Gannett and McClatchy made digital gains at the end of 2016

Though steep print ad revenue losses persisted in the fourth quarter of 2016, Gannett and McClatchy both reported today slightly improved financial performance heading into the new year.

Gannett's USA Today Network posted a revenue gain compared to the same period in 2015, even though print ads declined at about the same rate as in the third quarter — 15.4 percent.

But most of the added revenue came from acquisitions of several newspapers and a marketing subsidiary (Reach Local). On a so-called same-store basis, revenues were off 7.4 percent.

For McClatchy the biggest marker of progress is that it did make a small net profit — $3.1 million on revenues of 262.2 million — in the quarter. However for the full year, McClatchy lost $34.2 million.

On the heels of reports from the New York Times Co. and Lee last week, the current financial trajectory and improvement strategy of the industry is clear.

It is all about building new digital and other revenues to cover print declines, stripping costs out of the legacy operation and trying to pick up the pace of digital transformation.

Neither company provided a detailed forecast for the balance of this year. That leaves hanging the question of whether the off-the-cliff print ad losses for the second half of 2016 will continue or level off.

Distress for Macy's and other retailers had a lot to do with the big declines late in 2016 and so far this year. But it is hard to make the case that that was a one-time event.

Brick-and-mortar retailers continue to cede market share to Amazon and other digital outlets. Facebook and Google are potent competitors for local marketing dollars.

Both Gannett and McClatchy showed healthy growth in digital advertising. Subcategories like mobile and video are way up (though on a small dollar base). And rates are leveling or rising as the companies deliver more products and better targeting.

Progress on paid digital subscriptions is painstaking. Gannett now has 182,000 through USA Today and its network of 109 local properties. That's a 70 percent gain from a year ago. McClatchy has 82,000.

By comparison, the New York Times added roughly that number just in the fourth quarter of 2016.

Gannett CEO Bob Dickey was asked about expansion plans for this year, but said only that the company has cash and credit on hand to buy more if good opportunities arise.

Today's was the first earnings conference call with analysts for newly appointed McClatchy CEO Craig Forman. He pretty much stuck to the script from the announcement two weeks ago when the board named him to replace Pat Talamantes: McClatchy's digital transformation initiatives are sound but the company needs to move faster.

Market reaction was muted. Gannett was up 4.1 percent for the day, making up about a third of the ground it had lost so far this year. McClatchy shares were down 3.5 percent.

Editor's note: Poynter receives funding through a training partnership with McClatchy. The company has no influence over our news content.

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