Top Execs Tell Analysts at Mid-Year Review: Sunny Days to Come!

By: Jennifer Saba McClatchy opened its presentation to analysts and investors during the Mid-Year Media Review in New York this morning with an assembled video of happy staff-shot photos -- lots of dogs, kids, flags, etc. -- set to the music of OK Go.

But the last picture summed up how the industry is viewed: You couldn?t miss the meaning of a dead Armadillo as roadkill.

And in case you did, McClatchy?s chief Gary Pruitt made sure to explain: ?It?s the photo used to market this conference.?

While there was downcast news coming out of the meetings hosted by the Newspaper Association of America, executives were upbeat while addressing the challenges facing the industry. Most of the companies reporting today including McClatchy, The New York Times Co., Gannett, and The Washington Post Co., cited weak classified advertising revenue as the culprit for substantial losses year-to-date.

At the New York Times presentation, executives told the audience there is turbulence in the ad market and bad visibility. Particularly troublesome categories for the company include telecommunications, banking, real estate, and entertainment.

But CEO Janet Robinson and her team got a break from the usual questions thrown at management these days, usually regarding its stock structure and the chance the company could go private.

Companies with properties in the Western part of the United States and Florida blamed the slump in home sales for the drop off in real estate advertising that is hitting those regions especially hard. ?Our hottest markets last year are our coolest ones this year,? said Susan Clark-Johnson, president of Gannett?s newspaper division.

For the first five periods of this year, Gannett said its ad revenue was down 6.8%.

Overall, the plunging ad revenue that started about a year ago caught Donald Graham, chairman and CEO of the Washington Post Co. (one of the pithiest presenters), off guard. He responded to an audience member?s question, ?the sharp decline of newspaper revenue last summer came as a surprise to me."

For its part, McClatchy said its circulation would continue to decline in the 3% to 4% range through early 2008. As for ad revenue, Pruitt said, ?We can?t tell you the bottom of the revenue slump has been reached.?

Indeed the ad results are lousy now and many executives choose to plea the Fifth when asked to forecast future growth. But despite all that, there was a sense of optimism during the presentations and a call for patience from investors.

During an afternoon CEO roundtable panel, Pruitt, Clark-Johnson, and Freedom Communications chief Scott Flanders all said there was a disconnect between what is happening with newspapers now and what can happen in the future. Circulation may be declining, but when newspapers? Web sites are taking into consideration, the audience is growing.

?We?re not looking at the value of the online reader versus the print reader but of the total audience and that is how we?re selling it,? said Clark-Johnson.

This is no small feat. Pruitt pointed out that audience growth is only going to translate into more dollars down the line.

It?s the reason Yahoo and Google have come calling. When moderator John Sturm, the president and CEO of the NAA, asked the panel if they wanted to be Google?s best friend they all acknowledged that going forward, they have to work with the portals. Still, they maintained they owned the local market online but the portals bring newspapers more reach.

Flanders called for the industry to work together on these initiatives because they are confusing advertisers: ?I think we need to be better partners and work better together as an industry.?

Taking online recruitment as an example, Flanders said the industry has split into teams -- CareerBuilder, HotJobs, and Monster -- and ?that hasn?t helped our story.?

Flanders also said newspapers need to walk away from traditional ad sources advocating free classifieds.