By: E&P Staff
The McClatchy Co. reported its second-quarter net income per share fell to 24 cents from 42 cents in the year ago period, with one-time gains from unusual events unable to offset a continuing slump in ad revenue.
McClatchy’s net income for the quarter included a gain on the sale of its interest in SP Newsprint Co., a gain on paying off debt, charges related to its plan to reduce employment by 10%, and the write down of certain Internet ventures, including the sale of its stake in ShopLocal.
McClatchy said revenue for the quarter fell 15.6% to $489.7 million.
Ad revenue was down 16.8% from the year-ago quarter, with online ad revenue up 12.5%. Online accounted for 11.8% of total ad revenue in the quarter, up from 8.6% for all of 2007.
McClatchy said retail ad revenue was off 7.9% for the quarter, while national declined 20.4%.
Classified ad plunged 28.1% on big declines in real estate (down 37.1%), employment (down 39%), and automotive (down 17.8%). McClatchy has been hit especially hard from the housing downturn because it publishes papers in the Florida and California where the collapse of the housing bubble was steepest.
McClatchy said ad revenue for its California papers was off 26.8%, and ad revenue for its Florida properties fell 23.2%.
Circulation revenue fell 5.2% for the quarter, McClatchy said.
McClatchy said it repaid $294.7 million in debt in the second quarter, reducing its total debt to $2.10 billion from $2.40 billion at the end of the first quarter.
McClatchy Chairman and CEO Gary Pruitt said he saw some glimmer of hope in the company’s online performance, noting that nearly 50% of online advertising came from ads placed only online, and were not tied to a print up-sell.
“Despite the strong growth in our online business, the advertising environment continues to be weak and we expect revenues to continue to be down,” Pruitt added. “Whether revenues improve from recent trends depends upon the direction of the overall economy.”
Pruitt hinted the company may reduce its dividend in the third quarter.
McClatchy CFO Pat Talamantes noted that the reduction in debt had cut interest expense by 26% to 12.9 million in the second quarter.
“We have met all of our financial obligations, including the financial covenants in our credit agreement, and we expect to continue to do so,” he said. “We continue to monitor our financial position and have good relationships with our bank group, and we will seek an amendment to our covenants if necessary. We still expect to make further progress in deleveraging our balance sheet and expect total debt to be in the $2 billion range by the end of 2008.”