Posts Tagged ‘McClatchy’

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Future is later but still dim for McClatchy

Wednesday, February 24th, 2010

Financial analysts polled by Reuters are not optimistic about the McClatchy Company’s future despite the breathing room the newspaper publisher has made for itself by restructuring its debt through bond sales. One gives the company 18 months to two years to figure out how to make enough revenue online to sustain itself.

Things looked better in January when the company announced “encouraging fourth-quarter results,” Reuters says. Then the company put off its next major debt payment until 2013 by agreeing to higher interest rates.

“But McClatchy’s swaps have retraced all of January’s strengthening and are now 157 basis points wider than when its refinancing was announced, at about 1016 basis points as of Tuesday, according to data from Markit,” the Reuters report says.

“‘I think the market is smart enough to know that there are some fundamental issues here and what they’ve done is basically delayed the inevitable,’ said Shelly Lombard, analyst at independent research service Gimme Credit.”

“Despite the fact that McClatchy’s online revenues are growing rapidly, they are still a small portion of its overall business and are not expanding quickly enough to replace newspaper revenue, she said.

“On the positive side, Lombard said she does not expect McClatchy to run into problems for at least 18 months and probably two years, and investors can collect their coupons until then.”

G.D. Gearino, a former business editor at McClatchy’s News & Observer in Raleigh, provides a good explanation of  McClatchy’s bond swap on his blog. He also points out that deep in the financial statements we find that “the new bonds, unlike the previous ones, are backed by McClatchy’s assets. Bondholders will be on equal footing with the banks.  And one of those assets, of course, is The News & Observer.”

We saw the Reuters report mentioned on the Fitz & Jen blog at Editor & Publisher, where, in their daily market roundup, they point out that on Tuesday McClatchy “took the sector’s biggest hit percentage wise with its shares off 5.7 percent to $5.12. Reuters reported that credit default swaps for MNI indicate the market is nervous about the company.”

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Continued rough sledding ahead for newspapers

Monday, February 15th, 2010

A look at fourth-quarter 2009 financial results from five of the 10 publicly owned U.S. newspaper companies that have reported so far shows that “it’s clear the industry as a whole is still in deep trouble, with no strong indication that better days are ahead,” says a Nieman Journalism Lab report.

The report says that in Q4 2009 the industry “saw its 14th consecutive advertising revenue decline; the last nine of those quarters were double-digit declines.” And nothing indicates that January, typically a bad month for revenue, is looking any better.

The report examines the five publishers individually: Gannett, New York Times Co., Lee Enterprises, Media General and McClatchy Co.

At McClatchy, it finds strong online revenue growth comparatively, but scoffs at CEO Gary Pruitt’s claim that expectations of revenue declines in the low- to mid-teens percentage range in January indicate a recovery. “In other words, McClatchy expects the Q4 decline of 20.5 percent to be followed in Q1 2010 by a decline of somewhat less than 15 percent, and considers that to be an ‘improving advertising trend.’”

In another problem area, “Besides nearly $2 billion in long-term debt, McClatchy also disclosed that at year-end, its pension plans were underfunded by $494 million in the ‘qualified’ plan (their standard defined benefit plan, which is frozen), and another $100 million in the non-qualified supplemental executive-level plan. This accumulation of future obligations makes McClatchy one of the most-leveraged publishers out there.”

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McClatchy set to reward top execs

Monday, February 1st, 2010

Top McClatchy executives could be getting six-figure bonuses “for their efforts towards stabilizing the company’s financial outlook following a period of significant economic turmoil,” according to Editor & Publisher’s review of regulatory filings submitted late Friday.

CEO Gary Pruitt is excluded from eligibility for the $160,000-plus bonuses under the “2010 Senior Executive Retention Bonus Plan.”

Bonuses will be paid to three executives E&P names if the chain’s performance in operating cash flow in 2010 is sufficient to fund a supplemental company contribution to its 401(k) retirement plan, McClatchy said.

