On Monday, the Toronto Star published the final Star Touch tablet edition of its newspaper. On Wednesday, Torstar Corp. reported that it saved $1.2-million on the initiative in the most recent quarter, and expects the move to contribute to a total of more than $7-million in savings in the rest of this year from continuing cost-cutting and restructuring efforts.
The multimillion-dollar investment in Star Touch was meant to revolutionize the company's news-distribution model. However, in June, the company announced it would shutter the project after it had not attracted enough readers and advertisers in its first two years. The costs of developing the new app, which launched on Tuesday, are expected to be "very modest," Torstar chief executive and Toronto Star publisher John Boynton said on a call with analysts on Wednesday.
"We expect those cost reductions to help offset print advertising revenue trends, which we expect will continue to be challenging," Mr. Boynton said.
The new CEO, who took over the post at the end of March, has said that "everything is on the table" in considering how to transform the Toronto-based newspaper and digital-media company.
The development of Star Touch was based on technology developed for a similar tablet edition at Montreal's La Presse, which has been much more successful: in June, the French-language newspaper announced that it would deliver its last print newspaper at the end of this year, publishing instead on its LaPresse+ tablet edition. According to a statement at the time, more than 270,000 tablet users read the online edition each day.
No longer using La Presse's technology will "simplify" the back-office operations for the Toronto Star's digital edition, Mr. Boynton said.
"Quite frankly, it's easier to buy for our clients, and easier to sell for our sales people, and easier to target when it's all part of the same tech stack," he said on the conference call.
Torstar reported a net loss of $7-million, or 9 cents a share, in the three months ended June 30, compared with a loss of $23.9-million, or 30 cents a share, in the same period last year.
Operating revenue declined to $161.8-million in the second quarter, down from $177.9-million last year.
Torstar also reported a $6.3-million non-cash amortization and depreciation charge related to its investment in digital media company VerticalScope and $6.1-million in restructuring charges.
Like most media companies, Torstar is attempting to cope with a shifting advertising environment that has seen the bulk of digital ad spending migrate to giants such as Facebook Inc. and Google Inc., as well as a larger shift away from print advertising.
Torstar is depending on growth in its Digital Ventures segment, and on cost-cutting initiatives in its newspaper operations, to offset revenue declines at its Star Media Group and Metroland Media divisions.
The company reported that print advertising was down 15 per cent in the quarter, with particular pressure in national print advertising, and a 3.6-per-cent drop in subscriber revenue.
Digital revenues now represent 18 per cent of the company's overall revenue, driven by gains at VerticalScope and in Metroland's digital ad sales at its local community websites.
"We're facing continued headwinds, but we continue to make good progress on the bottom line," Mr. Boynton said on the call on Wednesday. "We'll continue to plow away at the transformation plan."