TORONTO - Torstar Corp.'s new president and chief executive David Holland says his company has "no choice" but to slash costs at the Toronto Star newspaper and potentially lay off staff to compete with other media rivals.

"Every other medium we compete against is striving to be as efficient as possible," Holland said in an interview with The Canadian Press on Wednesday.

"We have no choice but to pursue the lowest possible cost structure, but at the same time preserve our commitment to quality journalism and quality content."

In the last year or so, Toronto Star rivals such as the Globe and Mail, National Post and Toronto Sun dailies have cut staff and streamlined operations to become more efficient. Broadcasters, which also compete with newspapers for ad spending, are also restructuring to deal with a slump in their business caused by the recession.

Holland was confirmed last week for the top role at Torstar after serving as acting CEO since May. He takes on the job during a period of turmoil for the newspaper industry, which has been squeezed by the recession and a slump in advertising while the Internet continues to lure away readers and advertisers.

Newspapers across North America, but especially in the United States, have felt the pinch from the turbulent economy, which has eaten away at profits and caused many newspapers to cut jobs or close down operations entirely.

Earlier this week, management at the Toronto Star newspaper filed formal notice with its union to contract out newsroom production work and cut 121 jobs in editorial and pre-publishing operations. The move is expected to save more than $4 million a year.

The union has said the potential layoffs could erode the quality of stories at Canada's largest-circulation daily and weaken the Star's competitive position in the newspaper industry.

Holland said executives don't intend for the restructuring cuts to be evident in the daily paper.

"Hopefully -- and our intention is -- to preserve the quality of what people expect when they read the Toronto Star," he said.

"With the downturn in the economy, it's pretty natural to sit back and reflect on whether their cost structure is as efficient as it should be. We did take actions there, and we needed to."

"We've got a responsibility to our shareholders to operate our businesses as effectively as possible, and if we are in a position to take costs out without affecting our positioning in the long term, we will do that," he added.

The union at the newspaper has 30 days to propose alternatives to either avoid or alter the contracting out of the work or the eventual layoff of staff.

Holland's outlook on Torstar's position within industry remains optimistic and he noted that its Metroland division hasn't been as badly affected by the downturn in advertising. Newspapers under that wing include the Hamilton Spectator, Guelph Mercury and Waterloo Region Record in southern Ontario.

Holland said the Star comprises a smaller piece of Torstar than it did a decade ago, because divisions like Harlequin Enteprises, which publishes primarily romance fiction, have grown.

Overall, Torstar employs about 7,000 people, while the Star has about 1,300 workers across all its divisions, including its printing plant just north of Toronto.

Stock in the company closed down five cents to $6.85 at the Toronto Stock Exchange.