November 5, 2014

With downbeat third quarter results already recorded by McClatchy and the New York Times Co., Tribune Publishing followed suit today in its first quarterly earnings report and conference call as a public company.

Tribune Publishing operated at roughly break even, recording a tiny net loss (less than a tenth of a percent) on revenues of $404 million. Advertising revenues were down 9.5 percent compared to the same quarter in 2013 when the company was a division of Tribune.

National advertising was a particular culprit, down 17.1 percent for the quarter and 12 percent year to date. And with papers in Los Angeles and Chicago, national is a bigger slice of the total for Tribune Publishing than at Gannett’s 80 community papers or McClatchy’s 29.

CEO Jack Griffin, in his initial conference call with analysts, noted weak movie advertising in Los Angeles and loss of a leading grocery chain in Chicago.  But he avoided making excuses.  “We are not satisfied with the company’s ad sales performance in the third quarter,” he said, and promised that a newly appointed chief revenue officer will be bringing changes.

Similarly, Griffin said that the company was not yet doing all it could to control costs.  “We have much work to do to get operating margins in line with our peers,” he said.

Specifically, Griffin said Tribune Publishing has barely started in offering digital marketing services to local businesses in its eight markets — an activity already yielding a significant  new revenue stream at Gannett and other companies.

On the positive side, Griffin noted Tribune Publishing is rolling out updated digital apps for all of its papers and is marketing them aggressively.  He characterized the company as being in the “early steps of (digital) business transformation” but said the pace will increase over the next year.

Tribune Publishing’s spinoff was completed Aug. 4, so the quarterly report included one month as a Tribune division and two as an independent company.  An assortment of transitional  expenses affected costs, so the company’s financial picture could change as those are completed.

Perhaps as a result, the call attracted relatively little analyst interest with only two posing questions, and it ended after just 35 minutes.

By contrast to the continued tepid newspaper results, two local broadcast companies today reported huge revenue gains for the quarter, buoyed by the political advertising boom.  Sinclair Broadcast Group, the largest, was up 48 percent year-to-year for the quarter; Gray Television’s was up 49.2 percent.

Tribune Publishing shares had been trading at a little under to $20 since the spinoff, but they were off nearly 20 percent — to $15.50 — in midday trading.

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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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