McClatchy lost $2M in first quarter

McClatchy Newspapers lost $1.96 million in the first quarter of the year on an 11 percent drop in advertising revenue, though indicators elsewhere are that the economy is getting better.

Media Jobs Daily reminds us that the publisher lost $2 million in the first quarter of 2010, too. And, as Rachel Kaufman writes: “Doesn’t look good.”

As the company’s slump deepens, the Associated Press says part of the problem is that seven of McClatchy’s newspapers are in California and Florida, two of the regions where the downturn in housing prices has been sharp. And, of course, the advertising shift from print to the Internet also continues to hurt.

The 1Q report actually shows that McClatchy’s digital ad revenues grew by  2.2 percent compared to the first of 2010, and were 20.1 percent of  the quarter’s total advertising revenues, up from 17.5 percent in the first three months of 2010.

Overall revenues for the quarter were $303.7 million, down 9.5 percent from 1Q 2010. Advertising revenues were $225.1 million, and circulation revenues were $66.2 million, falling 5 percent.

“The slowing in advertising revenue that we previously reported for January continued through the first quarter,” CEO Gary Pruitt explained. “National advertising continued to be one of the largest areas of decline, falling by 29.3 percent in the first quarter of 2011 compared to 2010. In addition, the shifting of the Easter holiday to a later date in April 2011 compared to 2010 had a negative impact on retail advertising in March. As a result, advertising in March was down 12.7 percent, pulling down the overall ad revenues in the quarter to an 11 percent decline.”

Here’s a good idea from Pruitt, who took home $3.71 million last year, including a $1.85 million bonus: “In response to this year’s weak start in advertising, we have increased our ad sales efforts companywide … .”

On the other hand, he also says much of the lost revenue is not coming back. “I would say that we need to recognize that a big piece of that [a structural shift to digital marketing] is structural and permanent, and therefore we need to make sure that our expense structure is reflecting that and is permanently reduced as well.”

McClatchy eliminated nearly 540 full-time jobs in the first quarter of 2011, a nearly 9 percent reduction from the same time last year, the Associated Press said. The company has also consolidated computer systems and printing among newspapers and hired contractors in place of staff.

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