July 21, 2016

McClatchy kicked off second-quarter earning reports for newspaper companies with results suggesting no abatement yet in the industry’s widespread financial challenges.

The company posted a loss of $14.7 million on revenues of $244.9 million.

Total revenues were down from the same period in 2015 by 7.7 percent. Advertising revenues were off 11.1 percent year-to-year.

In its financial reporting, McClatchy does not break out print revenues separately, so the decline there may have been even higher. McClatchy did note a 16.1 percent year-to-year increase in what it calls “digital-only” advertising (that is not sold in combination with a print buy).

Audience revenues were flat.

In its earnings release, the company offered a relatively downbeat forecast for the rest of 2016:

While the company remains committed to communicating the value of print advertising, the declining trends in direct marketing and print advertising are not anticipated to subside in the next two quarters. Management expects print advertising revenues will continue to become a smaller portion of advertising and total revenues.

McClatchy has controlled expenses in various ways. The report highlighted shutting down production facilities in Wichita, Fresno and Lexington, Ky. It also intends to sell its office buildings in Sacramento (the company’s home base), Kansas City and Columbia, S.C.

As I wrote last week, McClatchy did a successful reverse stock split in early June. Repriced into the teens as a result, the shares appeared to pick up interest from investment firms and rose more than 40 percent.

Wall Street seems to have anticipated today’s weak report, and in morning trading shares were off just over 2 percent.

Gannett, The New York Times Co. and New Media Investment Group are scheduled to release second quarter results next week. Tronc has not yet scheduled its report.

Editor’s note: McClatchy has a training partnership with Poynter.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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