TORONTO – Torstar Corp.’s first-quarter loss soared to $53.5 million as the company recorded extra expenses related to its transition towards more digital media and revenue fell at its traditional newspaper businesses.
The publisher of the Toronto Star, other newspapers and numerous websites saw its total operating revenue drop by 13.5 per cent to $156.7 million from $181.2 million a year earlier.
Torstar’s relatively small digital ventures segment did see revenue nearly double to $15.9 million, but the improvement wasn’t able to completely offset the revenue decline from its two newspaper divisions.
“We expect the challenging print advertising environment experienced in the first quarter to continue for the balance of the year,” said Lorenzo DeMarchi, Torstar (TSX:TS.B) executive vice-president and chief financial officer, in a conference call with analysts.
Torstar said the main reason for its increased digital revenue was its 56 per cent investment in VerticalScope, which acquires and manages specialty websites.
The company also added digital revenue from its Toronto Star Touch application for tablet computers, but didn’t disclose how much it generated.
The daily and weekly opens for the product have remained stable since the last quarterly report, said president and CEO David Holland, who has taken over the responsibilities of John Cruickshank, former publisher of the Toronto Star and president of Star Media, on an interim basis. Cruickshank stepped down in March.
“We continue to believe that the tablet platform can be an important part of the Star’s broader multi-platform offering to its customers,” said Holland.
Torstar has hoped that the tablet will bring a younger audience to the newspaper to help the company overcome declining print advertising revenue.
Torstar invested $5.1 million in Star Touch during the quarter, including marketing costs, and expects to spend about the same over the remainder of 2016. It invested about $14 million in the app the previous year.
The company has previously said it expects to break even on the app in 2017 as it decreases its investment into the product.
Torstar’s first quarter net loss amounted to 66 cents per share and compared with a year-earlier loss of $3.9 million or five cents per share, including $3.5 million from discontinued operations.
The latest loss included $27.6 million of non-cash expense items related to Torstar’s investment in VerticalScope and $22.4 million in expenses related to a previously announced plan to close its Vaughan printing plant and contract out the work.
Torstar holds an investment in The Canadian Press as part of a joint agreement with a subsidiary of the Globe and Mail and the parent company of Montreal’s La Presse.