Third-quarter results from McClatchy Co. -- publisher of the Miami Herald and the Sacramento Bee among other newspapers -- encapsulate some of the main problems facing the newspaper industry at large, as growth in digital advertising revenues fails to offset much larger declines in the legacy print ad business.
In McClatchy’s case, the problem was amplified by sinking circulation revenues, a reflection of print woes.
McClatchy’s total revenues fell 7% from $272.9 million in the third quarter of 2014 to $258.1 million in the third quarter of 2015, mostly due to an 11.8% drop in advertising revenues, from $169.8 million to $149.9 million. Retail ads were down 14.7% to $71.5 million, national ads up 2% to $11.2 million, and classifieds down 15.5% to $38.6 million.Circulation revenues slipped 2.2% from $91.3 million to $89.3 million.
The advertising revenue decline came despite sizable increases in some digital ad categories, including national digital ads, up 35.2% in the quarter. Digital-only advertising (meaning digital ads not packaged with print buys) increased 9.6%.
However, most digital ad sales are still bundled with print components, which drag down digital -- notably in classifieds, where digital ad revenues actually sank 4.3%. As a result, total digital ad sales were up just 0.8%. On the print side, total ad revenues tumbled 14.4% from $127 million to $108.8 million.
Likewise, the decrease in circulation revenue resulted from continuing declines in the print audience, as total average daily circulation fell 4.3% from 1.59 million in the third quarter of 2014 to 1.52 million in the third quarter of 2015. Sunday average circ was down 8.2% from 2.53 million to 2.33 million.
At 77,000, McClatchy’s digital-only subscription base remains a relatively small part of total circulation -- just 5% of the total subscriber base.