Print declines continue to drag down publishers

AP News
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Posted: Oct 19, 2010 6:31 PM
Print declines continue to drag down publishers

The country's largest newspaper publishers still haven't been able to reverse a slump in advertising sales more than three years after it began.

The latest prognoses for the newspaper business came Tuesday in a pair of third-quarter earnings reports from The New York Times Co. and McClatchy Co. Both showed that print advertising fell compared with a year ago, when ad sales had already taken a big plunge from 2008 levels.

And neither company was able to draw enough new business from its digital operations to make up for the losses in print.

The outlook entering the holiday season isn't much better.

Both the Times Co. and McClatchy, which owns The Sacramento (Calif.) Bee, The Miami Herald and other newspapers, said advertising fell more sharply in September from a year ago after better months in July and August.

Times Co. CEO Janet Robinson projected a 10 percent increase in digital ad revenue during the fourth quarter, but would only say print will improve "modestly" over the declines recorded in the third quarter.

On a conference call with analysts, McClatchy CEO Gary Pruitt had to fend off repeated attempts to get a more detailed picture of where things stand going into the holidays.

"We intentionally did not release any results for October or speak to them because we don't think they are meaningful at this time, and we lack visibility as we look forward into the fourth quarter," he said.

Last week, Gannett Co., publisher of USA Today and more than 80 other newspapers, offered similar results. Its 23 TV stations boosted the company's earnings on a wave of election-related advertising. But investors punished Gannett's stock for another 5 percent slide in print revenue, which still makes up the bulk of the company's total.

After results came out Tuesday morning, Times Co. fell 25 cents, or 3.1 percent, to close at $7.79. McClatchy shares fell 27 cents, or 7.9 percent, to $3.15. Including those drops, shares of the Times Co. have declined more than 8 percent and McClatchy is down 18 percent since that first warning shot from Gannett on Friday.

On Tuesday, the Times Co., which owns The Boston Globe, the International Herald-Tribune and 15 other daily newspapers besides its flagship newspaper, posted a loss for the quarter of $4.3 million, or 3 cents per share. The company was hurt by severance costs and one-time accounting adjustments.

It was an improvement over the same quarter of 2009, when even bigger one-time expenses led to a loss of $35.6 million, or 25 cents per share.

Excluding items, the Times Co. would have made a profit of 7 cents per share, down from an adjusted figure of 16 cents a year ago. On that basis, analysts surveyed by Thomson Reuters expected earnings of 5 cents.

Revenue slipped 2.7 percent to $554 million, from $569 million a year ago, slightly below the average forecast from analysts of $560 million.

While digital ad revenue, including results from About.com, jumped 15 percent to $78.3 million, print slipped almost 6 percent to about $209 million. Circulation revenue, which comes from subscription fees and newsstand sales, fell 5 percent to $229 million.

On a conference call with analysts, Robinson highlighted the company's continuing efforts to build a more profitable online business.

She said the flagship newspaper has made progress developing a system to charge readers for full access to NYTimes.com. Next year, the Boston Globe will create a site it will charge for; it will complement Boston.com, which will remain free.

McClatchy, based in Sacramento, Calif., reported net income of $11.9 million, or 14 cents per share, down from $23.6 million, or 28 cents per share, a year earlier. Stripping out one-time items, earnings came to 12 cents per share, a penny lower than a year ago.

McClatchy's digital ad revenue climbed 1.6 percent to $47.5 million. It was offset by an 8 percent drop in print advertising to $202 million. Circulation revenue declined 4 percent to $66.4 million. Taken together, revenue fell 6 percent to $328 million.