Torstar Corporation , one of Canada's largest newspaper publishers, reported a net loss of $4.4-million for the second quarter as a tax charge hit its bottom line and weaker advertising caused by the recession squeezed revenues at its newspaper and online operations.
The owner of Canada's biggest daily, the Toronto Star, said Wednesday it lost 6 cents a share for the three months ended June 30. That compared with a net profit of $36.2-million or 46 cents a share for the same period in 2008.
Quarterly revenues fell to $373.7-million, about 6.3 per cent lower than the $398.8-million last year. The Toronto-based company, which also owns the Harlequin Enterprises book publisher, was hit hard by the slump in advertising caused by the recession.
In the quarter, Torstar benefited from a $19.2-million foreign exchange gain, but also booked a charge of $29.9-million, or 38 cents a share, related to a valuation allowance against future income tax assets of CTVglobemedia, a broadcaster and newspaper publisher in which it has a minority stake.
Excluding that charge, Torstar would have reported net income of $25.5-million for the second quarter.
The publisher also took a $3.8-million restructuring charge for cuts that eliminated 58 jobs in its newspaper operations in the quarter but will save the company about $3-million a year in labour costs.
"Results continue to be mixed with the decline in newspapers and digital more than offsetting the growth at Harlequin and lower corporate costs," said David Holland, interim president and chief executive, said in a release before stock markets opened.
"The challenging economic environment is taking its toll on revenue in the newspapers and digital division particularly in those categories vulnerable to a downturn in economic activity such as employment and real estate. However, on the cost side, the restructuring efforts undertaken to date are making a difference, mitigating, in part, the impact of the revenue decline we are currently experiencing. The Harlequin business continues to perform well despite economic conditions."
Looking ahead Mr. Holland said that "given the uncertain economic outlook, we continue to anticipate that newspapers and digital revenues will be soft for the balance of 2009."
"The benefits of the restructuring activities and a more benign newsprint pricing environment will offset, in part, the impact of the anticipated revenue challenge. At Harlequin, we anticipate reporting growth for the year including the favourable impact of foreign exchange."
Torstar's businesses include the Star Media Group led by the Toronto Star, digital properties including thestar.com, toronto.com, Wheels.ca and Workopolis, as well as the Metroland Media Group publisher of community and daily newspapers in Ontario.
The company also owns the Hamilton Spectator and other newspapers, including a stake in the Black Press papers in British Columbia. In book publishing, it operates Harlequin, a leading global publisher of romantic fiction.