million ($418 million). The sale helped reassure investors
who have worried that the company's dividend payout is
unsustainable, but it leaves Torstar more reliant on a
turnaround in its media business.
The softer revenue number for the media business - which
publishes the Toronto Star and a string of regional and commuter
newspapers and is Torstar's largest unit - was offset by cost
cuts that improved margins, RBC Capital Markets analysts Haran
Posner and Drew McReynolds wrote in a note.
But reflecting the challenges management faces as it cuts
costs, journalists at the Star withheld their bylines in both
the print and online editions of the newspaper on Wednesday to
protest what their union said was management's attempt to create
17 digital-first positions at 60 percent of current wages.
"We can't stand for a backdoor approach to rewriting our
contract and savagely reducing salaries in the future," said Dan
Smith, a Toronto Star editor and union representative. About 225
staff in the Toronto Star newsroom are represented by Unifor,
Canada's largest private sector union.
On a conference call with analysts, Torstar executives said
cost reductions have been wide-reaching but that the biggest
savings had come from contracting out page layout and other work
deemed peripheral to the creative and news-gathering processes.
The company said net income attributable to shareholders was
C$7.1 million ($6.52 million), or 9 Canadian cents a share, in
the three months to the end of March, compared with C$4.2
million, or 5 cents a share, a year earlier.
Operating revenue from Torstar's media business fell to
C$211.3 million from C$229.8 million, while total sales slipped
7 percent to C$292.4 million.
Torstar has struggled to offset a broad decline in print
advertising in recent quarters, as advertisers follow readers
and move more of their spending online. Torstar is aiming to
make up for losses in its traditional print business with
revenue from readers who pay for access to the online version of
the Toronto Star.
But overall digital media revenue declined 2.7 percent in
the quarter, weighed down by softness at daily deals site WagJag
and job search site Workopolis.
The company said the outlook for advertising revenue for the
rest of the year is unclear. It expects to save C$17.1 million
in the remainder of 2014 from restructuring moves completed in
the first quarter.
On an adjusted basis, which excludes restructuring and other
costs, Torstar earned 14 Canadian cents a share, in line with
the average of analyst estimates. The revenue figure missed the
average analyst expectation of C$299.2 million, according to
Thomson Reuters I/B/E/S.
Torstar's shares slipped slightly to C$7.66 on the Toronto
Stock Exchange on Wednesday morning. They had jumped to levels
last seen in early 2013 after the company announced the
(Reporting by Alastair Sharp in Toronto; additional reporting
by Sayantani Ghosh in Bangalore; Editing by Savio D'Souza, Chizu
Nomiyama and Peter Galloway)