Posts Tagged ‘projections’

Analyst moderates outlook for McClatchy

Monday, March 29th, 2010

J.P. Morgan has given a thumbs-up to McClatchy’s refinanced debt and cost controls, and has moved its rating from “underweight” to “neutral,” according to Editor & Publisher.

The newspaper publisher “held an offering for $875 million in notes in order to refinance more than half a billion in bank debt and other outstanding notes. The move leaves McClatchy with $91 million in bank debt and notes that are due to mature in 2011,” the magazine explains.

Analysts said McClatchy has “proven to stand out ahead of its peers on cost reduction, giving a higher degree of confidence that it will be able to maintain profitability and cash flow despite ongoing revenue pressure expected in 2010.” The company’s chief means of cost reduction has been layoffs and buyouts, to the tune of eliminating about a third of its workforce.

Gannett, The New York Times Co. and E.W. Scripps are also rated “neutral,” E&P notes.

J.P. Morgan expects McClatchy to the see an advertising revenue decline of 11.5 percent in 2010 with total revenue estimated to be off 8.4 percent.

In another report, the analyst predicts newspaper industry advertising revenue will fall 8 percent in 2010 due to easing comparisons. “For the first time in many years, margins may actually improve in 2010 as revenue declines moderate and most companies benefit from a more significant decline in costs,” analysts wrote.

Radio revenue may have turned the corner

Thursday, March 25th, 2010

Folks in the radio business have some good news with what Advertising Age calls “not just a slight increase for 2010 but several years of compounding growth.”

It’s not much though. “The predicted turnaround will be slight, leaving radio revenue in 2014 still shy of its 2008 level,” the magazine says.

BIA/Kelsey, a consulting firm specializing in local media, says radio ad revenue is likely to see a 1.5 percent gain this year.

“The industry will continue to grow its online revenues in 2010 as increasingly more progressive radio groups recognize they are more than just over-the-air transmitters and begin to integrate cross-platform promotions with their broadcast and Web operations,” Mark R. Fratrik, VP at BIA/Kelsey, says in the report, according to Ad Age.

Digital ad spending to pull ahead of print

Monday, March 8th, 2010

A 9.6 percent jump in digital advertising in 2010 means more money will be spent on digital ads than print for the first time this year, according to Outsell’s annual advertising and marketing study, says Forbes.

“Of the $368 billion marketers plan to spend this year, 32.5 percent will go toward digital; 30.3 percent to print,” Forbes says. “Digital spending includes e-mail, video advertising, display ads and search marketing. ‘It’s a watershed moment,’ says the study’s lead author, Outsell Vice President Chuck Richard.”

The study, which is due out today, also says that ad spending for magazines will rise this year by 1.9 percent and, quoting Richard again, “We should see far fewer closures and cutbacks among traditional media.”

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.”

Writing on newspaper industry’s wall is clear

Tuesday, February 23rd, 2010

A new count by Media Daily News says the newspaper industry has lost 105,000 jobs in the last decade, as the “rise of the Internet began lowering the curtain on the golden age of print.”

Based on records kept by the U.S. Census Bureau and Department of Labor and tallies by various industry watchers, total employment in the newspaper publishing business has declined from 414,000 in 2001 to 309,000 at the end of 2009, a 25.4 percent drop over the course of eight years,” the report says.

Job cuts in newsrooms accelerated last year as “publishers finally decided they had cut other business functions to the bone, and reluctantly began cutting costs in the newsroom.”

The obvious conclusion: “if 2010-2011 doesn’t bring a big rebound in newspapers’ fortunes, coming years may see the quality and quantity of journalism suffer noticeably.”

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.”

Analyst warns against McClatchy bond sale

Tuesday, February 2nd, 2010

A Reuters analyst urges caution to those banking on the McClatchy Company being out of the financial woods.

McClatchy is marketing $875 million of bonds this week. But bond investors should be wary. McClatchy’s performance will be tough to maintain,” writes Lauren Silva Laughlin.

McClatchy has cut costs, mainly through layoffs, to recover from near bankruptcy, and digital advertising revenue grew by 15 percent in 2009 compared to 2008. But online revenue is still only 16 percent of the total, which was down by 20 percent in the 4th quarter of 2009.

The worry is that McClatchy can’t cut costs fast enough to bridge the time it will take to transform print revenue to digital,” Laughlin says. “Without ending the print declines, lost revenue could easily consume the benefits of cost savings.”

McClatchy is selling senior secured notes due in 2017 in a deal that is expected to price on February 4. The publisher intends to use the net proceeds of the offering to repay approximately $614 million under its credit agreement and to fund its cash tender offer for approximately $166 million aggregate principal of notes due June 1, 2011 and approximately $24 million of senior notes due 2014.

Signs point to modest ad growth

Friday, January 29th, 2010

Another media watcher sees signs of economic recovery and reason to adopt a more positive outlook for advertising in 2010.

Barclays Capital said Thursday that ad sales could climb 3.5 percent to $167.6 billion this year, which is better than the group’s previous expectation for a flat year, Bloomberg reports.

“While we expect modest aggregate growth for local media advertising in 2010, we also expect national advertising to outpace the growth of local advertising and take share from local overall,” the report says.

Network TV ads, with help from the Olympics and World Cup, may rise 7.8 percent and online ads could grow by 8.9 percent, the report says. Previous estimates were 4.5 percent and 5.7 percent, respectively. Local broadcast TV advertising could grow by 5 percent (3 percent was projected previously) and radio ads could see a 2.2 percent gain instead of a 4 percent decline.

Newspaper ad spending  should drop 5.8 percent, better than the 10 percent loss expected previously. Magazine ads should be down 3 percent instead of the 10 percent decline expected earlier.

Interpublic Group’s forecasting unit said last week it expected a 1.4 percent rise in ad spending overall with the help of the Olympics and elections.

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.

Bargain hunters shop newspapers, survey says

Monday, January 25th, 2010

Newspapers and magazines are still advertisers’ best bet for reaching serious shoppers, a survey released Friday says.

According to an Editor & Publisher report, “23 percent of adults surveyed said that newspaper and magazine advertisements are the place they will find the best bargains. By contrast, 18 percent said the best bargains are found online, 12 percent picked direct mail and catalogs, 11 percent chose television, while just 2 percent said they turned to radio for bargains. “

The Harris Poll for Adweek Media “also found that the older the respondent, the more likely they are to cite newspaper and magazine advertisements. … Among the 44 to 54 age demographic, 24 percent use print ads, while one-third (33 percent) of those 55 and older say newspapers and magazines are the places to find the best bargains.”

Consumers aged 18 to 34 are more likely to say online ads (22 percent) and television commercials (17 percent) are the best places to go.

Women are more likely than men to prefer newspaper and magazine advertisements, or direct mail and catalogs, while more men go online, the survey found.