Not only has McClatchy stock gained nearly $1 since CEO Gary Pruitt made his presentation to investors and analysts Wednesday morning at the annual UBS Global Media Conference in New York, Pruitt says classified advertising revenue is leading the way in the firm’s improving 2010 ad revenue picture.
It’s a Bizarro world.
As Poynter’s Rick Edmonds points out, the death of classified advertising is pretty much “a consensus truism about the decline of the newspaper industry.” But McClatchy says not only that classifieds are leading its improving outlook, but among classifieds, employment advertising is up 2.1 percent since first turning positive in May.
It’s all a part of the continuing “less-bad is good” scenario. Here’s the score, directly from McClatchy’s news release: “Advertising revenues were down 5.8 percent in October and November 2010 combined, compared to declines of 6.4 percent in the third quarter, 8.2 percent in the second quarter and 11.2 percent in the first quarter of 2010. Year-to-date advertising revenues through November 2010 were down 8 percent. Total revenues for October and November 2010 combined were down 5.1 percent and were down 6.2 percent year-to-date through November 2010.”
But the stock is soaring, says The Street, based on Pruitt’s optimistic outlook. “We have seen improvement in revenues in every quarter of 2010 and that has continued into the fourth quarter,” Pruitt said in his presentation. “Looking forward to 2011, we expect advertising revenues to continue to improve.”
Edmonds reports that Pruitt said classifieds are recovering faster than other segments of the company’s advertising base and should be a healthy business for years to come.
More than half of McClatchy’s employment classifed income is now from the digital version, and rates for online classifieds, which have always lagged print, are pulling even with print, and may pass them in another year or two, according to Pruitt, again with employment ads taking the lead.
Edmonds also points out that McClatchy derives revenue from part-ownership in such online classifieds sites as CareerBuilder, Classified Ventures and Homefinder. McClatchy announced that Classified Ventures, which includes cars.com and apartments.com, will pay McClatchy a special dividend of $20 to $25 million by the end of the year.
“McClatchy, like most of the newspaper companies presenting this week, is operating profitably and using a big share of those earnings to pay down debt,” Edmonds concludes [The publisher will have $1.775 billion of outstanding debt and "a very manageable maturity schedule" at the end of its fiscal year, Pat Talamantes, McClatchy's chief financial officer, said.]. “And like the other companies, it is not making any promises that revenues, currently declining about 5 percent year-to-year, will grow in 2011.
“’I can’t tell you when we will go positive,’ Pruitt told a questioner, ‘but we think that we will.’”
