SBJ Staff Report

Aug. 17, 2010 - Morris Publishing Company, publishers of the Savannah Morning News, Savannah Magazine and Skirt, released its 2nd Qtr. 2010 operating results Monday, reporting its first full quarter of operating results since emerging from bankruptcy in March, and out from under a withering debt load.

For the 2nd Qtr, Morris Publishing reported a profit on operations of $3.491 million, down from a $ 7.351 million operational profit during the same quarter last year.  But the company has to make only minimal interest debt payments for the balance of 2010, helping the profit picture.

The company reported a decline in overall operating revenues of -6.2%. However, this is consistent with three other major newspaper groups that operate in the South, or have similar sized daily newspapers, McClathy, Gannett and Lee Enterprises.

Overall, it was “run of press advertising” that was down 7.1%; insert advertising revenue was down 5.6%. Advertising revenue from specialty products printed by the company, but not a part of main newspaper product, was $1.6 million, down $0.1 million, or 6.5%.

McClatchy, which owns the Macon Telegraph and The Island Packet in Beaufort County reported a 2nd quarter advertising revenue decline of -6.0%; Gannett, which owns of newspapers in Florida and across the U.S. had an ad revenue decline of -8.15%; , and Lee Enterprises, which owns a number of small dailies, weeklies and niche products reported an ad revenue decline of -4.88%.  

Morris Publishing is reporting total assets of $149,546,000 and total liabilities of 177,878,000 as of June 30, 2010, still functionally bankrupt, but the company is in compliance with all terms and agreements with its current lenders.

Under its bankruptcy plan, the company reduced its long term bond debt and unpaid interest payments by more than $330 million, and now has only $20 million in short term debt – “working capital loans” – and long term secured debt of $112,685,000.  

In total, its long-term debt is at an interest rate of 10% which will cost the company more than $10 million in 2011 in interest payments, along with repayment – or refinancing - of its short-term notes which come due in April 2011.  But the company is current with all financial requirements of its lending parties, according to its SEC filings, including cash to debt ratios.  

Online advertising revenue was a bright spot, up 1.7%, from last year.

“Our existing Florida newspapers and publications, which account for 32.1% of our total advertising revenues, contributed 52.2% of our entire net decline in advertising revenue. Real estate remained a languishing part of the state of Jacksonville's economy and double digit unemployment in Jacksonville continued to weigh on consumer spending,” the company reports.

Overall, advertising revenue from Morris’s daily newspapers was down $2.4 million, or 5.7% or which advertising revenue from The Florida Times Union in Jacksonville was down $1.2 million, or 9.2%, and St. Augustine was down $0.1 million, or 4.5%.

The Augusta Chronicle was down $0.2 million, or 3.4%, Savannah was down $0.3 million, or 6.3%, Lubbock, TX was down $0.3 million, or 7.1%, and Topeka was down $0.1 million, or 4.0%. Athens and Amarillo were unchanged from last year. The company’s five other daily newspapers were together down $0.2 million, or 5.4%.

“Our non-daily publications were down $0.1 million, or 3.2%, with declines from Skirt! and Jacksonville's discontinued Waters Edge city magazine offset somewhat by the gain from Augusta city magazine,” the company says.

Operating expenses were up 1.3%.

The company must repay the principal on its long term debt whenever it has excess cash, and was able to make four payments, in April, May, June and July, for a total of $ 9,557,000 in payments from operating cash.