Declines in Print Revenue Outweigh Digital Growth, Driving Results Down at Harlequin
“Declines in print revenue more than offsetting digital revenue growth,” wrote Harlequin parent Torstar’s management in a discussion of the company’s financial performance for 2012. The company blamed a “competitor’s best-seller” (see: Fifty Shades of Grey) and higher digital royalties for its performance.
Both revenue and operating profit were down at Harlequin in 2012 compared with 2011. Revenue was C$426.5 million ($414.72 million) in 2012, down from C$459.4 million in 2011. Profit was C$71.5 million in 2012, down from C$81.8 million in 2011.
“A combination of weaker revenues, higher digital royalty rates and negative foreign exchange impact contributed to the decline in Harlequin results. An encouraging sign is that the quarter-to-quarter stability in the print and digital book publishing markets continued through the fourth quarter,” said Torstar president and CEO David Holland in a press release.
In an outlook on 2013 performance, the release later said that “digital revenue is expected to grow in 2013.”
Highlights of the rest of the company’s results:
• Revenue was $1,485.7 million in 2012, down $63.1 million from $1,548.8 million in 2011. Excluding the impact of acquisitions and a decrease at TMGTV resulting from lower product sales, revenue was down $64.9 million (4.2%) in 2012.
• EBITDA was $207.7 million in 2012, down $34.5 million from $242.2 million in 2011. Media Segment EBITDA was down $27.0 million primarily as a result of lower print advertising revenues. Book Publishing Segment EBITDA was down $9.2 million including a decline of $1.7 million from the impact of foreign exchange. Corporate expenses were down $1.6 million in 2012 as a result of lower compensation costs and a mark-to-market adjustment of a share-based compensation hedging instrument.
• Net income attributable to equity shareholders was $103.2 million or $1.30 per share in 2012 down $114.5 million or $1.44 per share from $217.7 million or $2.74 per share in 2011. Excluding the impact of CTV Inc. in 2011, Torstar would have reported net income attributable to equity shareholders of $143.1 million or $1.80 per share in 2011.
• Net debt was $149.0 million at December 31, 2012, down $4.3 million from $153.3 million at December 31, 2011.