Posted by: Aaron Pressman on April 25, 2008
What a horrendous earnings season it’s been in the dying newspaper business. It’s worth taking a closer look as some people still don’t seem to get it. This piece by the usually sharp Chris Anderson made me chuckle, for example. (Hey Chris, before you go citing a 2-year-old anecdote about the Yellow pages business, you might want to check in on more recent results). The combination of the weak economy, long-term falling readership, the advertising shift to competing online platforms and consolidation among department stores continues to crush the industry. Investors, get out while you still can.
Newspaper true believer Gary Pruitt’s McClatchy (Symbol: MNI) showed a loss of almost $1 million for the first quarter as overall revenue plummeted 14%. That was mainly thanks to a drop in newspaper ad revenue to $404 million from $477 million a year ago. But, hey, online ad revenue increased 11%. Unfortunately, it’s still only 11% of all ad revenue. So that 11% increase is just $4.6 million, or slightly more than 1% of total ad revenue.
The Grey Lady (NYT) said ad revenue fell 9% in the first quarter even as Internet ad revenue increased 12%. Again the overall drop was $46.6 million in real life while the Internet ad boost was just $8.6 million. Media General (MEG) reported a net loss and said newspaper ad revenue fell 19% helping overall revenue fall 11%. The company’s interactive media division saw revenue fall 3%. A.H. Belo (AHC), the sinking ship, errr, newspaper group spun off from Belo (BLC) this year pre-announced that its first quarter results would be “substantially below” expectations, too.
At Gannett (GCI), publishing ad revenue dropped 10% and circulation revenue fell almost 3%. The company gave precious little information about online activities in its press release, saying online revenue company-wide “contributed” to results for the quarter, whatever that’s supposed to mean.
It was kind of a ridiculous spectacle on Thursday, then, when a company that owns newspapers and cable networks, E.W. Scripps (SSP), sparked a mini-rally among publishers thanks to its better than expected results not at all related to the company’s dead-tree publishing arm. Revenue from newspapers declined 8% from a year ago while cable channel revenue increased 15%, leading to the overall 7% revenue improvement. Scripps is also one of the few media companies with its own major web site division (owner of Shopzilla and uSwitch), which showed a 23% revenue increase. Key sentence for the future of newspapers in even this positive earnings report: “Newspaper online revenue was $10 million, which was flat relative to the prior-year period.”
Online is not going to bail out these dinosaurs. People like to say that TV didn’t kill radio, but there are a lot fewer radio companies than there used to be (not to mention that radio has been one of the worst performing stock sectors for years). Maybe there will be news articles disseminated on dead tree pulp for years to come but all these public companies aren’t going to survive.
(Earlier coverage: Newspaper stocks face ugly, wide chasm, Betting on a newspaper wipe-out, Newspaper stocks are actually hot outside of the U.S., Olstein reveals why he tossed old media stocks, Another smart guy dumping newspaper stocks, No good news for newspapers in KRI deal)