The McClatchy Co. reported another big drop in profits today, the result of the continued decline in advertising revenue. The company said it expects the slump to continue and announced that it will re-examine its shareholder dividend policies as it looks for ways to save money.
Sacramento-based McClatchy, which owns The Bee, said second-quarter profits from continuing operations fell to $17.3 million, or 21 cents a share, from last year's $34.5 million, or 42 cents a share.
The results met Wall Street analysts' expectations, and McClatchy stock gained 27 cents, to $5.25, in early trading on the New York Stock Exchange.
Bottom line net income, including various one-time adjustments, fell to $19.7 million, or 24 cents a share, from last year's $35.2 million, or 43 cents a share.
McClatchy, the nation's third-largest newspaper chain, said ad revenue fell 16.8 percent and total revenue was down 15.6 percent, to $489.7 million. All newspaper publishers are suffering big declines in sales as subscribers and advertisers move to the Internet and other media and the weakening economy takes its toll. McClatchy's problems are worsened by its heavy reliance on California and Florida, two of the states hardest hit by the real estate slowdown.
But revenue was down sharply all over the country. The lone bright spot was a 12.5 percent gain in online ad revenue.
"Despite the strong growth in our online business, the advertising environment continues to be weak, and we expect revenues to continue to be down," Chairman and Chief Executive Gary Pruitt said in a press release. "Whether revenues improve from recent trends depends upon the direction of the overall economy."
He said the company is "investing significantly" in its Internet business and will continue to ratchet down costs, which fell 9.1 percent during the quarter.
The second quarter included McClatchy's first-ever mass layoff, which cut staffing by 10 percent. That resulted in severance charges of $23.3 million.
"We are committed to doing more (cost cutting) if revenues decline further in the second half," Pruitt said. "Our board will meet during the third quarter to consider dividend policies, and we will look at additional cost-saving measures as necessary."
McClatchy's current dividend is 18 cents a share.
Call The Bee's Dale Kasler, (916) 321-1066.
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