Magazine article Editor & Publisher

Performance Anxiety Prevails at PaineWebber Media Gathering

Magazine article Editor & Publisher

Performance Anxiety Prevails at PaineWebber Media Gathering

Article excerpt

Last year, newspaper executives were ebullient at the annual PaineWebber media conference, crowing about 1997 and promising more good times in 1998.

This year was a stark contrast. In presentation after presentation, somber publishers promised to boost earnings even as revenue growth declines.

In general, the companies promised to raise advertising rates, prune their staffs, enter nontraditional businesses such as database marketing, and to use free cash to buy back stock. The executives all said they will be helped by newsprint prices, which will remain low in this tough market.

Here's a rundown of the major players and what they said at the conference in New York.

TIMES MIRROR CO.

CEO Mark Willes headlined his company's stable balance sheet but noted that Times Mirror faces serious problems at its flagship Los Angeles Times.

Despite the troubles at the Times, Wiles reported that Times Mirror was on target to achieve 30% earnings per-share growth in 1998 followed by 10% growth in 1999. He committed to having his company be among the top 25% of the nation's largest businesses in earnings growth and return on capital. In addition, he noted, the company's East Coast papers had a record year. But, he cautioned, "We are clearly not doing as well in this year's fourth quarter as expected."

Los Angeles Times CEO Kathryn M. Downing detailed the problems at the company's flagship: thus far in the final quarter of 1998, help wanted advertising is down 8% and high-tech advertising has fallen 25%. For the year, operating profits at the Times have fallen 7.5%, she said. The paper is preparing two more rounds of staff and budget cuts and is cutting travel and entertainment budgets by 25%.

DOW JONES & CO.

Forget the flagship. Think electric. That's the mantra from CEO Peter Kann and his management team at Dow Jones, publisher of The Wall Street Journal.

As the Journal invests in more color capacity, Kann said the company would place "substantial reliance on earnings growth" in its interactive businesses and Ottaway family of community newspapers. He predicts cash flow margins of 27% from both divisions, while chief financial officer Jerry Bailey said they would provide 50% of profits in 1999.

The firm's three main online businesses -- Dow Jones Newswires, Dow Jones Interactive and the Wall Street Journal Interactive -- are set to bring in $400 million in revenues in 1998, with the Journal's 250,000 subscriber online edition anticipated to turn a small profit in 1999, said Gordon Crovitz, who heads electronic publishing operations. Dow Jones Newswires, a corporate financial service, is already highly profitable, and Dow Jones Interactive, targeted at corporations, operates at a profit, but the company still is investing in the service.

Bailey also articulated the 1999 financial targets: 5% revenue growth and 10% per-share earnings growth, fueled in part by an aggressive stock buyback plan. "We expect to be held accountable to these targets," he said.

In addition, he unveiled a plan for what he called "process redesign" or rethinking the way the company does business in order to save money. "Process redesign at Dow Jones will not represent just a disguised form of layoffs," he promised. The company jettisoned 4% of its work force, or 355 staffers, in 1998.

McCLATCHY CO.

Painting a bright picture as it absorbs the debt from its $1.367 billion purchase of the Minneapolis Star-Tribune, Sacramento, Calif.-based McClatchy vowed that all its papers would increase their news holes in 1999.

"Every McClatchy newspaper is increasing the space devoted to news next year, said CEO Gary Pruitt, noting that at the same time revenues would grow 3% or 4% in 1999 while per-share earnings will advance 10%.

The company also promised aggressive investments in nontraditional ventures, including direct-mail operations and commercial printing. …

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