Newspapers: February the Cruelest Month... So Far

In a not-so-shocking turn of events, three of the nation's biggest newspaper publishers reported dismal revenue results for February, indicating that the industry's long-term secular downturn is proceeding on schedule. Gannett, McClatchy, and the New York Times Co. all blamed collapsing classified revenues--in large part due to the housing slump--as well as losses in national and local advertising.

Revenues at the Gannett Co. slumped 7.2% in February compared to the same month in 2007, due mostly to an 8.3% decline in newspaper advertising revenues. Broadcast revenues, including the Captivate Network, fell 7.1%. This is the 13th straight month in which the company's revenues declined; the last period of growth was January 2007. Classified revenues fell 13.6% and retail slipped 7.7%.

One bright spot in February was USA Today, the company's national flagship, where revenues rose 14.5% due to growth in travel, technology, financial, packaged-goods, retail, advocacy and pharmaceutical categories.

Meanwhile, McClatchy's revenues slipped 11.7% in February, as advertising revenues tumbled 13.3%. This is the 20th straight month in which the company's revenues declined; the last period of growth was June, 2006. Classified revenue plunged 25.2%, national fell 12.7%, and retail was down 2.3%.

Finally, the New York Times Company reported a relatively less dismal revenue decline of 2.6% in February. Classified revenues plunged 19.4% and retail 10.4%.

The slippage (the company's fifth straight month of negative growth in advertising revenues) prompted Peter Appert, a newspaper analyst with Goldman Sachs, to write in a client note: "We do not see a quick or easy fix to the challenges facing the company... other than continued investment to drive a migration of revenues and earnings to Internet-based operations."

On Monday, NYTCO reached an agreement to allow two candidates proposed by dissident shareholders from Harbinger Capital and Firebrand Partners to join the board of directors. In their campaign to join the board, the two candidates--Scott Galloway, founder of Firebrand, and James Kohlberg--said they would pump up the company's new digital initiatives to drive revenue growth. Originally the companies proposed four candidates, but withdrew the other two as part of the compromise with NYTCO.

Next story loading loading..