TorStar Corp. is predicting a challenging 2008 for its newspaper holdings, but fortunately, there is a way to ease the bite into earnings taken by falling advertising revenue.
"Uncertainty in the economic outlook for both Canada and the U.S. may affect Torstar's businesses in 2008," it said in a statement. "Early indications ... are that the economy may be having a negative impact on newspaper revenues."
It said it announced a "substantial voluntary separation program" this month, which will reduce the newspaper's workforce by an unspecified number of employees to help the Star deal with possible revenue declines.
"This program, along with other initiatives, should provide for operating cost relief," it said.
"The geographic concentration of our community and daily newspapers exposes us to the particular trends in Ontario" where the economy has been slowing due to cutbacks in the manufacturing sector, (CEO Rob Prichard) said.
Prichard said Torstar has "some early indications that the slowing economy is affecting newspaper advertising early in the year and the Hollywood writers' strike will affect CTVglobemedia's results in our first quarter."
TorStar has about a 15 per cent share in CTVglobemedia, which employs yours truly at CTV.ca News.
Advertising revenue at Torstar Corp. [TS.B-T] has started to be hit by an economic slowdown, executives said yesterday, offering a glimpse into the concerns at many media companies, from newspapers and the Internet to radio and television stations.
Torstar, which publishes Canada's largest newspaper by circulation, the Toronto Star, along with dozens of papers throughout Ontario, said it expects 2008 to be a challenging year if the economy does cool off. After reporting increases in 2007 and fourth-quarter profit, the company said the outlook for the year ahead is not as positive.
Torstar recently negotiated a new labour contract with its newsroom and production employees, which has allowed the company to cut costs, Mr. Prichard said, though he did not indicate the magnitude of the reductions. The agreement included modest pay raises for staff, he said, along with buyouts, the elimination of premium pay for Sunday work and changes to job titles in the newsroom.
“It gained us considerable flexibility in how to organize the work of the paper, quite dramatically reducing the number of classifications in both the pre-press process and the newsroom,” Mr. Prichard said.