A few posts back, I predicted first-quarter earnings would make even the most optimistic newspaper executives question their predictions of a natural turnaround. Here's a roundup of actual first-quarter results as reported in news releases.
Dow Jones & Co. on Tuesday posted a 63% decline in first-quarter profit due to a year-earlier gain, but the publisher reiterated that it expects 2007 earnings before special items to grow 25% to 40% from the 2006 total. (Source is MarketWatch on this one because company press release was oddly worded.)
Total operating revenues for the company were $1.87 billion in the first quarter compared to $1.88 billion in the first quarter of 2006 . . . Operating cash flow (defined as operating income plus depreciation and amortization) was $471.6 million compared to $488.2 million in the same quarter a year ago. Net income was $210.6 million in the first quarter of 2007 compared with $235.3 million in the year-ago quarter.
On a combined basis, print and online retail advertising decreased 1.5 percent, and classified advertising decreased 2.0 percent . . . Income from continuing operations decreased 11.1 percent, to $11.9 million. Net income decreased 17.6 percent to $11.9 million.
The McClatchy Company today reported first quarter 2007 earnings from continuing operations of $14.5 million . . . compared to earnings from continuing operations of $21.8 million . . . in the first quarter of 2006. The company's total net income for the 2007 quarter was $9.0 million . . . compared to total net income of $27.7 million . . . in the 2006 first quarter.
Publishing Division profit in the quarter declined by 31.3 percent. Total Publishing revenues decreased 5.7 percent, and newspaper advertising revenues were down 6.6 percent from 2006.
Operating profit decreased to $54.5 million from $60.5 million in the first quarter of 2006 . . . Total revenues decreased 1.6 percent to $786.0 million from $799.2 million. Advertising revenues decreased 3.4 percent; circulation revenues increased 1.0 percent; and other revenues rose 4.3 percent.
Tribune’s 2007 first quarter operating revenues decreased 4 percent, or $55 million, to $1.2 billion . . . Operating cash flow was down 12 percent to $238 million from $271 million, while operating profit declined 16 percent to $181 million from $217 million.
The bottomline for all of these companies is profits are declining because revenues are falling faster than they can cut expenses. The risk is that cuts become desperate and begin irreparably hurting the product. Cutting print resources eventually dilutes the quality of the companion online product, which is supposed to ensure newspapers' bright futures.
The real correction we're realizing is newspaper companies cannot continue operating at the profit margins to which they're accustomed while transitioning to an online-focused business model. Smart companies will accept smaller profit margins while also outlining a plan for investment online that Wall Street can get behind.
Comments (1)
Update that focuses on the effects of this sort of underperformance.
L.A. Times set to cut 150 jobs as a result of poor returns in first quarter.
Posted by Lucas | April 21, 2007 2:19 PM
Posted on April 21, 2007 14:19