By: Mark Fitzgerald Media General Wednesday became the third big newspaper chain to report a second-quarter profit because deep cost-cutting offset the continuing slump in advertising revenue.
In its publishing division, the Richmond, Va.-based parent of The Tampa Tribune and 20 other dailies report its second-quarter profit excluding severance and other special charges jumped 19.9% from the year-ago quarter.
The print division turned a profit even though total revenues fell 20.3%, and advertising revenue was down even more -- by 26%. In the quarter, though, Media General slashed expenses by 24.8%, not including the cost of severance and other charges.
Media General's advertising results were as grim as those reported earlier by The McClatchy Co. and Gannett Co. Inc.
Classified ad revenue overall plunged 35.2%. At its metro daily markets, revenues were down even more in the major classified categories. Automotive fell 27.1%, real estate plummeted 54.9 -- and employment plunged 63%.
Yet this is going to be regarded by Wall Street and other observers as yet another example that the newspaper industry may have hit bottom and is poised to take advantage of an economic recovery, whenever that should occur.
Certainly, that is the way Media General President and CEO Marshall N. Morton portrayed the company in the earnings announcement.
"Media General has implemented many difficult but necessary expense reductions that strengthen our ability to weather the deep recession and recognize the reduced revenue streams available in our business," he said. "As a result, we are in a stronger position to take advantage of an economic recovery."
Media General's cost-cutting, which dropped overall operating costs 23% from a year ago, including mandatory unpaid furloughs, an end to company 401(k) plan contributions and a final freeze of the company's pension plan. The plan had been partially frozen in 2006.
Morton noted that "cost elimination actions" were most aggressive in Media General's newspaper business.
Like Gannett and McClatchy executives before him, Morton said there is some evidence the ad revenue slump is abating. Automotive came back "somewhat," especially in its Florida, Virginia and Alabama markets, which have been its most troubled. "The decline in retail advertising in the current period was also less severe than in the first quarter of 2009," he said.
Newspaper retail ad revenue fell 21%, while national was down 18.7%, Media General said.
By market, revenue declined 26% in Florida; 16.2% percent in Virginia; 25.8% in North Carolina; and 18.7% in South Carolina. Alabama was a brighter spot, with revenue down just 12.2% on retail and classified declines that were not as sharp as in other markets.
Circulation revenues increased 11.9% on single-copy and home-delivery price increases in most markets.
Newspaper salary expense, excluding severance, decreased 24.6%, reflecting extensive workforce reductions, and the unpaid furloughs.
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