Torstar Inc. will increase its dividend by 5 per cent, despite a weak advertising market that pushed the company's revenue lower in the last quarter.
Chief executive officer David Holland said the company's earnings were "solid in the quarter given the environments" as he announced the increased payout to investors and warned that the advertising market for the Toronto Star and its stable of smaller papers remains weak.
"Visibility remains limited on the print advertising market and the digital advertising market continues to evolve rapidly," he said.
Revenue was $350.8-million, compared to $351.4-million a year ago. The company said it earned $29.3-million in its first quarter, compared to $13.8-million a year ago.
Excluding acquisitions, revenue at the media division slipped $1.6-million in the quarter. Print advertising was 4.4 per cent lower at the Star and 4.9 per cent at Metroland Media Group, but the losses were "partially offset" by an increase at its Metro division, which publishes commuter dailies.
"The national finance category of advertising continued to be weak in the first quarter and was a significant contributor to the revenue declines in both print and digital media," the company said.
On a conference call, Mr. Holland said real estate advertising continued to be a bright spot. But after holding out against declines, the company's community papers are seeing a pullback in classified advertising similar to those seen at daily papers over the last few years.
Newspaper publishers are increasingly looking to their websites to raise revenue, but the digital market has been difficult as well. Digital revenue was 11.2 per cent of the media division's revenue in the quarter, down from 11.5 per cent a year ago.
Several cost saving measures were undertaken in the quarter, as well, including a restructuring at Metroland and the Star that are expected to save the company almost $10-million by the end of the year.
It also reached a deal to merge it Ontario distribution operations with The Globe and Mail, which the company said could result in an annual savings of up to $5-million.
The company's Harlequin division saw revenue decrease by $9.4-million, due to "the anticipated moderation of digital growth in North America without a corresponding slowing of the declines in retail print sales. Harlequin expects to continue to adjust the volume of printed books distributed into the market through the balance of the year with the objective of improving operating results."