Toronto Star publisher, Torstar, reports $233.2M loss in Q4 of ’15, recommits to Star Touch app
Loss in final quarter of the year includes a $213 million non-cash impairment charge, as well as lower revenue mostly affected by a year-over-year decline in national print advertising
The publisher of Canada’s largest daily newspaper, Torstar Corporation, today reported its fourth quarter earnings from 2015. The company said it would record a $233.2 million loss in the quarter, much of its attributable to $213.3 million of in non-cash impairment charges and $37.2 million of amortization and depreciation expense.
The fourth quarter decline primarily reflected lower print advertising revenues, though digital revenue grew 27.3 percent in quarter 2015, largely from the investment in VerticalScope as well as from revenue growth at eyeReturn, thestar.com and in local digital advertising at Metroland Media Group.
“Let me begin by saying that we’re in the midst of a meaningful transition at Torstar,” said David Holland, President and Chief Executive Officer. “We did not expect this transition to be easy, but we do believe, it will ultimately prove to be very worthwhile. We’ve repositioned our asset base in part with the allocation of capital to VerticalScope and within the Canadian media operations we are investing in the Star Touch app with a goal of developing another contribution generating platform in addition to the print and browser platforms.”
The Star Touch app was first released in the fall of last year (see TNM post here) and is built on the La Presse+ platform. That French-Canadian newspaper has been committed to going all digital and late last year announced that it would shutter its daily print edition to rely on its app and website (it is still publishing a weekend edition.)
But Holland expressed disappointment in the results so far, which the company said was about a $14 million (CAD) investment which includes marketing costs.
“We are pleased with our progress in a number of areas including the critical area of engagement,” Holland said. “The audience build, however, is slower than we had anticipated. But we are encouraged by advertiser interest and their support for the product at this very early stage.”
“2016 is expected to represent another year of investment in establishing Star Touch with an expected net investment in the range of $10 million this year, weighted more towards the front half of the year,” said John Cruickshank, publisher of the Toronto Star.
Despite the heavy investment so far in the new app, the company said they will stay the course.
“The longer people are on Star Touch the more often they use it every week and they longer they use it every day,” said Lorenzo DeMarchi, Executive Vice President and Chief Financial Officer of Torstar Corporation. “So everything is trending in the right direction, and the acquisition is slow and steady, the acquisition of new customers.”