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Weaker Dollar Plus Restructuring Impact Torstar Publishing

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March 1 – March 8, 2007 Edition

Weaker Dollar Plus
Restructuring Impact
Torstar Publishing

TORONTO/2/28/2007–Book and newspaper divisions of Torstar Corp. both reported lower fourth-quarter profits on Wednesday, impacted by restructuring, foreign currency movements, and weaker performance at its flagship Toronto Star daily newspaper.

Torstar earnings were C$36.1 million ($30.9 million), or 46 Canadian cents a share, in the three months ended Dec. 31, a decline from a profit of C$37.9 million, or 48 Canadian cents a share, in the comparative period the previous year.

Torstar wrote down C$11.7 million during the quarter to account for restructuring at the Toronto Star, which has been grappling with a sluggish advertising market.

Book Publishing revenues at Harlequin Enterprises, Ltd., best known for women’s romance novels, were up $9.4 million in 2006 excluding the impact of foreign exchange. North America Retail was up $9.9 million, North America Direct-To-Consumer was down $5.7 million and Overseas was up $5.2 million.

Book Publishing operating profits were down $2.5 million in 2006 excluding the impact of foreign exchange. North America Retail was up $2.7 million, North America Direct-To-Consumer was down $6.5 million and Overseas was up $1.3 million. Harlequin reduced its global workforce by 4% through a restructuring completed during the second half of 2006.

North America Retail increased book sales in 2006 after stabilizing in 2005.

Significant efficiency improvements were made to the series business in 2006 as fewer books were printed and distributed and more books were sold. Sales of single title books also increased in 2006. Lower promotional and sales support costs were partially offset by increased product and distribution costs.

“We had a solid fourth quarter,” said Robert Prichard, Torstar’s President and Chief Executive Officer. “Metroland, our largest business, delivered good revenue and profit growth, closing a strong year with positive momentum.

“Harlequin, excluding foreign exchange, delivered higher revenues and profits, also ending the year on a positive note. Offsetting these two strong performances were lower revenues and profits at the Toronto Star reflecting difficult advertising trends and increased promotional expenses. In our digital businesses we are encouraged by good revenue growth which we expect to continue into 2007. The quarterly results also included a substantial equity pickup from our investment in CTVglobemedia.”

“2006 was a challenging year for Torstar,” continued Robert Prichard, “particularly as we faced major negative foreign exchange impacts throughout the year. This is behind us now and with good growth and momentum at Metroland, a strong finish at Harlequin, positive trends in our digital businesses and a determined effort underway to stabilize results at the Toronto Star, we enter 2007 optimistic that it will be a better year.”

The Book Publishing Segment reports the results of Harlequin Enterprises Limited, a leading global publisher of women’s fiction. Harlequin publishes women’s fiction around the world, selling books through the retail channel and directly to the consumer by mail and the Internet. Harlequin’s women’s fiction publishing operations are comprised of three divisions: North America Retail, North America Direct-To-Consumer and Overseas. In 2006 Harlequin published books in 26 languages in 109 international markets. Harlequin reported a total of 131 million books sold in 2006, consistent with 2005.