Print revenues plunged 58% in last half of March, but digital traffic and digital subscribers are rising
Newspaper publisher Torstar Corp. saw its first quarter loss more than triple as the economic shutdown resulted in a significant hit to advertising revenues, company executives said in an earnings call Wednesday morning.
The company, which publishes the Toronto Star, reported a net loss of $23.5 million or $0.29 per share for the three months ending March 31, 2020. In the same period last year, Torstar posted a $7.4 million loss. Operating revenues declined by 20 per cent — also by $23.5 million — in comparison to the first quarter of 2019.
Most of the losses were attributed to double-digit percentage decreases in both print and digital advertising revenues. Torstar, like most legacy media, still relies heavily on print advertising revenues, which have been on the decline for years. This quarter, the company posted $23.7 million in print advertising revenue, down from the $38 million in the first quarter of 2019. Digital advertising revenues fell to $11.6 million from $13.3 million.
“Results in the quarter continued to reflect ongoing challenges in the print advertising market and towards the end of the quarter, the emergence of the COVID-19 pandemic and the resulting government measures for social distancing and the closure of non-essential businesses began to have a negative impact on advertising revenue,” said John Boynton, Torstar’s CEO.
Torstar repeatedly pointed to the impact COVID-19 is having on its business. Print revenues, for example, were down 29 per cent on a “same-store basis” for the quarter but plunged 58 per cent in the latter half of March. Lorenzo DeMarchi, Torstar’s chief financial officer, said that the company saw a similar pattern in its flyer distribution business. The declines only continued into April, he said.
The lone bright spot for the company was an increase in digital traffic and digital subscribers that executives said continued to accelerate into April. Torstar now has 90,000 subscribers with digital access, including 32,000 digital-only paid subscribers. These gains, however, were offset by losses in print subscribers and so subscriber revenues were still down 3.7 per cent from 2019.
DeMarchi said the company expects the negative trends to continue so long as the economic shutdown is in place.
“We believe the advertising revenue impact associated with COVID-19 will persist so long as the current government-imposed business and social-distancing restrictions remain in place and that trends will begin to improve with the easing of these closures and restrictions,” DeMarchi said.
To alleviate some of its losses, Torstar sold the building housing the Hamilton Spectator for $25.5 million in the first quarter and eliminated 85 positions in April, a move that saved the company about $7 million on an annualized basis. Based off of the declines in revenue that the company saw in March, DeMarchi said Torstar will qualify for the federal government’s Canada Emergency Wage Subsidy to cover 75 per cent of employee wages. The company expects to receive $12 million in the first eight weeks of the program and qualify for the last four weeks, bringing the total to $18 million.
Should the economic shutdown continue, Torstar is planning for further reductions.
“We are monitoring our financial outlook closely and are developing plans to implement additional labour and other cost reductions depending on the length and severity of potential revenue declines associated with the COVID-19 pandemic,” DeMarchi said.
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