Wednesday, December 7, 2011

McClatchy tries to provide some good news: revenue is only down a little, I mean a little more

It's funny how last month when Apple reported its quarterly results some of the tech websites jumped up and screamed how disappointing the results were, with some sales numbers coming in less than what some analysts had projected. By that measure all that is necessary to produce disappointing numbers is to have some say that in the next quarter all the world's money will end up in Apple's hands – and when it doesn't, well, what a horrible quarter.

But that is the price some companies pay when they are announcing record breaking results, sometimes good isn't good enough. So when a newspaper company, coming off of horrible results says that their results were not nearly as bad as other quarters the same voices can be heard proclaiming what a wonderful quarter the company had.

Take McClatchy which today provided new earnings and revenue projections which they, and other media outlets, are pretty pumped up about. To the numbers:

Management noted that it saw improving advertising revenue trends that began in September and continued in October and November 2011. Advertising revenues were down 8.7% in October and 2.4% in November (down 5.6% for the two months combined), compared to declines of 10.1% through the first nine months of 2011. Total revenues for October and November combined were down 4.9% compared to declines of 8.7% through the first nine months of 2011.

OK, there is no question that a 5.6% decline is better than a 10.1% decline for the previous months – though both declines occurred at the same company remember. But how did McClatchy do last year, were they up against a good quarter? Here is what the company said last year about the same quarter:

Revenues in the fourth quarter of 2010 were $369.9 million, down 5.9% from the fourth quarter of 2009. Advertising revenues were $287.4 million, down 6.9% from 2009, and circulation revenues were $69.0 million, down 3.3%.

So McClatchy says that so far its ad revenue is down 5.6% for the quarter versus last year's 6.9% decline. I suppose there is good news in there somewhere, right?

"As we look to the fourth quarter, we are pleased to have seen the improvement in revenues in recent months. We expect cash expenses to be down in the mid- to high-single-digit percent range, excluding severance costs associated with our restructuring plans," McClatchy's CEO Gary Pruitt said in the company's press release.

"As we look ahead to 2012," Pruitt continued, "we have limited visibility but will work hard to maintain our ad revenue momentum. We're adding digital sales staff and expanding our sales training. We will continue to be vigilant in controlling expenses and, of course, we will continue to reduce debt. Finally, we will be opportunistic, as we always have been, in considering transactions that will strengthen our company and will be open to digital investments that give us a strategic advantage in our operations."

Layoffs and sales training. Sounds like 2012 is going to be loads of fun.

Listen, I'm not trying to be a jerk about this, but at some point earnings announcements need to start talking about what the newspaper company plans on doing to reverse these revenue drops, other than threatening more layoffs or sending the staff to therapy.

On the bright side, I suppose, the company does talk up their ownership stake in both Classified Ventures and CareerBuilder, both of which are contributing to the bottom line. There is a lesson in there, don't you think?

The bad news for the newspaper industry is not limited to just the U.S., I'm afraid. The British journalism site is reporting the Wolverhampton Express & Star, is planning to cut up to 50 jobs, or ten percent of its staff.

"It is very disappointing that we have had to make this very difficult decision but 2011 has been an extremely challenging trading year and 2012 is not looking any better," Alan Harris, managing director at the paper is quoted as stating.

What is particularly worrisome is that a year ago there were voices expressing optimism that 2011 would be a rebound year for the industry – I've not heard that about 2012 so far. On the other hand, there is a philosophy among traders in the stock market that you know you've hit the bottom when no one talks about stocks going up – call it contrarian trading.