By: Jennifer Saba
Last year proved to be a tough one for Knight Ridder and all newspaper companies. But even with a potential upturn some time in 2004, the belt will remain fairly tight, according to Tony Ridder, chairman and CEO, who presented the company’s 2004 strategy yesterday at the Bear Sterns 17th Annual Media, Entertainment and Information Conference in Palm Beach, Fla.
“We like people that run our business to have a passion for newspapers but we’re also passionate about cost control,” said Ridder via a Web cast. “Since the onset of this current recession, we have downsized 13% of our workforce — almost all of it voluntary. I’ve said we won’t replace those people as business returns, thus creating leverage for the recovery.”
Ridder hopes that most other companies don’t follow the same philosophy, as help wanted revenues — a topic that dominated the presentation — continues to be a matter of importance for Knight Ridder and the industry at large. Naturally, the more businesses hire, the more they will place ads. “Knight Ridder is the nation’s second largest newspaper publisher in an industry still emerging from a sharp recession. The downturn has had a strong adverse impact on help wanted advertising, one of our traditional strengths,” Ridder said. “Despite that, industry advertising has increased at a compound annual growth rate of 3.6% over the past 10 years.”
Knight Ridder did experience help wanted growth in 15 of its 28 markets — 13 small markets and two larger ones including Fort Worth, Texas.
Each year the company generates $300 million in net free cash flow and, in the last eight years, Knight Ridder has moved a profit margin of approximately 11% to approximately 20%, he said. The goal is to move it to 25%.
The company will continue to be aggressive on the online front and searching for new revenue opportunities from non-core print. About $130 million in revenue came from non-core print (out of $2.9 billion). Knight Ridder Digital’s revenue was up 44% last year to $80 million with an expected growth rate of 20% for this year.
Circulation gains also remain a top priority. Knight Ridder will continue to focus on methods other than telemarketing like crew sales, kiosks and direct mail.