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McClatchy claims profits, hints at more job cuts

Thursday, January 28th, 2010

The McClatchy Company on Wednesday claimed a profit in the final quarter of 2009 partly attributable to an improving advertising climate, but CEO Gary Pruitt indicated that the company would proceed with more layoffs.

“Given that total ad revenues are still negative and secular challenges remain, we will continue to focus on costs,”  Pruitt said in a statement, according to a New York Times report. Over the past couple of years, “costs” has meant personnel and has translated as job cuts at McClatchy newspapers.

McClatchy posted a 16.5 percent drop in revenue from a year earlier to $393.2 million, and said advertising revenue was down 20.5 percent, to $308.7 million. But, Pruitt said, advertising trends — particularly on the Web and including classifieds — were better in October, November and December.

“McClatchy spent 2009 shrinking itself to match dwindling ad revenue in the recession,” The Associated Press said. “It ended the year with about two-thirds of the payroll it had in the middle of 2008.”

The publisher also announced a deal to delay payments on its $1.95 billion of debt by selling bonds and assuming higher interest rates.

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N&O eliminates 21 positions, SacBee axes 25

Monday, January 11th, 2010

The News & Observer announced the elimination of 21 positions this morning, including 10 from the newsroom. The Sacramento Bee, another McClatchy newspaper, announced the elimination of 25 positions.

The reductions represent “the latest cuts as the media company rides out a sharp decline in revenue,”  The N&O’s report says.

In a memo to the newsroom, Managing Editor John Drescher said five newsroom employees in single-incumbent jobs — meaning they are the only ones who do their jobs — were told today their last day at the newspaper will be January 29. In addition, five employees from  photo, design, copy editing and news research must come forward to have their positions eliminated or staff members will be let go according to seniority.

“We continue to operate in a time of great challenge at The News & Observer, at The McClatchy Company and within the newspaper industry,” N&O Publisher Orage Quarles III said in his announcement to staff. “While we have already implemented a number of cost-control and reorganization measures, revenues continue to show losses, and we must reduce our expenses until we are again showing growth.”

In December, McClatchy CEO Gary Pruitt said all of the company’s daily papers were making a profit. Pruitt also said at the time that more cost reduction, in the high-20 percent range, would be necessary in 2010.

In addition to the ongoing decline of the newspaper industry, McClatchy has been burdened by about $2 billion in debt acquired mostly in its  2006 acquisition of Knight Ridder. The company has wiped out some $1.4 billion of the debt over the last four years, according to a previous Editor & Publisher report.

The N&O has 524 full-time positions today, down from 704 a year ago, according to the newspaper’s report about today’s layoffs. The newspaper last year also cut wages, suspended contributions to retirement plans and required unpaid furloughs for its staff.

Last year, The N&O had layoffs or buyouts in April and August, after a previous round in October 2008 and various other jobs eliminated earlier.

Quarles told his reporter today that it’s too soon to say whether there could be more cuts this year, a decision that will hinge mostly on how much ad sales rebound.

“I know that these announcements are distracting and disruptive, and I apologize for that,” Quarles’ e-mail said. “We can only ask, with utmost respect and gratitude for all that you do, that everyone stays focused and continues to work hard to help our company continue to make its way through these difficult times.”

“This is another sad day,” Drescher said.

McClatchy restructured a portion of its debt in December and has seen its stock price double since.  It rose 25 cents Monday, topping $5 to settle at $5.14 a share at closing.

“When it announces its latest earnings next week, McClatchy is expected to report that fourth-quarter revenue fell by a percentage in the low-to-mid-20s, compared with a 28 percent drop in the third quarter,” The N&O today.

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McClatchy CEO optimistic

Tuesday, December 8th, 2009

Update: Gary Pruitt “said that advertising revenue is ‘finally, finally, improving,’ that all 30 of [McClatchy's] newspapers are profitable and that McClatchy expects to maintain, if not grow, cash flow in 2010,” Editor & Publisher reported after McClatchy’s presentation to the UBS Global Media and Communications Conference Tuesday morning.

