Skip to main content

Second-quarter results for Torstar suffer with the company booking a net loss of $1.1-million, compared with an $18-million profit in the same quarter last year.

MARK BLINCH/REUTERS

Torstar Corp. is betting some of the money it reaped from bodice rippers on the growth potential of other obsessions, such as muscle cars and golden retrievers.

The newspaper publisher announced on Wednesday it is spending $200-million for a 56-per-cent stake in VerticalScope Inc., a Toronto-based digital media company that operates hobbyist and niche-interest websites on subjects ranging from cars and sports to pets and collectibles.

The investment is Torstar's first move to spend a part of the proceeds from its sale of Harlequin Enterprises Ltd., a publisher of the famed romance novels, to Rupert Murdoch's News Corp. for $455-million last August. But it also deepens the publisher's stake and expertise in digital publishing and advertising, creating the potential for future collaborations with Torstar's existing properties.

Story continues below advertisement

"We've been assessing opportunities to employ capital that resulted from the Harlequin sale for over a year now," David Holland, Torstar's chief executive officer, said in a conference call with analysts on Wednesday. "It's an important step forward in the transformation of Torstar, positioning the company for growth and its more digitally oriented future."

Torstar's acquisition comes at a moment when the company is struggling with a plunge in print advertising revenues and trying to pivot to a more stable digital future with the planned launch of a new tablet edition of the Toronto Star, its flagship newspaper, this fall. The Star is hiring new journalists even as it cuts costs elsewhere in the business.

Second-quarter results for Torstar, also reported on Wednesday, continued to suffer. The company booked a net loss of $1.1-million, or a penny per share, compared with an $18-million profit, or income of 23 cents a share, in the same quarter last year.

Operating revenue was $206-million, down from more than $225-million a year earlier. Segmented revenue fell 8.6 per cent to just under $217-million for the quarter, which ended June 30.

Print ad revenue at the Toronto Star was down 11.4 per cent for the quarter, a slight improvement compared with recent quarterly results. Publisher John Cruickshank said he is cautiously optimistic the recent "easing" in print ad declines is continuing in the current quarter.

Subscriber revenues at the Star were down 3.5 per cent and are expected to fall further with the arrival of the new tablet edition, which will be free to readers and is to launch in mid-September. Digital revenues were effectively flat, year over year.

VerticalScope, which is based in Toronto and has about 130 staff, provides some hope for growth in the coming quarters. Mr. Holland declined to reveal its revenue, saying only that it operates at "a pretty healthy margin." But Cormark Securities analyst David McFadgen said in a research note: "We believe the acquisition goes a fair way in transforming Torstar."

Story continues below advertisement

The site has more than 600 online forums catering to enthusiasts on a range of topics, such as The Truth About Cars, PetGuide.com and ElectricianTalk.com. Torstar says the forums collectively attract 80 million unique visitors and 500 million page views each month, with much of that traffic flowing from the United States.

It will be run as a separate business, led by current president Rob Laidlaw. One of VerticalScope's strengths is in the automotive space, with sites such as AutoGuide.com – also a key advertising category for Torstar.

Mr. Holland praised VerticalScope for its "expertise in the development of audience," and said "there may be opportunities for collaboration [with other Torstar properties] over time."

But he stressed that for the time being, the new acquisition is a separate, profitable venture. "As of today, we are not sitting back counting on lots of cross-pollination," he said.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter