Torstar: Struggles Expected to Continue

| About: Torstar Corp. (TORSF)

With Torstar Corp. (OTC:TORSF) set to announce its second quarter results next Wednesday, analysts are expecting continuing struggles as the newspaper industry adapts to a still-changing media landscape.

Market consensus for the Toronto-based publisher of the Toronto Star newspaper is revenue of C$380-million and earnings per share of C$.29 on the quarter.

Scotia Capital's Paul Steep is more pessimistic, forecasting C$366-million (C$.26) for the media conglomerate.

He said in a note Wednesday:

Our expectation is that Torstar's second quarter results will reflect the firm's exposure to a slowing Ontario economy. Torstar has been actively restructuring over the past year to combat changes in the print media landscape, however, the magnitude of the headwinds are limiting the impact.

Torstar's latest move to cut costs is to let go an additional 27 jobs on its classified sales force in July, Mr. Steep said.

Advertising, which includes key sectors such as auto, real estate and employment, have also dried up in the recession.

"The Ontario economy remains in a tough position to stage a meaningful recovery in these advertising segments in the near to medium term," he said.

However, Torstar may benefit from an expected decline in newsprint costs.

Mr. Steep maintains a Sector Underperform on Torstar and has slashed the target price to C$5.75 from C$6.