May 9, 2012 / 3:37 PM / 6 years ago

UPDATE 1-Quebecor, Torstar overcome weak advertising

* Newspapers remain a weak spot for both companies

* Quebecor’s new wireless unit grows, TV splutters

* Torstar profit helped by cost cuts

TORONTO, May 9 (Reuters) - Quebecor Inc said on Wednesday its quarterly earnings nearly doubled on strong growth by its wireless service, while profit at Torstar Corp, publisher of Canada’s largest newspaper, also surged as cost cuts offset weak print advertising sales.

Quebecor, a Montreal-based media and telecoms company that has diversified, said its wireless subscriber base grew 90 percent from a year earlier. It launched the service in late 2010 as the fourth element of a bundled offering that includes landline telephone, Internet and cable television.

Torstar, which publishes the Toronto Star, and Quebecor’s news media segment, which includes the Sun chain of newspapers, continued to feel the impact of a shift by advertisers to digital media.

RBC Capital Markets analyst Drew McReynolds said Quebecor’s television and Internet subscriber growth was sluggish and that Torstar struggled to keep up sales growth in a tough advertising environment. Its gains came mostly from solid cost control, he said.

Torstar trimmed its operating costs excluding salaries by 3 percent, while revenue dipped to C$350.1 million. Without giving specific numbers on ad sales, Torstar said weakness in the national finance category contributed to revenue declines in both print and digital media.

McReynolds expects Quebecor to add 40,000 new digital TV customers, but it only signed up 17,000. Its 8,000 net Internet customers missed his estimate of 20,000.

Desjardins Securities analyst Maher Yaghi said Quebecor was likely to face further competitive strains as BCE Inc’s Bell Canada expands its own television product.

“The company is starting to face more intense competition in its territory from Bell’s IPTV offering and believe the company’s new strategy to subsidize cable set top boxes will cause some pressure on cash flows in upcoming quarters,” he said.

Torstar - which also owns community newspapers and publishes romance novels under the Harlequin banner - has stepped up its investment in digital initiatives, and it recently signed a distribution deal with Canada’s Globe and Mail newspaper to save money.

Quebecor’s net income attributable to shareholders rose to C$72.9 million, or C$1.14 a share, from C$34.3 million, or 52 Canadian cents, a year ago.

Adjusted income from continuing operations rose to 62 Canadian cents a basic share from 56 cents a year earlier. Revenue rose more than 7 percent to C$1.06 billion.

Torstar’s net income attributable to shareholders rose to C$29.3 million, or 37 Canadian cents per share, from C$15.4 million, 19 Canadian cents per share, a year ago.

On an adjusted basis, it earned 24 Canadian cents a share, up from 22 cents a year earlier. Its revenue slipped to C$350.8 million from C$351.4 million a year ago.

Quebecor said its news media and broadcasting segments were hurt by increased competition, advertising weakness and the cost of launching new products.

Shares of Quebecor were little changed at C$36.94 by mid-morning on the Toronto Stock Exchange, while Torstar fell 2.8 percent to C$9.82.

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