August 1-15, 2005 Edition

Harlequin Parent,

Torstar, Reports

Scant Rise in Profits

TORONTO, CANADA/07/27/05—Torstar Corp, Canada’s largest newspaper publisher and owner of romance publisher Harlequin Enterprises, has reported a scant 0.8 percent rise in second-quarter profit. Slightly higher numbers in the newspaper division offset sagging sales and profits at Harlequin.

Harlequin’s revenues were up $2.9 million in the second quarter, excluding the impact of foreign exchange. North America Retail was up $2.7 million, but North America Direct-to-Consumer sales were down $1.9 million. Harlequin’s operating profits in the second quarter edged up only $0.5 million to $23.4 million from $22.9 million in the quarter from lower volumes, higher production costs and promotional spending. The second quarter 2005 North America Retail series volumes were below the second quarter of 2004 but were in line with the fourth quarter of 2004 and the first quarter of 2005.

Torstar’s Toronto Star, Canada’s largest daily newspaper, saw net income rise to C$36.1 million ($29.1 million), or 46 Canadian cents a share, for the period ended June 30, compared to a year-ago profit of C$35.8 million, or 44 Canadian cents per fully diluted share. Performance was under an expected profit of 47 Canadian cents per share.

For the overall quarter, income increased to C$405.4 million from C$399 million. Newspaper revenues rose 3.7 percent to C$272.7 million, but revenue at Harlequin fell to C$132.8 million from C$136.1 million a year ago.

Analysts said the results were in line with market expectations, but that the near-term outlook was uncertain.

Torstar Chief Executive Robert Prichard said in a conference call with analysts that the outlook is “constrained” for sales at both the Star and at Harlequin for the rest of the year.

Torstar has also invested C$4 million to C$5 million in a new celebrity news magazine called WEEKLY SCOOP. The publication will launch in October and will be available at newsstands across Canada.