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May 9, 2018

Torstar plans further transformation amid tough print advertising market: CEO

Toronto Star

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TORONTO -- The Torstar Corp. (TSb.TO) media group, which includes the Toronto Star and dozens of other newspapers, will experiment with a new subscription model that makes greater use of data analytics to match advertising with consumers.

Torstar CEO John Boynton announced the plan at Torstar's annual meeting Wednesday, but declined to provide details on timing.

He added that Torstar has been putting in place new personnel with expertise in data management and providing extensive training to other staff so they know how to take advantage of the potential of the subscription model by targeting consumers with ads specific to them.

"You really have to be great at data before you go into subscription," Boynton said.

But he said that, in an interim step, Torstar will introduce a single sign-on approach for the websites of its community publications, such as the Oakville Beaver and the Brock Citizen, and coupon service on Thursday.

Visitors to these sites typically won't be see their access to content restricted, but they will be required to provide names and certain other details to upload comments or community calendars or download coupons.

Boynton told reporters after the meeting that he's not talking about re-introducing paywalls, which the Toronto Star tried and other publications use, but looking at other industries with successful subscription models.

"We're looking at industries that are very mature and responsible (in using) data," he said, pointing especially to the music, entertainment, telecommunications and financial services.

Last month, Torstar announced it would ramp up investment in its free Metro newspapers and roll them into a new brand, StarMetro. The newspapers are used to direct readers to city-specific versions of that feature regional news along with national and international news and columns. But the company said at the time it had no immediate plans to bring in a paywall for its enhanced digital news products.

After Boynton's formal presentation, a shareholder said that he didn't want to be "hurtful" but, in his opinion, a previous attempt to get payments for online content on Torstar's websites "was a mess" and "didn't go well."

Boynton replied that the market environment is very different now, with more evolved technology and consumers increasingly willing to subscribe for content.

"So the somewhat leaky paywall from last time shouldn't be seen this time," Boynton said, in reference to glitches that allowed readers to get around it.

Torstar ended a previous iteration of a paywall after two years in 2015 and instead launched the now defunct tablet app StarTouch, under the direction of previous CEO David Holland. The company spent some $20 million on the app, which was inspired by a successful digital-only publication from Montreal's La Presse.

On Tuesday, La Presse said it plans to adopt a not-for-profit structure, using a $50-million grant from current owner Power Corporation of Canada. But Boynton said the company has no intention to make a similar move.

Boynton replaced Holland last year and has since implemented a number of changes as newspapers struggle with the loss of advertising revenue, resulting in mass layoffs, publication closures and a shift to fewer print editions and more online publications.

Boynton spoke to shareholders after Torstar announced it lost $14.5 million, or 18 cents per share, in its first quarter, a seasonally weak period that ended March 31. That was an improvement over the year-earlier first-quarter loss of $24.3 million, or 30 cents per share.

Revenue for the quarter totalled nearly $129 million, down from $138.7 million a year ago, although direct comparisons year-over-year were complicated by a number of factors including the exchange of publications with Postmedia that was announced late last year and completed early this year.

The company said the Postmedia transaction is expected to reduce Torstar revenue because of publication closures, but improve profit margins.

Boynton acknowledged during the shareholder meeting that the Competition Bureau is investigating the transaction but said Torstar doesn't think the deal violated the Competition Act.

Under the agreement announced by the two companies in November, 41 newspapers changed hands and 36 were closed, mainly in Ontario regions served by multiple publications. Nearly 300 jobs were cut as a result.

In documents used by the bureau to obtain warrants to search several offices of the two companies, the watchdog alleged they conspired to divide up sales, territories, customers and/or markets for advertising or flyer distribution in certain regions.

The bureau also said the companies had lists of which Torstar and which Postmedia employees would be terminated and agreed to a transitional services agreement.