Journal Communications -- and its 'Milwaukee Journal Sentinel' -- Swing to Q3 Profit

By: Mark Fitzgerald Journal Communications Inc. reported Tuesday that it earned a profit of $1.8 million in the third quarter, compared to a net loss of $17.1 million a year ago. The media company said its only daily newspaper, the Milwaukee Journal Sentinel, was profitable in the quarter, despite a hefty chare related to layoffs and other workforce reduction measures.

Just as it has for newspaper peers who have so far reported third-quarter results, Journal Communication continued to see a big revenue decline. Overall revenue was off 22.9% from the year-ago period to $136.3 million.

Revenue for its publishing division, which includes the Journal Sentinel, a chain of non-dailies and shoppers, fell 21.8% to $59.5 million to continued weak advertising. Operating earnings plunged 40.3% to $700,000. Journal Communications said its newsprint fell by more than 51% to $3.2 million from $6.6 million in the third quarter of 2008.

At the Journal Sentinel, revenue fell 23.4 on skidding advertising.

Classified advertising revenue plunged 48.7% in weakness in all three major categories. Retail ad revenue was off 22.3%. Interactive ad revenue for the daily was also down by 36.8% to $2.4 million, mostly on falling automotive and real estate online advertising.

Operating earnings at the daily slipped to $100,000 from $900,000 a year ago.

But the Journal Sentinel's operating earnings were also down big, 22.1% as the paper saw the effects of workforce reduction and lower newsprint costs.

These lower costs were partially offset by a charge of $3.8 million related to workforce reductions.

Revenue at community newspapers and shoppers fell 13.5% in the quarter to $8.1 million, mostly on declines in automotive and real estate classified and display advertising. Journal Communications said it benefited from $1.1 million in revenue from new acquisitions.

Operating earnings from the community papers and shoppers rose to $600,000 from $200,000 a year ago, largely because of the recent acquisitions.

In the quarter, Journal Communications paid down $6 million in debt, bringing its total debt reduction so far this year to nearly $43 million, Chairman and CEO Steven J. Smith said.

"Although the advertising environment remains challenged, we did see some improvements in broadcast revenues as the quarter progressed," Smith said, noting the company also signed two
"significant long term printing contracts with publishing customers, as we continue to capitalize on our Journal Sentinel production facility."

He said Journal Communications expected to see "modest improvement" in advertising in the fourth quarter, but the corporate focus would continue to be on reducing expense and debt.


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