Reporting another decline in quarterly earnings, The McClatchy Co. said Wednesday it is working to reduce costs at its newspapers while ramping up the “digital transformation” at the Sacramento media company.
McClatchy, which owns The Sacramento Bee and 28 other papers, said profits from continuing operations fell to $11 million in the fourth quarter, down from $29.4 million a year earlier. Revenue fell 5.9 percent, to $317.6 million, and advertising sales fell 10.8 percent.
The latest results show that while the company has made inroads in the digital world, the gains haven’t been enough to offset the decline in print advertising, the traditional mainstay of newspaper publishing. The industry, along with other traditional media, has struggled for the past decade with the transition to a world increasingly dominated by the Internet. Print ads accounted for just 38 percent of McClatchy’s total revenue in 2014, down from 41 percent a year earlier, and the company expects the percentage to continue shrinking.
Pat Talamantes, McClatchy’s president and chief executive, outlined the company’s strategy of moving more swiftly into the digital realm.
“We see 2015 as the year to accelerate our plans,” he said on a conference call with investment analysts. Part of the plan calls for reducing costs tied to publication of the print papers.
Talamantes said the company is well positioned financially to make the transition. The company took $631.8 million in pre-tax proceeds from the sale of its 25.6 percent share of automotive website Cars.com last fall. Using the proceeds to repay loans, McClatchy was able to reduce its debt burden by about one-third, to $1 billion, in the fourth quarter. As a result, McClatchy will save an estimated $40 million on interest payments this year, Talamantes said.
The Cars.com deal gave McClatchy an enormous boost in its bottom line. Profits grew to $302.6 million in the quarter, or $3.44 a share, compared with year-ago profits of $12.5 million, or 14 cents a share.
Talamantes said the company’s digital business continued to grow.
Digital advertising was up 1 percent in the fourth quarter, excluding certain adjustments. Digital-only advertising, meaning the sale of digital ads not tied to a print advertising contract, was up 6.3 percent.
For the full year, total revenue fell 3.9 percent to $1.17 billion. Net income rose to $374 million, or $4.23 a share. That included gains from the sales of Cars.com and another Internet investment, Apartments.com. In 2013, the company earned $18.8 million, or 22 cents a share, for the full year.
McClatchy shares closed at $2.57, down 21 cents, on the New York Stock Exchange.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.