Newspaper Earnings Down, with No Relief in Sight
U.S. newspaper publishers limped through their first week of earnings without offering any signs of when a slump in advertising revenue, exacerbated by the poor housing market, may end.
Media General, Journal Register and Dow Jones all reported third-quarter results Thursday that showed declines in advertising sales at their newspapers.
Their results follow Gannett and McClatchy earlier this week, and offer a preview for The New York Times , Tribune and Belo, which report next week.
Both Media General and Journal Register reported lower expenses, which publishers are increasingly playing up to compensate for their lower sales.
"Cost-cutting is the story," Benchmark analyst Ed Atorino said, adding that the outlook for newspaper publishers otherwise was "more of the same."
Media General said its third-quarter net income fell to $2.5 million, or 11 cents a share, from $20.6 million, or 87 cents a share, a year earlier. The results last year included 54 cents a share from discontinued operations related to several CBS affiliate television stations.
Revenue fell 4.5 percent to $230 million, which compared to average Wall Street expectations of $233 million, according to Reuters Estimates.
Media General said expenses in its publishing division dropped 7.5 percent, with total company costs down 4.6 percent.
"In the fourth quarter of 2007, the Publishing Division expects continued softness in Classified and Retail advertising, particularly in the Tampa market," Media General said. "Partially offsetting the softness are projected expense savings from cost-reduction initiatives and lower newsprint expense."
At the Yardley, Pa.-based Journal Register , which publishes the New Haven Register, third-quarter net income rose to $11.2 million, or 28 cents a share, from $7.3 million, or 19 cents a share, in the same quarter last year. Those results included 20 cents from tax gains.
Journal Register's revenue was down 7.4 percent at $113 million, in line with analysts' expectations. The company cut its expenses 5.9 percent.
The theme common to both companies, as with all newspaper publishers in the quarter, was classified advertising. At Media General, which publishes the Richmond Times-Dispatch, classified ad sales dropped 16.1 percent. The Tampa Tribune saw the biggest drop, with classified sales falling by a third.
Journal Register's classified revenue fell 10.3 percent.
Not counting its Michigan papers, which have been particularly hard-hit, classified revenue dropped 7.9 percent, with real estate classifieds down 19.1 percent.
Dow Jones on Thursday reported similar results at its local Ottaway newspapers, with total ad revenue down 8.8 percent. At The Wall Street Journal's U.S. print edition, ad revenue dropped 2.9 percent because of a decline in technology ad sales.
McClatchy Chief Executive Gary Pruitt had said on Tuesday the company does not know when its advertising woes will end.
Media General also said it has no plans to spin off its newspapers from its broadcast business as Dallas Morning News publisher Belo did earlier this month.
Scripps , which publishes the Rocky Mountain News in Denver, said this month that it will split its papers and television stations into one company and keep its cable networks and online business in a separate company.