Skip to comments.Lagging Ad Sales Contribute to Earnings Decline at Newspaper Chains (Dino Media Ext Alert)
Posted on 04/14/2006 4:16:25 AM PDT by abb
THE newspaper industry continues to flag financially, with three companies The New York Times, Tribune and McClatchy reporting sharply lower first-quarter earnings yesterday.
Executives of all of the newspaper companies said they were hurt by stagnant advertising, particularly in the automotive and entertainment categories, and a continuing rise in the cost of newsprint. The Times Company and Tribune also cited the cost of severance packages after cutting hundreds of jobs.
At the same time, the companies said that their Internet activities were thriving. Those activities still account for only a small share of total revenue and are not big enough to offset the losses from traditional advertisers. But revenue from the Internet is clearly a growth area where the newspapers are shifting their focus.
John Janedis, a media industry analyst at Banc of America Securities, said, "The newspaper guys have done a better job than other media in monetizing their online content."
He added: "You may argue that they're cannibalizing their print content, but at least they're recapturing some of it." Still, the numbers are too small to make a difference, he said.
At The New York Times Company, profit fell 69 percent, to $35 million, or 24 cents a share, down from $111 million, or 76 cents a share, in the first quarter of last year. The company attributed much of the decline to a big gain that it reported last year after it sold its headquarters in Midtown Manhattan. The company and The New York Times newspaper plan to move into new headquarters nearby in the second quarter of next year.
(Excerpt) Read more at nytimes.com ...
Ouch. Hurts so good
Yeah, sure. I guess it wouldn't have anything to do with today's newspaper executives displaying their contempt for their customers on a daily basis with badly written articles that insults the intelligence of the average 6th grader.
Papers have forgotten their mission.
They report the news.
They dont make it.
Todays newspapers think every story has to be an op-ed piece where they tell us how we should feel about it.They feel it is their right to put their slant on what we read.
And it's a poor investment, too...
New York Times Unfit in Print
By Stephen D. Simpson, CFA (TMFWildWeasel)
April 13, 2006
Behold the value trap: a stock that seems cheap, if only a few supposedly easy changes are made here or there, and if things go just a little bit better. Sometimes things work out, but other times, investors find themselves sticking with a stock that goes nowhere before petering out or selling at a bargain-basement price.
I don't necessarily think that all newspapers are doomed, but I'm pretty sure that I don't want to buy the shares of New York Times (NYSE: NYT) and wait to find out.
Surprising few observers, this was a soft quarter for the newspaper company. Total revenue climbed a bit more than 3%, but it would have been up just 1% without the inclusion of About.com, which was purchased last year. Of that 1% or so of growth, the bulk was ad revenue growth (0.7%), with circulation revenue up 0.3%.
Unfortunately, expense growth showed a bit more muscle. Expenses were up 6% in total (up about 3% without About.com), with newsprint costs rising nearly 6% from last year. High newsprint costs continue to be a problem, and the company is responding the same as most other newspaper operators -- by cutting down usage when possible, including a new scheme to shrink the amount of space devoted to stock price quotes during the week.
If the New York Times can improve, I think it will do so through cost-containment on the newspaper side; better ad rates, if it's lucky; and growth from Internet activities like About.com. Even though About.com contributed only 2% of revenue this quarter, it chipped in more than 10% of operating profit -- a disparity that cannot be ignored.
I don't dislike this company/stock; I just don't see enough potential. As I said yesterday, stocks like Gannett (NYSE: GCI) and Journal Register (NYSE: JRC) are more appealing to me when I use lowball cash flow estimates across the sector. At least New York Times pays a decent dividend. That can give investors something to look forward to as they wait and hope for a revival in this decidedly unpopular sector.
For more Foolishness that's fit to print:
The American Thinker's contribution to the story here:
More from the Motley Fool
At Tribune, Help Wanted With Ads
By Jeremy MacNealy
April 13, 2006
Major League Baseball is underway, with the Chicago Cubs off to a surprisingly solid start. Media enterprise Tribune (NYSE: TRB), the team's owner, must be pleased with the Cubbies' play. But as partial owners of Tribune, will shareholders be as pleased with the company's overall latest performance? I doubt it.
