A quick glance at the net income of four Q2 earnings releases from newspaper publishers Gannett (NYSE: GCI), The McClatchy Company (NYSE: MNI), Media General (NYSE: MEG) and The New York Times Co. (NYSE: NYT) almost make it seem like the worst is over, as all of the companies posted profits. And even though revenues were down by double digits for all, optimistic execs made it sound as if the declines were slowing, holding out the possibility for a turnaround. The results beat analysts’ expectations in most cases.
In three of the four cases, the newspaper publishers’ profitability was based on the aggressive cost-cutting all have taken over the past year (the NYTCo benefited from a favorable tax charge). As Outsell’s Ken Doctor notes, each of the four all sliced expenses between 20 and 29 percent. “The results of the past week primarily shows that expense control has kicked in,” said Alan D. Mutter. “The industry is
wondering if newspapers have hit bottom and will stabilize.”
But it’s pretty likely that this “return to profitability” is only temporary, as more drastic changes are sure to come. Even if the economy turns around, think of the past week’s earnings as a small break from the pain the newspaper industry is going through.
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