labels: Management - general
Restructuring to save Canadian media group Torstar $12 million annually news
13 May 2008

Torstar Corp, the owner of Canada's largest-circulation daily Toronto Star, has announced its intention to cut 160 jobs in a restructuring prompted by continuing weakness in the newspaper industry. This was its second job cut in two years, after shedding 85 positions from its workforce in 2006.

The company said its decision would result in a one-time restructuring charge of about $21 million in the first quarter, although it expects to save $12 million annually as a result of this exercise. A spokesperson for Torstar said there are approximately 6,200 employees at its newspaper division and that the staff reductions cut across almost every area of the unit.

The company said the cuts would include voluntary and involuntary staff reductions. A company spokesman said 122 employees at the firm's flagship newspaper, the Toronto Star, are leaving voluntarily. The newspaper has around 1,800 people on its rolls and a daily readership of 436,000.

Torstar's decision comes during a difficult environment for newspapers as many readers turn to the internet and away from print publications. However, strangely, the 10 employees at the internet production staff at Torstar Electronic Publishing were also laid off.

The company countered charges of neglecting its online business by saying that the affected positions are redundant support jobs and many of the functions have been transferred over time to the editorial department.

"We've made the decision to better align existing resources and reduce duplication of efforts," said Robert Hepburn, spokesman for the Toronto Star. "Part of the Star's strategy is to aggressively embrace the opportunities provided by the internet," he said, adding the Star has recently hired more editorial staff for its various online services, including three new vertical content sites that were recently launched this week.

He justified the job cuts, saying they were an effort to try to keep cost structure at a "level that is reasonable". "In the newspaper industry across North America, the trends in recent years in terms of advertising have been challenging to all media outlets or organisations," he added.

In a letter to staff, Toronto Star publisher Jagoda Pike said that the paper's "strategy has focused on taking responsible steps to deal with the substantial revenue declines."
"Our two largest expenses are labour and newsprint," Pike wrote.

"We tackled newsprint first and reduced our consumption by more than 10 per cent through a number of initiatives. We then took steps to reduce labour costs, including through changes to our collective agreements and now with the (voluntary severance programme)."

The Toronto Star ratified a new contract with its staff in January, averting a strike. It said at the time that the three-year agreement would help the newspaper transition from a traditional print-focused organization to one that deals with multimedia - both print and online.

Besides newspapers, Torstar also has interests in speciality publications, digital properties, Syndicate content, as well as women's fiction and a 20-per cent stake in CTVglobemedia. The newspaper division is split between two main subsidies: Metroland Media Group and Star Media Group.

Star Media Group is a division of Toronto Star Newspapers Ltd., which is a subsidiary of Torstar Corporation. It was created on 11 September 2006 as part of restructuring of the companies assets.

Star Media Group includes the flagship Toronto Star, Canada's largest daily newspaper, Torstar Syndication Services a syndication service of content for various publications, Torstar Media Group Television, which is a film / video production unit and includes ShopTV Canada, as well as TMG Production and TMG Entertainment.

Metroland Media Group is Torstar's largest division. Metroland consists of daily and community newspapers, printing services, flyer distributing and digital operations. Metroland operates over 130 daily and community publications.

Metroland publishes over 100 community newspapers including former CityMedia Group publications. Metroland also has as a number of speciality publications and operates several consumer shows. It also published the alternative newspaper Eye Weekly.

Torstar had net profits of $101.4 million last year, up 28 per cent from 2006, but said this was boosted by favourable newsprint costs and adjustments for lower future tax rates - conditions unlikely to be repeated in 2008. Hence, the management has warned shareholders and employees of tougher times ahead.

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Restructuring to save Canadian media group Torstar $12 million annually