TORONTO - Executives at Torstar Corp. (TSX:TS.B), owner of the Toronto Star newspaper and other dailies and weeklies, are keeping their optimism in check as revenues edge higher from an economy beginning to improve after a painful recession.

"We continue to believe in our approach of erring on the side of caution," Torstar's president and CEO David Holland told shareholders at the company's annual meeting Wednesday.

"Our businesses are highly dependent on the economy (and) although there are signs of economic improvement it is far too early to suggest we are back on a solid footing, especially in our newspaper business."

Torstar, like most in the newspaper industry, has faced eroding readership of its newsprint publications over the years while the recession delivered an extra slap as advertisers started reducing their budgets.

The company also saw a squeeze on job and classified ads and a pullback in auto-related advertising last year as the Ontario-centred industry restructured. Torstar posted a lot of red ink during the 2008-2009 recession.

However in its 2010 first-quarter results, the company reported a net profit of $7.4 million, or nine cents per share, as cost cutting helped drive efficiencies at its newspaper and digital operations.

The earnings results missed average analyst expectations of 11 cents per share, according to a survey by Thomson Reuters, but reversed a loss of $21.4 million or 27 cents a share for the same year-ago period.

Holland noted at the annual meeting, held in Toronto, that the latest results were being compared to a very slow start in the first quarter of 2009, which was evident in the weaker revenue numbers.

Overall revenue fell to $334.2 million from $339 million for the January to March quarter, but that reflected currency translation impacts that dropped revenue by $10.1 million.

Meanwhile, newspaper and digital operations performed better financially and benefited from cost cutting and layoffs over the past year.

Torstar's net debt fell to $493.2 million from $515.8 million at the end of 2009.

Despite Torstar's cautious outlook, the company has taken a bullish approach to the media industry, in some respects.

While it has slashed jobs at its operations to reduce costs, Torstar also revealed earlier this week that it has submitted an offer to acquire the newspaper and online businesses of Canwest LP and its related companies as part of the Canwest group's restructuring under bankruptcy protection from creditors.

The company's financing partner is Fairfax Financial Holdings Ltd. (TSX:FFH), which owns about 20 per cent of Torstar.

The Canwest papers include the former Southam big city dailies from Vancouver to Montreal, including the National Post, Ottawa Citizen, Calgary Herald and Vancouver Sun.

Executives dodged numerous questions about the Canwest bid from both analysts on the earnings call and union leaders at the annual meeting. They declined to say why they thought the assets were worth buying or how they'd fit within the company.

Torstar chairman John Honderich said the company signed a non-disclosure agreement when it bid on Canwest's papers which prevents it from making any comment during the process.

The banks who own Canwest's newspapers have set a floor price of $950 million for the newspapers, which also have other bidders under the court-supervised auction.

"There can be no assurance that Torstar's offer will be accepted or that a transaction will be consummated," the newspaper company said. "Should Torstar be successful, a purchase of the Canwest assets would be material to Torstar."

Other media giants have taken a different approach to the industry-wide downturn, most recently on Wednesday with the Washington Post Co. saying it is exploring the sale of its money-losing Newsweek magazine.

Meanwhile, Rupert Murdoch's News Corp. is in the midst of revealing the details of a new subscription-based model for its news content both online and on portable devices. The plan is expected within the next month.

Holland said in an interview after Torstar's annual meeting that while the company has explored charging customers for content, it's not something that will happen any time soon.

"It's going to be awhile before we get there, if we do," he said, noting that the iPad could inspire the company to create a digital version of the newspaper that Canadians would pay for.

While some newspapers have either temporarily or permanently reduced the number of editions of the newspaper produced each week, Torstar's papers aren't considering that option for now, he added.

In the quarter, Torstar booked $8.3 million for restructuring and other charges, compared to $25.9 million a year ago when it logged a $12.8 million cost partly from the exit of former CEO Robert Prichard.

Holland said the company is still in the midst of long-term cost cutting initiatives which include scaling back Torstar's staff. Over the past year the company has pared the workforce by about 300, a number which includes layoffs, voluntary severance and retirements.

"We've got to work through everything we've announced for the next little while," he said in an interview.

"Is it conceivable there could be more (job reductions), I guess the answer is yes... (but) we're not sitting back thinking there's another wave soon."

Torstar has about 6,600 employees across its entire operations, which include the Star Media Group led by the Toronto Star, Canada's largest daily newspaper and digital properties including,, Workopolis, Olive Media, and eyeReturn Marketing.

The company also owns Metroland Media Group, publishers of community and daily newspapers in Ontario, and Harlequin.

Shares in Torstar fell 25 cents to close at $11 on the Toronto Stock Exchange.

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