Torstar president and chief executive officer David Holland looks on at the annual general meeting for shareholders in Toronto, May 5, 2010.MARK BLINCH/Reuters
Two of the country's largest newspaper publishers say their revenues are dropping faster than they can compensate with job cuts and other money-saving initiatives.
Torstar Corp. and Quebecor Inc. reported quarterly earnings on Wednesday; both companies said print advertising was falling rapidly, and that there are few signs of a pickup in the coming months. They warned that they may need to find more ways to reduce costs despite recent cuts.
"For many years, media companies lived privileged existences," Torstar chief executive officer David Holland said at his company's annual general meeting. "Those days are long gone."
Their reports follow closely after similar statements made by Postmedia Network Inc. and The Globe and Mail, both of which have announced buyouts in the last month to compensate for reduced revenue as advertisers look for other ways to get their messages in front of consumers.
The difficulties are affecting papers across North America – publishers are increasing their online advertising revenue, but not at the same rate that would be needed to compensate for the loss in print.
"The acceleration of revenue declines could force us to pursue the rollout of cost reduction initiatives in all our business and markets and refine our analysis of several revenue-generating initiatives," said Sun Media chief operating officer Julie Tremblay during a company conference call, after noting profit at the division plummeted 62 per cent to $5.7-million in the last quarter.
The company has cut managers and publishers from many of its papers, and also trimmed staff across its dozens of daily newspapers across the country. Last November, it cut 500 from its staff, a cut of approximately 10 per cent.
But the ad market continues to be challenging for the company – Quebecor's news media unit, which accounts for a fifth of the its total business, saw its revenue fall by more than $25-million or 11 per cent to $208-million.
Advertising revenue led the fall with a 14-per-cent drop, but digital revenue (down 8 per cent) and circulation revenue (down 5 per cent) were also a problem. The urban dailies owned by Canada's largest newspaper publisher by number of titles fared only marginally better than the community newspapers, with an 11-per-cent decrease compared to a 13-per-cent fall.
Torstar – which publishes Canada's largest newspaper by circulation, the Toronto Star, as well as community newspapers and books through its Harlequin division – said its quarterly profit fell 76 per cent to $4.2-million in the first quarter, while revenue fell 5 per cent to $332-million.
The company recently announced that about 50 employees would leave the company as it outsourced editing and page layout to a Toronto-based company called Pagemasters North America. (Pagemasters is owned by The Canadian Press, which is co-owned by The Globe and Mail, the Star and Gesca Ltd.)
The biggest revenue drop was at its Star Media Group, which publishes the Star. Print advertising at the paper fell 16 per cent, stripping the company of almost $11-million in revenue. Its community papers fared slightly better, while its book publishing division saw revenues pull back slightly on weaker international sales.
"Evolution is not a choice, but a necessity for Torstar," Mr. Holland said. "Torstar is committed to investing in the future but our financial results are not immune to the pressures of the environment."
The company said it expects digital revenue to improve as the year goes on, but can't be sure how the broader advertising market will fare.
"Torstar cost reduction has been and is expected to remain an important area of focus," the company reported in a filing. "The media segment is anticipated to realize $14.8-million of savings in the balance of 2013 from restructuring initiatives undertaken through the end of the first quarter of 2013. … Plans to reduce operating costs in the media segment over the balance of the year have been developed to mitigate the potential impact of continued revenue declines."
With a file from reporter Sophie Cousineau in Montreal
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