Days after announcing cuts at its flagship Toronto Star newspaper, Torstar Corp. said profit fell almost 65 per cent in the fourth quarter due to a weak national advertising market and a writedown at its online job search division.
The company said it posted a $24-million profit, down from $64-million a year ago. It took an $11-million non-cash writedown on its Workopolis subsidiary, which has been hammered by increased competition in the online recruitment industry and generally weak economic conditions.
Revenue fell 5 per cent to $395-million, compared to $425-million a year ago.
"Visibility remains limited for the media operation," chief executive officer David Holland said in a statement. "The print advertising environment remained soft in the early part of 2013. We intend to continue to be diligent in seeking out revenue opportunities across our media platform including the introduction of a paywall at the Star. We also expect to adjust the cost structure in the media operation as we continue to adapt."
Mr. Holland said the Toronto Star division was hit hardest by the weak national advertising market – the division that includes the Star saw an overall 8.5-per-cent decline in print advertising revenue in 2012 – and that the decline was "more moderate" at its Metroland division, which publishes community newspapers. Its Harlequin division also faced challenges, paying out higher royalties to and getting hit by exchange rates.
The earnings come as reporters at the chain's flagship Toronto Star newspaper pulled their names off stories Wednesday to protest cuts at the paper that were announced earlier this week as a cost-saving measure as advertising revenue falls. The paper intends to outsource as many as 25 copy editing and page design positions, and eliminate another 30 jobs in the advertising and human resources department.
"Some say byline withdrawals is a clumsy union tool, in that it doesn't accomplish a whole lot in the practical world, as most readers may not notice," union representative Dan Smith wrote in a note to members. "We actually agree with part of that. But in this case, we need to do something to send a powerful message to the publisher and the board – which is meeting here (Tuesday) and will be in town (Wednesday) for Torstar's fourth quarter results."
Byline strikes are a well-established tactic at newspapers, and are intended to draw readers' attention to internal issues they may not know about. The protest only extends to the paper – reporters kept their names on the online versions of their stories. Columnists don't have the same contractual right to pull their names off of their work as reporters, so are still named in the paper Wednesday.
Torstar wants to outsource the editorial jobs to Pagemasters North America, which is owned by Canadian Press (which is part owned by the Star and Globe and Mail and the parent company of La Presse). Torstar said it has invested $500,000 in the Canadian Press so far this year, which is transitioning from a member-owned collective to a for-profit corporation under its new owners.
The company said all the layoffs and cost-reductions it undertook over the last year will save the company about $15-million a year.
The company breaks down its quarterly results by division. Here are the highlights.
· Star Media Group: Revenue declined by $6.4-million to $138.6-million as print advertising fell 11 per cent at the Toronto Star. Digital revenues also fell, down 1.8 per cent on accounting changes. Operating earnings were $16.8-million in the fourth quarter of 2012, down $9.8-million from $26.6-million in the fourth quarter of 2011.
· Metroland: The company said "revenues were down $2.3-million or 1.4 per cent in the fourth quarter of 2012 primarily as a result of modest declines in print advertising revenue. Distribution revenue increased moderately in the quarter. Digital revenue was down 6.4 per cent, driven entirely by a decline at WagJag."
· Book publishing: The company said "book publishing revenues were down $8.8-million in the fourth quarter excluding the impact of foreign exchange, with North American revenues down $6.6-million and overseas revenues down $2.2-million. North American division revenues were down $6.6-million in the fourth quarter of 2012, excluding the impact of foreign exchange. Declines in print were not offset by increases in digital revenues."