Tronc's digital results are headed in the wrong direction
Tronc Inc. experienced a rare decline in unique visitors in the second quarter of this year, off 9 percent compared to the same period in 2016.
Even as revenues disappoint, and Facebook and Google spirit away advertising share, legacy media companies like Tronc almost always show some gain in uniques and pageviews.
Digital advertising was also down 9 percent year-to-year. And like other organizations with newspaper roots, Tronc properties including the Chicago Tribune and Los Angeles Times continue to suffer sharp declines — 17 percent for the quarter — in print advertising.
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Despite those discouraging audience and revenue numbers, the company operated at a modest profit — 2 percent as measured by net income on revenues of $370 million — on the strength of cutting expenses by 10 percent year-to-year.
That reflected savings from a round of buyouts and layoffs in late 2015 and early 2016. In addition, the company is presently holding a number of positions open as it looks to hire additional digital talent.
The one positive number in the mix was the growth of digital-only subscriptions to 220,000 — a gain of more than 20 percent in just one quarter and nearly 90 percent compared to the period a year ago.
I would infer that the paywall at Tronc properties is being tightened in a push for paid digital subscribers and that some free-rider traffic is disappearing in the process.
But Terry Jimenez, Tronc’s chief financial officer, said that part of the decline was driven by news events. The second quarter of 2016 included the Pulse nightclub attack, exhaustively covered by the Orlando Sentinel, and a high-profile shooting on the UCLA campus. There were no comparable traffic drivers this year.
As for the advertising decline, Jimenez told a conference call of analysts that major categories of classified and retail advertising were hit especially hard.
In opening remarks to the analysts, CEO Justin Dearborn was candid about factors underlying the stalled pace of Tronc's digital growth strategy.
"We are keenly focused on improving the mobile experience which has been lacking," he said. He also said that he took encouragement in the recent digital subscription surge at The New York Times, which has added 200,000 to 300,000 net new subs in several recent quarters.
But, he added, "We are five years behind them."
When financier Michael Ferro took control of Tronc (then Tribune Publishing) and had installed Dearborn as CEO in early 2016, there was talk a year ago of bold digital expansion. It was to include international coverage of entertainment and celebrities along with a huge volume of stories produced by artificial intelligence.
Neither has materialized. In fact, as at several other regional companies, transformation has turned out to be more like "ongoing evolution," Dearborn said, and the pace much slower than he had hoped.
The announcement of results and the conference call came after the market closed. For the day, Tronc shares traded down 5.87 percent.
Correction: This story has been changed to reflect that CEO Justin Dearborn characterized digital transformation at Tronc as an "ongoing evolution" -- and also that it intends to hire digital talent for positions currently open.