The advertising environment continues to be extremely tough for the newspaper industry. Newspaper ad revenues for the first quarter were flat year over year. Retail advertising was particularly weak, as electronics and department stores reduced their exposure. Hardware and home improvement-related advertising revenues, however, showed solid strength. Given the hot real estate market, this comes as no surprise.
National advertising experienced some of the greatest declines; revenues from this segment were down 8% compared with the same period a year ago. The lack of Hollywood blockbusters may help to explain this weakness. Revenues from the auto industry also fell.
In addition to newspapers, Tribune's television, broadcasting, and entertainment segments continue to struggle. Entertainment was hit by a $13.5 million charge related to a player trade for the Cubs. I guess success on the field comes with a cost.
The interactive advertising division continues to display the greatest growth. Traffic at Tribune's websites increased 32% in the first quarter. This translated into 30% higher revenues, with classified help-wanted ads performing particularly well. According to management remarks in the conference call, the company intends to add more news video to its newspaper websites to keep online readers engaged. Online businesses like its CareerBuilder.com concept will also be emphasized going forward. Within three years, management hopes to double its exposure to the Internet, making online sales at least 12% of its total revenues.
Overall, the picture continues to look bleak. Shareholders may take some comfort in management's apparent belief that Tribune's stock is undervalued. The company repurchased $138 million worth of stock this quarter, and plans to buy back roughly $350 million for the year. But until Tribune can get its top line moving in a positive direction again, there's not enough value here to entice this particular Foolish investor.
Take a swing at further Foolishness:
The leftwing bias in newspapers is costing them millions and millions of dollars. You'd think they'd stop. They should be required to report it to the FEC as an in-kind donation to DemocRATS.
Ayinde O. Chase - All Headline News Staff Writer
Somerset, NJ (AHN) - A study in Internet marketing reveals over 75% of manufacturing companies plan to increase their online marketing budgets in 2006.
The findings are a result of an annual survey of industrial marketing executives conducted by SVM E-Business Solutions who surveyed more than 220 marketing executives at U.S. manufacturing firms.
Analysts uncovered that online marketing efforts are producing tangible results for manufacturers. Previously, companies who have made the switch to advertising online frequently experienced problems when it came to result measurement and price-cost effectiveness.
However, the survey found the vast majority of respondents plan to step up their online marketing efforts to address their most important business challenges in 2006.
Bob DeStefano, president of SVM E-Business Solutions, says, "This study confirms that online marketing should be an essential component of a manufacturer's overall marketing mix." He continues, "Industrial marketers who hesitate to embrace online marketing will miss a critical opportunity to increase sales, grow market share and strengthen relationships with customers."(excerpt)
Every dime spent on web advertising comes out of the hides of the Dinosaur Media - newspapers and television.
"He added: 'You may argue that they're cannibalizing their print content, but at least they're recapturing some of it.' Still, the numbers are too small to make a difference, he said."
The paragraph about online revenue is the key reason why the outlook is not good for these newspaper giants. Even if they converted their operations over to be 100% Internet based, the amount of money they could get for online advertising wouldn't come close to what they could get back in the days of paper & ink.
In the old days, the costs of printing and distributing a newspaper were so prohibitively high that most cities wound up with one dominant newspaper that had an effective monopoly on certain kinds of advertising in a given market. For example, if you wanted to run a help wanted ad or a print ad for a major department store, there was really only one outlet in any given metro area that made sense. By going online, these well-established brands lose much of their value and their monopoly status. Sure the website for a particular newspaper might get a lot of eyeballs in its home market, but it would be relatively easy for a competitor to come in and start up a rival site that would compete for the local advertising $$$. So while the dominant daily newspaper in Anytown USA will probably continue to exist in one form or another, they'll never again be at the top of the uneven playing field that they got so used to over all those years.
As I've said on a previous thread, I'm not convinced that this process means the end of the liberal media establishment, but it is always fun to see pompous elitists take it on the chin and not even know what hit them.