By: E&P Staff
The McClatchy Co. reported today that total revenue for Q2 fell 8.3% to $632.4 million compared to the same period a year ago. Ad revenue dropped 9.8% to $488.3 million while circulation revenue during Q2 decreased 4.6% to $69.7 million.
The company said it earned $39.2 million or 48 cents per share from continuing operations compared with $32.2 million or 69 cents per share in Q2 2006. (The company noted it issued 35 million Class A shares during the Knight Ridder acquisition, which negatively impacted earnings per share.)
Cash expenses were down 12.2% as a result of cost reductions made integrating Knight Ridder properties into the company. Operating cash flow was up 4.4% and operating cash margin was 26.9%.
Gary Pruitt, chairman and CEO of McClatchy, said in a statement about the results: “Advertising revenue worsened across the board in the second quarter of 2007, but particularly in real estate advertising. Nearly three-quarters of our advertising declines are coming form California and Florida, two regions that benefited strongly from the real estate boom, and are likewise being hurt in the subsequent real estate slowdown.”
For both those regions, ad revenue plummeted 17.8% during Q2 and 14.4% in June.
Pruitt said in a statement the company expects more declines in real estate through the end of the year and that overall ad results will be down through 2007.
Once again the company mentioned its in talks with Gannett and Tribune about renegotiating its affiliate agreement with CareerBuilder. “It is our clear preference to remain with CareerBuilder, and we will update investors once we have made a decision on our online employment solution,” Pruitt said.
During an afternoon conference call, Pruitt said he expects the talks about CareerBuilder to wrap up within weeks.
The Google print ad program was brought up on the call during the question and answer session. When asked about results from the trial, Pruitt said that it’s not “having a huge impact yet,” but that the results are “encouraging.” The program has brought revenue in the several hundred thousand range, Pruitt said.
Debt at McClatchy was down $79 million to $2.68 billion since the end of Q1. The company expects to reduce debt by about $600 to $700 million over the next 18 months.
By advertising category, retail ad revenue decreased 6.2% to $213.2 million in Q2. National fell 9.4% to $46 million. Classified was down 14.9% to $187.8 million. Within the classified category, automotive dropped 15.4%, real estate slipped 19%, and employment declined 15.5%.
By region, ad revenue in Q2 plummeted 21.1% in Florida. It was down 15.1% in California. The Southeast reported that ad revenue declined 4%.