May 14 – 21, 2009 Edition

Harlequin Sales Help Offset
Steep Losses at Torstar

TORONTO, ONTARIO/Authorlink News/05/11/09–Sales for Harlequin Enterprises grew at a solid clip in the first quarter ending March 31, 2009, partly offsetting parent company Torstar’s steep losses in the newspaper and digital segments. The company reported its financial results late last week.

“The first quarter was a tale of two solitudes: Harlequin delivered an excellent quarter of growth while our newspaper businesses confronted lower advertising revenues as a result of the recession,” said Robert Prichard, President and CEO of Torstar Corporation. “Harlequin has made a strong start and is on course for another solid year. Despite the global recession, Harlequin’s overall performance remains strong with digital revenue growth offsetting some print declines in Japan and the U.K. Revenue in the newspapers and digital segment was down 11 percent as the recession has hurt numerous advertising categories led by employment, real estate and automotive. While aggressive cost management across our newspaper businesses mitigated the impact of the revenue reduction, it has been insufficient to prevent a sharp drop in profitability. The newspapers also faced higher pension costs and newsprint pricing in the quarter which accentuated the reduction in profitability.”

Torstar’s revenue of $339.0 million was down $12.3 million as growth in Book Publishing was more than offset by lower advertising revenue in the Newspapers and Digital Segment.

EBITDA (operating profit before charges for interest, taxes, depreciation and amortization of intangible assets, and restructuring and other charges – see “non-GAAP measures”) of $24.8 million was down 35% or $13.5 million. The decline was from the Newspapers and Digital Segment as Book Publishing EBITDA was up $3.3 million in the quarter.

Torstar reported a net loss of $21.4 million or $0.27 per share compared with a net loss of $3.0 million or $0.04 per share in the first quarter of 2008. – Net debt was $619.0 million at March 31, 2009, down $8.3 million from $627.3 million at December 31, 2008.

“Looking forward, we are cautiously optimistic the worst is behind us. The combination of the expected gradual economic recovery, the full cost savings impact of our aggressive restructuring efforts and softening newsprint pricing should see the percentage declines in the newspaper division lessen as the year unfolds.”

“David Holland assumes the leadership of Torstar today as we complete our planned transition. He takes the helm with the full support of the Board and senior management team and my very best wishes.”