STNG Reports Soft Results

By: E&P Staff The Sun-Times Media Group reported today that earnings from continuing operations were $20.1 million, or $.23 per share for Q2 compared with a loss of $20.4 million or $.22 per share for the same period last year.

Operating earnings were impacted by a $47.6 million improvement in income taxes. Excluding that, earnings from continuing operations were down $7 million or down $0.08 per share due to a decline in operating revenue of $10.3 million.

Total operating revenue for the quarter was $107.4 million compared with $117.7 million for the same period a year ago. All of the company's revenues are generated by its Sun-Times News Group (STNG). Advertising revenue declined 10% to $83.6 million. Newspaper print advertising decreased 7.5% for the greater Chicago market.

The company said that the newspaper advertising environment weakened in the second quarter compared to the first quarter of the year, due to softness in the auto and entertainment categories. Results at STNG lagged the Chicago market due to shifts in it advertising organization and lower circulation attributable to the circulation scandal in 2004.

"The weak advertising market in Chicago has made our advertising sales reorganization extremely challenging and underscores the need to remain committed to our strategy," CEO Gordon Paris said in a statement. "We believe that our focus on selling the STNG network, combined with our exciting new media initiatives will allow us to offer enhanced and more targeted advertising solutions to our customers."

Paris said that the company expects to save $16 million to $20 million this year.

Circulation revenue was down 5%. The $1.2 million decline reflects lower single-copy sales and intensified competitive discounting of home subscription rates.

Newsprint expense dropped 6% to $16 million. Total newsprint consumption was down 19% due to lower circulation and page volumes, as well as planned reductions of the page sizes of many of STNG's titles.