McClatchy Revs Drop 17% In 4Q

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Toward the end of last year, a new trend emerged in the newspaper industry, with big publishers reporting smaller revenues but larger profits -- and it is continuing with the latest round of quarterly results.

On Wednesday, for example, the McClatchy Co. announced that total revenues fell 16.5% from $470 million in the fourth quarter of 2008 to $393 million in 2009, while operating cash flow increased 19.8% and net income jumped from a loss of $20.4 million to a gain of $32.4 million over the same period.

For the full year, total revenues fell 22.6% from $1.95 billion in 2008 to $1.5 billion in 2009, due mostly to a 27.1% decline in ad revenue, from $1.5 billion to $1.1 billion.

As with other major newspaper publishers, McClatchy's fourth-quarter combination of declining revenues and increasing income is due mostly to a stringent cost-cutting program, which yielded a 28.5% reduction in expenses between the fourth quarters of 2008 and 2009.

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The picture on the revenue front wasn't much better in the fourth quarter than in previous quarters, with total ad revenue tumbling 20.5% to $309 million, as a result of continued declines in all three major classified categories as well as national and retail (local) advertising. In classifieds, losses reflected the particular weakness of certain economic sectors: for the full year, automotive fell 20.4%, real estate 35.6%, and employment 43.6%.

The one bright spot was online ad revenues, which increased 14.9% in the fourth quarter. Their proportion of total advertising revenues increased from 10.9% in the fourth quarter of 2008 to 15.8% in the fourth quarter of 2009 -- although this increase was partly due to the overall decline.

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