Posts Tagged ‘Fitz & Co.’

McClatchy finances solid, analyst says – for now

Monday, September 20th, 2010

McClatchy Company gets a pat on the back for its fiscal discipline in a report by Fitch Ratings that’s summarized on Editor & Publisher’s Fitz & Co. blog.

The analyst says the publisher’s slowing revenue declines, tight cost controls and debt repayment have “exceeded expectations” and should be able to cover interest and principal payments for debt maturing through 2014.

“However, Fitch does not expect McClatchy to generate enough free cash flow to pay off its debt maturities in 2017,” the report says. “Given the secular risk for the industry, Fitch’s concerns that online revenue is not growing at a pace to offset the print revenue declines, and with no clear visibility of when revenues will turn positive, Fitch continues to remain cautious of McClatchy’s ability to refinance its 2017 maturities, and over the long term, the company’s capital structure could still be untenable.”

McClatchy has repaid about $3 billion in debt since buying the old Knight Ridder chain in 2006, and has lowered costs dramatically – principally through layoffs, which continue at the Kansas City and Miami newspapers.

Fitch continues to give McClatchy a CCC credit rating, a speculative-grade or “junk” rating that suggests a “high default risk,” but says keep up the good work and they could move the company to B, a speculative-grade or “junk” rating that suggests a “high default risk.”

Street no longer buying ‘cost-cutting’

Tuesday, July 20th, 2010

Editor & Publisher’s Mark Fitzgerald takes a look at Gannett Co.’s second-quarter earnings and says in his Fitz & Co. blog that simply cutting costs, which for the most part means laying off staff, no longer flies for newspaper publishers.

“The Street will no longer be satisfied with earnings pumped up only by continual cost-cutting. Gannett (GCI) handily beat Street estimates of earnings – but its overall earnings, in a quarter when its broadcast properties were humming nicely, was down 1.6%. … GCI got hammered for those results Friday, falling more than 10 percent.”

Gannet’s print and circulation revenues were down for the quarter also.

Other publishers’ stocks are also down as their 2Q reports come in the next several days, Fitzgerald says.