Describing it as a move that will position the company for a more “digitally oriented future,” Torstar Corporation has acquired a majority interest in Toronto-based digital media company VerticalScope.
Torstar paid $200 million for a 56% stake in the privately held Toronto company, which owns and operates a series of online forums and content sites in key verticals including automotive, power sports, outdoors and health.
The Toronto media company acquired ABRY Partners’ minority interest in the company, along with more than one third of shares held by continuing shareholders. VerticalScope plans to continue making a distribution to its shareholders this year, that if completed would reduce Torstar’s net investment to approximately $178 million.
Established in 1999, VerticalScope attracts more than 80 million unique visitors and more than 500 million page views each month. Its properties include AutoGuide.com, which boasts more than 550 owned and operated auto-related web sites, 17.6 million registered members and 39 million monthly unique visitors, and OutdoorGuide.com.
Torstar said that VerticalScope’s user forums and content sites provide “attractive platforms” for advertisers to reach engaged audiences across special-interest communities.
Torstar president and CEO David Holland (pictured) said that the acquisition is an investment in a company that is benefitting from ongoing shifts in the advertising landscape, particularly in areas such as social media, programmatic and mobile.
“The company’s commitment and expertise in the development of audience has been a critical element in the success it has enjoyed, and its platform supports the daily interaction of millions of registered users,” said Holland in a release.
The announcement comes as Torstar reported a loss of $1.1 million for the three months ended June 30, a swing of $19.2 million from a profit of $18.1 million last year.
The company reported revenues of $216.9 million, down from $237.3 a year ago, citing a continued decline in print ad revenues as well as flyer distribution revenues. The company said that print ad declines within Star Media Group, which includes the company’s flagship Toronto Star, have eased in the first six months of the year, reflecting a “moderation” in the rate of decline in national advertising at the country’s largest newspaper.
Revenues within Star Media Group fell $9.4 million or 8.8%, with print ad revenues at the Star falling 11.4%. Digital revenue from Star Media Group properties were comparable to the second quarter of 2014, and have decreased 3.9% in the first six months, reflecting lower revenues at Olive Media and Workopolis.
The company also reported “modest growth” for revenue at TheStar.com, which recently removed its paywall in preparation of that ad-supported free model that has worked so well for Gesca’s La Presse.
Revenues for its Metroland Media Group of community publications fell $10.9 million or 8.4% in the quarter, reflecting print advertising declines of 11.3% and lower flyer distribution revenues created by the closure of several large retail customers such as Target Canada. Torstar said that those declines were partially offset by price increases.