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McClatchy’s Gary Pruitt, a day after reinstituting employee raises (see post below), said Tuesday that the company expects revenue trends to continue to improve going into the first quarter of 2010.

Pruitt’s projection is that fourth quarter revenue wll be less-bad than it has been — “down in the low- to mid-20s percent range compared to down 28.1 percent in the third quarter and 30.2 percent in the second quarter.” Also, because of mass layoffs — “our focus on permanently reducing our costs” –  “we expect operating cash flow in the fourth quarter to grow compared to last year. Similarly, in 2010 we expect to at least maintain if not grow operating cash flow,” Pruitt said in a news release.

McClatchy management was to review the company’s business and strategies in a presentation at the UBS 37th Annual Global Media & Communications Conference at the Grand Hyatt New York Tuesday morning. The presentation is to be posted on its Web site.

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Bullish on McClatchy

Friday, October 23rd, 2009

From E&P’s Fitz & Jen blog in its daily roundup of newspaper stock performance on Thursday:

“Over at McClatchy, the company almost beat its 52-week high today if only shares (NYSE: MNI) had gained 39 more cents. The stock rose 8.3 percent closing at $3.65″ — up 28 cents.

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N&O cracks E&P’s Top 30 sites

Wednesday, September 23rd, 2009

Even before its redesign (see below) The News & Observer’s Web site was pulling in enough readers to rank 27th on Editor & Publisher’s Top 30 newspaper Web sites for the month of August.

The Nielsen Online list shows newsobserver.com with 1.8 million unique visitors in August. This is shown as a 110 percent gain year-over-year, but Nielsen expanded its measurement panel eight-fold in June and cautions that the measurements should only be used directionally.

E&P’s Fitz & Jen blog shows The N&O right behind the Denver Post’s site, which at 1.9 million visitors is also new to the list in the last three months, and ahead of the Arizona Republic’s site, the Sun-Sentinel of Fort Lauderdale, Fla., and the Kansas City Star’s site, a fellow McClatchy property.

McClatchy’s Miami Herald site ranks 17th on the list with 2.5 million visitors.

The New York Times site tops the list with 17.1 million unique visitors, followed by the Washington Post site with  11.6 million unique visitors.

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McClatchy paper to lay off 12

Tuesday, September 22nd, 2009

The Lexington (Ky.) Herald-Leader on Tuesday announced that it is reducing its workforce by 10 full-time and two part-time employees.

The McClatchy Co. newspaper has been through several rounds of layoffs and voluntary buyouts since early 2008. The most recent and largest of those was in March, when the newspaper laid off 49 full-time and four part-time employees, and reduced wages for remaining employees.

“The economic downturn has lasted longer than expected, and despite an upturn in the second quarter, the advertising climate remains extremely challenging,” Publisher Timothy M. Kelly said in a message to the staff Tuesday.

McClatchy, the publisher of 30 daily newspapers – including The News & Observer in Raleigh and The Charlotte Observer – has eliminated thousands of jobs to deal with revenue declines and to preserve its ability to make payments on about $2 billion in debt undertaken in the purchase of the much-larger Knight Ridder newspaper chain in 2006.

In its most recent cuts, The News & Observer laid off 10 employees in August.

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Media General employees lose third week of pay

Monday, September 21st, 2009

Media General, owner of the Winston-Salem Journal, The Tampa Tribune and 19 other daily newspapers, told employees Friday they must take off five more unpaid days by the end of the year, according to Editor & Publisher.

The five are in addition to 10 furlough days already assessed, for a total of three weeks of pay that the publisher has withheld from employees this year.

Employees must take one day by the end of September (the end of third quarter), and four during fourth quarter, the report says.

The publisher blames “last-minute advertiser cancellations and deferrals of planned spending” by other advertisers.

In addition to instituting layoffs, pay cuts and wage freezes, McClatchy Co., Gannett and other newspaper publishers have furloughed employees this year to save money.

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