Torstar reports Q2 loss, and ad slump lowers outlook at Rogers
While media ad sales have felt the full brunt of the recession, subscriber revenue is up at Sportsnet.
Torstar’s second quarter results were announced this morning, and revenue rang in at $373.7 million – down $25.1 million (6.3%), while EBITDA was down $9.6 million in the quarter (from $64.2 million to $54.6 million). Ad revenue declines, specifically employment and real estate, led to newspapers and digital revenue being down $30.4 million to $249.6 million, a 10.9% dip from 2008. However, Q2 book publishing revenue was $124.1 million, up $5.2 million (4.4%), helped along by a $7.7 million increase from the weaker Canadian dollar, offsetting a $2.5 million decline in underlying revenues. Torstar net income would have tallied up to $25.5 million (compared with $36.2 million in the same period last year), however a Q2 charge of $29.9 million related to a valuation allowance against certain CTVgm future income tax assets resulted in a reported net loss of $4.4 million.
‘The challenging economic environment is taking its toll on revenue in the newspapers and digital division particularly in those categories vulnerable to a downturn in economic activity such as employment and real estate,’ said David Holland, interim president and CEO of Torstar Corporation, in a release. ‘However, on the cost side, the restructuring efforts undertaken to date are making a difference, mitigating, in part, the impact of the revenue decline we are currently experiencing. The Harlequin business continues to perform well despite economic conditions.’ Holland says that due to the uncertain economic outlook, Torstar anticipates continued soft newspaper and digital revenue for the balance of 2009, however, expects that the restructuring ‘and a more benign newsprint pricing environment’ will help offset this, and anticipates reporting growth for Harlequin.
Meanwhile, ad sale declines led Rogers Communications to trim its 2009 revenue forecasts as it released its latest financial results on Tuesday. Rogers cut its 2009 guidance to overall revenue growth in the 2% to 4% range, against an earlier estimate of 5% to 9% growth, citing ‘greater and more prolonged than forecasted media advertising revenue declines associated with the sustained recessionary economic environment.’
Overall, Rogers posted second quarter earnings up 24% to $374 million, against a profit of $301 million in 2008, with revenue up 3% to $2.89 billion, compared to $2.8 billion in 2008, as results were under-pinned by a 6% jump in revenues at the dominant wireless phone division.
But Rogers’ cable and media division took the full brunt of the economic downturn during the latest quarter.
‘Basic cable, digital cable, Internet, and home phone service subscriber growth all continued to slow from the previous year reflecting the worsening economic recession and unemployment levels in the province of Ontario,’ the media giant reported.
Slowing cable subscriber growth led revenue in that business to rise a modest 4% to $972 million, while shrinking print, radio and TV ad sales led media division revenues to fall 11% to $366 million.
Rogers’ media unit, which includes the Citytv stations and specialties like Rogers Sportsnet and The Shopping Channel, comprises 13% of overall group sales.
Falling revenue at The Shopping Channel due to lower consumer spending was partially offset by higher subscriber revenue at Rogers Sportsnet.
Rogers also reported that savings from cost-cutting at the media division – the division recorded a one-time $21 million restructuring charge – was offset by higher programming costs for TV, including at the US series-rich Citytv stations.
Shares in Rogers fell $1.76, or 5.6%, to $29.22 during mid-day trading on the Toronto Stock Exchange on news of its latest results.
From Playback Daily, with files from Media In Canada