By: Jennifer Saba
Despite the absolute beating newspapers are receiving, Gary Pruitt chief executive of McClatchy still believes in the industry — and that his company will have a strong future.
Pruitt signaled his optimism during a quarterly earnings call this afternoon despite MClatchy’s weak Q2 results – ad revenue plunged 16.8% — after one analyst pitched him a “higher level” question on where Pruitt saw McClatchy three to five years from now.
“Visibility is certainly limited, that means I can say almost anything right?” Pruitt quipped before responding to the question with his best projection.
Print still very much figures better things for the company down the line, he said.
“We expect the company to continue to evolve to a hybrid print and online company still probably generating more revenue from print than online but much more evenly balanced,” Pruitt said. “We also see a broader portfolio of print products” — niche and lifestyle related – “and direct mail to allow advertisers a one-stop shop.
“We see ourselves maintaining our mass reach and then as a leading local online site. … We don’t think print will go away in this time frame.”
That was the last question Pruitt and McClatchy executive team answered during the session. The first one out of the box had to do with loan covenants.
Pat Talamantes, McClatchy’s CFO, said that at the end of the quarter debt is 4.5 times — typically debt-to-EBITDA — and that its loan covenant is at 5 times.
Good thing that Miami land sale is still on, executives confirmed when asked about the status. The $190 million transaction ($115 million after-taxes) is expected to close in Q4 even though McClatchy put up an incentive for the purchaser to close earlier — $10 million off if it happened in Q2; $5 million if it closed in Q3.
Any other assets sales planned? queried one analyst. “We continue to evaluate our assets and look for opportunities that we think will be strategic and [will] streamline debt,” Pruitt said.
Pruitt would not give any more details about the possibility of a dividend reduction and commented that the board is going to consider the policy at its upcoming meeting. “I don’t want to speculate about the outcome,” he added.