TORONTO – Media company Torstar Corp. (TSX:TS.B) says profits dropped 44 per cent in the second quarter as newspaper revenues declined and sales at its Harlequin book publishing operations slumped on a slowdown overseas.
The publisher of the Toronto Star and numerous other dailies said Wednesday that net income was $18 million, or 23 cents per share, falling short of average expectations of 36 cents, according to a survey of analysts by Thomson Reuters.
A year earlier, profits were $32.6 million or 41 cents per share.
Total revenue fell 7.5 per cent to $354.9 million from $383.9 million.
“We had anticipated lower earnings at Harlequin, but not to this extent,” said Torstar’s president and chief executive officer David Holland in a conference call.
Operating revenue at Harlequin dropped to $99.5 million from $107 million, affected by weakness in the economy, particularly in Europe, it said.
But the pains were felt beyond the book publishing division, which specializes in romance novels.
At the Star Media Group, which holds its Star and Metro newspapers, print advertising revenues were down, with a decline of 13.7 per cent at the Toronto Star, the company said. Overall digital revenues were 4.9 per cent lower from weaker results from its employment listing site Workopolis.
Operating revenue at the Torstar media division fell to $255.4 million from $276.9 million.
Over the past six months the results were even tougher. The Star Media Group has lost $1.3 million in the first half of this year, compared to a profit of $15 million a year earlier, mostly due to a combination of lower revenues and higher restructuring costs so far this year.
Holland said those efforts have already helped save Torstar about $12 million this year, and that he expects further cost reductions across both the Star and Metroland community newspapers will save another $12 million before the year is over.
“There’s probably some additional (cuts) coming down the stream, but we haven’t provided any information on that yet,” he added.
Torstar has been developing a paywall for its Toronto Star website for several quarters and Holland expects the technology to be in place before the end of the summer, though he believes the paywall’s contribution to the bottom line will be “pretty limited” this year.
Torstar holds an investment in The Canadian Press as part of a joint agreement with the parent companies of the Globe and Mail and Montreal La Presse.