By: Shawn Moynihan
The E.W. Scripps Company on Monday said total segment expenses for its newspapers were down 3.8% from the prior-year period to $93.4 million. Second-quarter segment profit in the newspaper division was $14.6 million, down 5.6% from $15.4 million in Q2 2009.
Year-over-year revenue from Scripps newspapers fell 4.0% to $108 million, while advertising revenue was down 7.7% to $73.3 million. That represents an improvement in the rate of decline from Q1 2010, when total revenues were down 7.6% and ad revenues were down 12% year over year.
Broken down by category, in advertising revenue local was down 8.1% to $21.7 million; classified, down 8.4% to $22.1 million; national, down 10% to $4.5 million; preprint and other, down 6.5% to $18.0 million; online pure-play, up 145; and total online (including print upsells), down 5.5%, to $6.9 million.
Reported circ revenue for Q2 was $29.7 million, up 4.0% compared to the year-ago period. Scripps said some of that was attributable to changes in the business relationship between the company and certain newspaper distributors in select markets: The company is transitioning to pay most independent distributors on a per-unit basis, recording circulation revenue after the transition at a higher retail basis and recording the per-unit delivery cost as distribution expense.
Excluding the effects of that change — which does not affect segment profit, the company said — circ revenue in the second quarter would have been down 3.0%.
Employee costs in Q2 were 5.2% lower than a year prior due to eliminations in staff and lowered pension expenses.
Expense for newsprint and press supplies in Q2 fell 18% due to a 14% decrease in newsprint volume and newsprint prices that were down 3.5% for the quarter.
In late April, Scripps announced that it had signed an agreement to sell United Media Licensing, its character licensing business, to Iconix Brand Group for $175 million in cash. That sale closed on June 3, and operating results and the after-tax gain on the sale of the licensing business were reported as discontinued operations.
Revenue from United Media’s remaining syndication business and a number of smaller entities rose 3.0% in the Q2 to $6.0 million, and the segment loss narrowed from $419,000 in 2009 to less than $200,000 this year.
Scripps’ total expenses, excluding restructuring costs, rose 2.7% in the quarter to $170 million. Expense decreases in the newspaper division were offset by cost increases in the television division, the company said, mostly due to an accrual for network programming expenses and the restoration of marketing activities that were suspended in the year-ago quarter.
“Our newspaper advertising revenue is still trending below the prior year, but the declines continue to moderate,” Rich Boehne, Scripps president and CEO, said in a statement. “The restructuring of our newspaper operations to capture benefits of scale and to focus local operations on content and sales is moving ahead. Coupled with an intense focus on community-service journalism, this realigning of our newspapers is helping offset some of the revenue weakness and positioning us for success as revenues stabilize.”