Blush Returning: Newspaper Companies Report Rebounding Second-Quarter Earnings

By Garneau, George | Editor & Publisher, August 27, 1994 | Go to article overview

Blush Returning: Newspaper Companies Report Rebounding Second-Quarter Earnings


Garneau, George, Editor & Publisher


HAPPY DAYS MAY not have fully returned, but frowns are turning to smiles as newspapers in the second quarter of this year continued to climb strongly out of a deep and prolonged recessionary hole.

With few exceptions, profits of publicly traded newspaper companies surged upward in healthy double-digit strides for the quarter.

Fueled by robust national economic trends, classified advertising continued to pace the ad rebound, as the category, lifted by especially strong employment and auto listings, posted strong revenue increases and even modest volume gains.

Preprints, especially part-run, continued their double-digit increases.

Newspapers continued to benefit from a three-year slump in newsprint prices, which held total newspaper costs down.

Gainers for the quarter included Central Newspapers net earnings up 31.7% on 9.4% higher ad linage; Dow Jones' 15.6% net earnings gain; Gannett's 16%, including 13% higher classified revenues; Knight-Ridder's 17.9% bottom line boost; Lee's 21.3%; McClatchy's 29.4%; Media General's 18%, excluding an asset sale; the New York Times Co.'s 53.2% boost, including the Boston Globe; Park's 47% leap; Pulitzer's 33.8% advance; Scripps' 44% jump, excluding unusual items; and Tribune Co.'s 37% surge.

Times Mirror reported lower net earnings as problems in specialty publishing and a weak Southern California economy continued to dog the owner of the Los Angeles Times.

Taxes took a bigger chunk out of bottom lines in the second quarter. In many cases, tax bills for public newspaper companies increased in double digits from a year earlier as a result of higher corporate income taxes. Typical were Dow Jones, whose tax bite jumped 19%, Central Newspapers up 29%, and Gannett up 18.6%.

Here is how the major publicly traded newspaper companies fared for the three months ended in June.

AMERICAN PUBLISHING

American Publishing Co., the newly public U.S. newspaper arm of Conrad Black's Canadian-based Hollinger Inc., reported higher revenues and earnings for the quarter, including results from the Chicago Sun-Times, acquired March 31.

The company, formerly a wholly-owned subsidiary of Hollinger, sold shares in an initial public offering May 11 that raised $100 million and left Hollinger with a 64% stake. Now based at its flagship Sun-Times, American owns 305 weeklies and small dailies.

The company reported net income for the quarter rose to $5.6 million, or 28[cts.] a share, from a net loss of $579,000, or 4[cts.] a share a year earlier. Quarterly revenues surged to $121.7 million, from $45.8 million, and operating income jumped to $11.7 million, from $4.8 million.

President and CEO Larry J. Perrotto said ad revenues were strong at the Sun-Times, where costs are being cut in an effort to raise profits, and at its Chicago area weeklies.

He said American's earnings before taxes, depreciation and amortization are running 15% ahead of last year as growing ad sales lift profits in rural markets.

For the first six months of the year, American reported net income of $5.9 million, or 34[cts.] a share, compared with a net loss of $2.9 million a year earlier, as revenues rose to $170.3 million, from $87.8 million a year earlier.

A.H. BELO CORP.

A.H. Belo Corp., owner of the Dallas Morning News, reported second-quarter net income advanced to $19.5 million, or 96[cts.] a share, from $16.1 million, or 80[cts.] a share, a year earlier.

Quarterly revenue rose 7.7% to $143.8 million, and operating profit jumped to $35.4 million, from $30.2 million. Publishing revenues advanced 7.5% to $91.1 million, and operating profits increased 35% to $17.7 million.

The company linked the earnings gain to higher ad rates, "modest" volume gains in classified and general ad categories at the News, double-digit gains in preprinted ad volume and lower newsprint expenses. …

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