Newspapers have been pummeled by declines for the past few years, with more readers turning to free and timely news online and advertisers following suit. But the financial crises has pushed many newspapers closer to the brink, as advertisers continue to hold off spending in an uncertain economic climate.
McClatchy has responded with deep staff cuts. The Sacramento-based company said in March it would eliminate 1,600 positions. Coming on top of previous layoffs, the latest cuts will bring McClatchy's work force down by a third in less than a year.
The goal is to reduce expenses by $110 million. The company expects the cuts to cost about $30 million in severance and other charges, but has not said how much it will record in the first quarter.
Even as it cuts costs, McClatchy is looking for ways to reduce its debt, which stood at $2.04 billion at the end of the year. It has been forced to pay higher interest rates in return for more flexible terms from lenders since last fall.
BY THE NUMBERS: Analysts surveyed by Thomson Reuters project a loss for the quarter of 11 cents per share on sales of $391 million.
"We estimate that the falloff in ad revenues will more than wipe out these savings," Fallon said, reiterating a "Sell" rating on shares.
STOCK PERFORMANCE: McClatchy's stock tumbled 39 percent during the quarter to 49 cents. The company has received notice from the New York Stock Exchange that it faces delisting if its market capitalization doesn't recover.