The McClatchy Company’s (NYSE: MNI) financial struggles only seemed to deepen in Q2, as Gary Pruitt, the publisher’s chairman and CEO, pinned the weakening economy and the shift from print to digital on its revenue and income decreases. Revenues were down 15.6 percent to $489.7 million in Q2 compared to last year’s $580 million. And while online ad sales grew 12.5 percent in the quarter, since they made up only 11.8 percent of total ad dollars—compared to an 8.6 percent share for all of 2007—it was not enough to offset wider declines. In all, McClatchy’s ad revenue fell16.8 percent to come in at $406.3 million. Meanwhile, Q2 net income from continuing operations was $20.1 million, or 24 cents per share, down by roughly 50 percent from last year’s $40 million.McClatchy's ad revenue was down 16.8% over the previous quarter. Retail ad revenue fell 7.9% for the quarter, while national fell 20.4%. Classified ads dropped a whopping 28.1% due to big declines in real estate (down 37%), employment (down 39%), and automotive (down 17.8%). Online showed growth, accounting for 11.8% of total ad revenue in the quarter, up from 8.6% for all of 2007.
McClatchy announced June 16th it was laying off 1,400 employees, approximately 10 percent of the McClatchy workforce. The company said this will result in $95 million to $100 million in annual savings over the next four quarters. McClatchy also sold its 15.0% interest in ShopLocal for $7.875 million and applied the proceeds to reduce debt. Also this past quarter, McClatchy sold its share of SP Newsprint Company, and used proceeds to reduce debt.
CEO Gary Pruitt says the company is poised to reduce its dividend in the next quarter and make more cuts if necessary:
"We are committed to doing more if revenues decline further in the second half. Our board will meet during the third quarter to consider dividend policies and we will look at additional cost saving measures as necessary."
4 comments:
He didn't say anything about cutting more people. Be intellectually honest in your reporting or don't report at all. It makes you no better than the corporate media.
Here is the Pruitt quote:
"We are committed to doing more if revenues decline further in the second half. Our board will meet during the third quarter to consider dividend policies and we will look at additional cost saving measures as necessary. But we know that economic slowdowns do not last forever and our 151-year-old company has been successful by taking a long-term view and staying true to our strategic plan. So while we will remain focused on realigning our cost structure as we transition to an integrated multimedia company in print and online, we are also focused on continuing to be the leading local media company in some of the best growth markets in the nation. We are working hard to position the company to benefit from a stronger economy once conditions improve."
I think Pruitt left the door wide open for future job cuts if necessary.
Kevin Gregory
Since McClatchy bought up Knight-Ridder, my local fishwrap (the KC 'Red' Star) has gotten worse. They're laying off workers galore. Seems like they'll cut anyone but the editorial writers and 'opinion' (5th) columnists.
I'd say they're circling the drain, but I think they're really just a big hairball clog, way past the point of circling the drain. They're just plugging it up until something breaks.
What else is there to cut, if not jobs?
Also, I understand what it means when he says they are building an "integrated multimedia company." I just wonder if Pruitt and the other suits know what that means, and whether they can implement that business model.
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