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.
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.