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Jul 27, 2016

Torstar cuts dividend for second time this year as Q2 loss balloons to $23.9M

Toronto Star

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TORONTO -- Torstar Corp. says expenses related to its VerticalScope acquisition last year and the closure of its Vaughan printing plant this month combined to drive up its second-quarter loss to $23.9 million -- including discontinued operations.

The loss amounted to 30 cents per Torstar share, up from a $1.1-million loss or one cent per share in last year's second quarter.

The media company's revenue was down 9.4 per cent from last year, mainly because of declines at Torstar's two main newspaper divisions -- part of a long-term shift in consumer and advertising patterns affecting the media industry.

Torstar says its cost-cutting efforts, including a reduction of 425 positions through the end of the second quarter, and investments in new technology will begin to show results later this year and into 2017.

However, its board of directors is reducing the company's dividend for the second time this year.

The quarterly payment to shareholders will fall to 2.5 cents per share, or 10 cents per year, starting with the Sept. 30 payment. The dividend had been 6.5 cents in June and March and 13.12 cents per share quarterly prior to that.

Torstar's overall revenue fell to $196.5 million from $216.9 million in the second quarter of 2015.

Its investment in VerticalScope in last year's third quarter partly offset the overall decline, as revenue from digital ventures nearly doubled to $17.2 million from $9.7 million.

However, Torstar says the impact of lower print advertising and the costs associated with its Star Touch tablet edition exceeded contributions from VerticalScope and cost-cutting.

The Toronto-based publisher of the Toronto Star and other newspapers says that printing formerly done at its plant north of Toronto was successfully shifted to Transcontinental on July 3 and the property and equipment are up for sale.

"Looking forward, we expect earnings in the balance of the year to benefit from growth at VerticalScope, efforts on costs, including outsourcing of printing the Toronto Star, and as anticipated, lower net investment in Toronto Star Touch compared to the 2015 launch," said Torstar president and CEO David Holland, who has previously announced his retirement.

"We remain very committed to a multi-platform evolution across our media operations, and with VerticalScope, a meaningful digital orientation for Torstar as a whole."

Torstar holds an investment in The Canadian Press as part of a joint agreement with a subsidiary of The Globe and Mail and the parent company of Montreal's La Presse.