McClatchy explains change in circulation revenue

The McClatchy Company

Circulation revenue was up nearly 6 percent in McClatchy’s first quarter, the company said in a report Wednesday. But, the report said, that revenue was up less than 1 percent “excluding the $4.3 million in revenue related to the transition to fee-for-service circulation delivery contracts at certain newspapers.”

Reached by email, McClatchy Director of Investors Relations Ryan Kimball said some of the company’s newspapers “transitioned to a different circulation contract” during the first quarter. The contracts are fee for service, which for accountants means their “delivery expenses are no longer netted against circulation revenues and thus makes the reported circulation revenue higher.” So some of the papers had higher revenues and higher delivery expenses, he said. The change “has no impact on operating income or cash flow but we do point it out so investors can get a sense of what circulation revenues did in a given period ignoring the impact of the transition.”

Advertising reveue was down nearly 7 percent compared with the same period in 2013, McClatchy said in its report. The company said nearly half of its advertising revenue now comes from “nontraditional sources.”

The company got $147 million from its stake in Classified Ventures, which recently sold. It expects to receive $34 million from the pending sale of its Anchorage Daily News. Taxes should shrink that nut to $24 million.

Disclosure: Poynter has a training partnership with McClatchy.

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