NEWS - Manufacturing

By Lou Phelps, SBJ Staff

Nov 21, 2011 – Area daily newspaper companies had a difficult third quarter, according to the SEC filings of two companies. (Download a comparison chart here.)

Morris Publishing Company of Augusta, owners of the Savannah Morning News, Augusta Chronicle, Savannah Magazine, Effingham Now and Bryan County Now, has reported continued losses for the 3^rd Qtr. ended Sept. 30, 2011. It is the 6^th straight quarter of operating losses since the company emerged from bankruptcy March 31, 2010 after defaulting on almost $300 million in loans.

For the 3^rd Qtr, the company reports that total company advertising revenue was down 11.88% - down $5 million. Many U.S. daily newspaper companies are experiencing a continued decline in advertising revenues, but not as sharply. (See comparison chart.)

The company reported an operating profit of $1.6 million, a 2.91% EBITDA, but after interest expenses on its loans, had a ($571,000) loss. EBITDA is earnings before interest taxes, depreciation and amortization. Year to date, McClatchy has but operating expenses $ 44 million as revenues have declined.

Through the first nine months of 2011, Morris’ print and online advertising revenues totaled $79.1 million, down $11.3 million, or 12.5%, from $90.4 million during the same nine-month period last year. Circulation and ‘other revenues’ were not down as dramatically.

The McClatchy Company, which owns the Hilton Head Island Packet, Beaufort Gazette and Macon Telegraph in the Savannah and Lowcountry regions, reported advertising revenue was down 10 percent for the 3^rd Qtr. 2011 vs. 2010. The company’s total revenues were off 8.39%.

The company cut operating expenses 8.1% and reported an operating profit of $45.443 million, a 15.1% EBITDA.

Morris Publishing’s total revenue is off $14.2 million, or 11.2%, versus the first nine months of 2010, and is reporting a year-to-date bottom line loss of $2.9 million.

The company has worked to cut operating expenses, and has used available cash flow to pay down its current loans which now stand at $59 million. Morris Publishing is paying 10% on the loans, affecting operating profits.

Compared to the first nine months of 2010, total online page-views were 513.5 million, down 5.7 million, or 1.1%, but “unique online visitors were 60.2 million, up 6.1 million, or 11.2%, reflecting our customers’ migration to the Internet platform,” according to the company’s SEC filing today.

In addition, insert advertising revenue was $28.2 million, down $2.6 million, or 8.4%, from $30.8 million in the first nine months of 2010, and advertising revenue from specialty products printed by the company, but not a part of main newspaper product, was reported as $5.4 million, down $0.3 million, or 6.0%, from $5.7 million last year.

Compared to the first nine months of 2010, advertising revenue from our 12 daily newspapers was down $12.9 million, or 11.4%.

During the third quarter of 2011, the company converted its Bluffton Today publication, a free distribution newspaper, to a non-daily semi-weekly newspaper now published on Wednesday and Sunday, and began charging for single copy. The company has also increased its single copy price to $2.00 for the Sunday paper in the Savannah area.

Savannah had the company’s largest declines in advertising revenues, down $1.8 million or 15.2%. Advertising revenue from Jacksonville was down $4.3 million, or 12.7%; St. Augustine was down $0.8 million, or 18.4%; Augusta was down $1.9 million, or 12.9%; Lubbock was down $1.3 million, or 10.5%; Topeka was down $0.7 million, or 7.1%; Athens was down $0.6 million, or 12.5%; and Amarillo was down $1.1 million, or 9.2%. The company’s other non-daily publications were down $0.7 million, or 7.2%.

For the first nine months, total classified advertising revenue was $39.5 million, down $5.0 million, or 11.4%, from $44.5 million in 2010; total national advertising revenue was $7.1 million, down $1.7 million, or 19.6%, from $8.8 million during 2010 with Jacksonville down $1.3 million of that figure.

Circulation revenue was $45.3 million, down $1.1 million, or 2.4%, from $46.4 million in 2010, “with the price increases in many of our markets being offset by the decrease in circulation volume,” the company reported.

And, “other income was $7.7 million, up $1.5 million, or 23.8%, from $6.2 million during the same period last year primarily due to the increase in other online revenues,” Morris states.