Hollinger International Narrows 1Q Loss

By: E&P Staff Hollinger International reported Wednesday it narrowed its net loss in the first quarter of the year to $11.7 million, or 13 cents per share, compared to a year-ago loss of $18.5 million or 20 cents per share.

The publishing company of the Chicago Sun-Times reported a total operating loss of $24.3 million for the quarter ended March 31 compared to a first-quarter 2005 operating loss of $15.8 million.

Net earnings for the quarter included a $14.7 million gain from the $106 million sale of its remaining Canadian properties.

Total operating revenues for the quarter were $102.4 million compared with $109.4 million in the year-ago period. Hollinger noted that all of its revenues are now generated by its Sun-Times Newspaper Group (STNG). At its upcoming annual meeting, Hollinger intends to change its name to the Sun-Times Media Group.

Advertising revenues were $78.9 million, down $5.1 million, or 6% compared with the prior year period.

In a conference call Wednesday morning, Hollinger executives said the advertising revenue decline reflects industry trends, but that the group was particularly hurt by the decline in auto classified.

"Classified auto was down double digits," CFO Gregory A. Stoklosa told analysts. "The Chicago newspaper market fared worse than the industry in all categories except for national, when it reflected the industry trend, and inserts, which were stronger than the national market."

STNG operating income declined $15 million, including $9.3 million in separation costs related to its previously announced plan to reduce headcount by 10%. As of March 31, 160 employees have accepted voluntary separation. Stoklosa said that later this year the group will implement involuntary layoffs of 65 people as it consolidates its production plants.

Circulation revenues in the first quarter were down 7.5% for the quarter, a $1.7 million decline Hollinger blamed on "lower single-copy sales, intensified competitive discounting of home subscription rates, and the elimination of unprofitable bartered bulk programs."

STNG newsprint expense was $16.2 million, down $300,000 from the first quarter of 2005. Total newsprint consumption decreased about 14%, more than offsetting a price increase of approximately 14% increase in average cost per ton. Consumption was down because of shaving the size of newspapers including the Sun-Times, as well as lower circulation.