Newspaper Companies Are Forecasting Rosy Financials for the Second Half of 1999

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The business of newspapers Newspaper financials printed in black ink

Newspaper companies are forecasting rosy financials for the second half of 1999, banking on continued low newsprint prices, ad revenue growth, and expense controls. Executives made the predictions to a gathering of stock analysts and institutional investors June 21-23 at the Mid-Year Media Review in New York.

Print publishing often took a back seat to online during the conference as the companies, once characterized as slow to jump on the Internet bandwagon, touted their latest growth numbers and pledged more investments in their online ventures.

The executives also assured analysts they would continue to control costs, in part by reducing web width, and pursue potential acquisitions, stock buybacks, and investments in niche and advertising publications.

Sixteen publicly traded newspaper companies participated in the sixth annual gathering, hosted by Gannett Co. Inc. Here are the highlights of their presentations:

DOW JONES & CO. INC.

The parent of The Wall Street Journal expects second-quarter earnings to be at the high end of analysts' estimates, which were 60 cents to 62 cents per share, and shoots for at least 10% annual earnings-per-share growth in the long term, executives say. The company expects its new Sunday business news pages, set to launch in major metro papers in September, to turn a slight profit in their first full year, and for its new free Web site, http://www.dowjones.com, to be profitable by 2001.

New YORK TIMES CO.

Despite a slow start, the company is on track to achieve earnings-per- share growth of 10% to 15% this year, says John O'Brien, chief financial officer. Core businesses are driving the growth, says Russell T. Lewis, president and CEO. At The New York Times newspaper, ad revenues grew 6% in the first five months of 1999, largely on the strength of its expanding national edition. The Boston Globe's ad revenues were down 1.5% in the same period, mainly due to softer high-tech help-wanted ads, Lewis says.

TRIBUNE CO.

Tribune, which publishes the Chicago Tribune, predicts 7% to 9% consolidated revenue growth in 1999, assuming a continued strong economy, and 10% to 15% growth in EBITDA (earnings before interest, taxes, depreciation, and amortization), over 1998's EBITDA of $900 million, says Donald Grenesko, senior vice president for finance and administration.

Grenesko told financial analysts that the company deserves higher multiples because of its growth history and broadcast leadership, among other factors. "When you put it all together, our value is significantly higher than where we're trading today," he says.

For 1999, the company expects to see 4% to 6% revenue growth in the publishing division and 7% to 9% in broadcast., Grenesko says. Circulation at the Chicago Tribune slipped 1% in the in the six months ended March 31 and was flat at the company's Florida newspapers, he says.

The broadcast division, with 22 major-market TV stations, is headed for a strong second quarter, led by the WB Network, Tribune's partnership with Warner Bros., says division president Dennis FitzSimmons. Tribune Ventures, Tribune's strategic investment arm, aims to make six to eight Internet-related investments of $30 million to $50 million a year, says Andy Oleszczuk, division president. Tribune, an early investor in America Online, recently unloaded $1.1 million worth of its AOL shares, which it plans to use for later investments.

JOURNAL REGISTER CO.

The Trenton, N.J.-based company expects a strong financial report for June following a slow start to the year due to advertising weaknesses in some of its Connecticut markets. The company expects to realize cost savings in 1999 from two new union contracts set to kick in later this year, says Robert Jelenic, chairman and CEO. The company, publisher of the flagship New Haven (Conn. …