News & Observer owner McClatchy Co. is claiming a 3rd quarter profit, saying it earned $23.6 million, or 28 cents per share, while revenue fell 23 percent to $347 million, with ad revenue down 28 percent. Excluding “special items,” McClatchy’s profit was $11 million, or 13 cents a share, in the latest three months.
The profit is based on cutting costs by 29 percent, mostly through layoffs and buyouts, which are ongoing. The N&O in Raleigh announced a new round of buyouts Tuesday and two other McClatchy papers announced similar cuts the day before.
How do you sustain a company with “profits” based on eliminating workers?
“The advertising declines we’ve experienced show some signs of slowing, but the ad environment remains weak overall,” McClatchy CEO Gary Pruitt says. “As a result, we expect print advertising revenues to continue to decline in the fourth quarter. So far in October, we’re seeing advertising revenue trends similar to the third quarter.
“We still have a lot of hard work ahead of us. As long as we are experiencing revenue declines, we must maintain a tight rein on expenses. We expect to hold costs down in the mid-twenty percent range in the fourth quarter.”
Other 3Q numbers: Circulation revenues were up 6.7 percent. Online advertising revenues grew 3.1 percent in the third quarter of 2009 and were 17.6 percent of total advertising revenues compared to 12.2 percent of total advertising revenues in the third quarter of 2008.
In his memo announcing buyouts Tuesday, N&O Publisher Orage Quarles III said the “Big 3″ in Classified advertising were continuing to hurt the firm. The 3Q reports shows employment advertising (want ads) down 59.7 percent, real estate down 42.9 percent and automotive down 34 percent year-to-year.
Meanwhile, “Shares of McClatchy (which topped $4 Wednesday but began dropping immediately Thursday morning) and other publishers leaped in the quarter as investors bet that the worst effects of the recession were over for the newspaper industry,” says the Associated Press.