Torstar Corp. was hit by a weak advertising market and a hugely popular erotic bestseller in the third quarter as profit fell 44 per cent from a year ago.
The company said Wednesday that bestseller 50 Shades of Grey – which traces the sexually charged relationship between Mr. Grey and a young female graduate – and soft advertising combined to push earnings down to $14.1-million, or 18 cents per share, from $25.2-million or 32 cents per share a year earlier. Revenue at the publisher – which owns the Toronto Star and Harlequin – slumped 6.2 per cent to $335.3-million, down from $378.7-million a year before.
"Results in the quarter were not immune from the challenges of the current environment," said chief executive officer David Holland.
The company said the advertising market for the company's stable of daily and weekly newspapers showed signs of improved in July and August, before weakening again in September. At Harlequin, which publishes romance novels, a decline in revenue was "more than expected by the market share impact of the exceptional performance of a competitor's bestseller and weak global economic conditions."
The Toronto Star said Monday it would build a paywall in the new year to help offset the loss of advertising revenue. The company said in its statement that the market will likely remain choppy in the coming months, and that it would continue to cut costs in its media division.
"Looking forward, visibility remains limited," Mr. Holland stated. "In the media segment, the advertising weakness experienced in September has continued into October. As we did this quarter, we will continue to take action on costs within the media segment as we work through the current challenges. At Harlequin, we would anticipate a modest decline in results in the fourth quarter attributable to factors such as the increase in digital royalty rates and weak global economic conditions."