April 13, 2006 10:35 pm
The results from the three large publishers underscored the troubles faced by the industry, including circulation declines, high costs and competition for advertising money from the Internet and other new media.
For the first quarter, net income fell 14 percent at McClatchy, 28 percent at Tribune and 69 percent at New York Times, which had recognized a big gain in the year-earlier period.
Only New York Times, which gave a forecast last month, matched analysts’ expectations. The other two fell short of Wall Street numbers.
Shares of McClatchy, which last month agreed to buy Knight Ridder Inc. for $4.5 billion, dropped about 5 percent in New York Stock Exchange trade. New York Times was down less than 1 percent and Tribune was up a similar amount. Shares of newspaper publishers as a group are down about 6 percent year-to-date.
McClatchy Chief Executive Gary Pruitt, one of the most vocal defenders of the industry, disputed criticism that newspaper publishing was obsolete.
“Some may see the current slow advertising environment as confirmation of predictions that newspapers and print media are dying,” Pruitt said. “We think that’s wrong.”
Another executive, New York Times Chief Financial Officer Leonard Forman, also came to the defense of the industry during a conference call.
“These are challenging times,” he said. But “while we operate in a mature industry, the pessimism I hear and read is unwarranted.”
All three publishers highlighted the strength of their own Internet businesses. New York Times said revenue at its About.com site, which it acquired a year ago, rose 98 percent.
Still, new media is only a small part of the newspaper business. At New York Times, the Internet accounted for only 7.5 percent of total revenue.
So for now, publishers must manage high costs for newsprint and an advertising market that over the first quarter was undercut by weak automobile and national ad placements.
That trend may not change in the second quarter, Pruitt said. “We expect second-quarter advertising results to be similar to the first quarter.”
At McClatchy, net income fell to $27.7 million, or 59 cents a share, from $32.3 million, or 69 cents a share, a year before.
The publisher, which plans to sell 12 of the Knight Ridder newspapers, said first-quarter revenue rose 0.4 percent to $282 million. Circulation revenue fell 4.5 percent, while advertising revenue increased 1.4 percent.
New York Times, publisher of the Boston Globe and International Herald Tribune as well as its namesake newspaper, said net earnings fell to $35 million, or 24 cents a share, from $111 million, or 76 cents a share, a year earlier.
The latest results include a charge of $9.4 million for job cuts announced in September. The year-earlier results included a gain of $67.8 million for the sale of its headquarters and property in Florida.
Costs increased 6 percent in the quarter. Besides the work force reductions, New York Times has announced various cost-saving measures, such as cutting back on stock tables in its flagship paper.
Tribune, which has cut jobs at Newsday and other papers, earned $103 million, or 33 cents per share, compared with $143 million, or 44 cents per share, a year earlier. Revenue fell 1 percent to $1.3 billion.
A fourth publisher, Journal Register Co., which owns 27 daily newspapers, said net income fell to $1.8 million, or 4 cents per diluted share, from $7.5 million, or 18 cents a share, a year earlier. Excluding a write-off, it posted earnings of $5.2 million.
Shares of Tribune rose 11 cents, or 0.39 percent, at $28.13. New York Times fell 8 cents, or 0.32 percent, to $25.14, while McClatchy fell $2.19, or 4.56 percent, to $45.81. Knight Ridder was off 98 cents or 1.56 percent to $61.82. Journal Register shares fell 13 cents, or 1.12 percent, to $11.50.
© Reuters Limited. Click for restrictions