Business & Real Estate

McClatchy reports 2016 loss, CEO pledges to accelerate ‘digital transition’

Citing growth in its digital news products and advertising, McClatchy’s recently appointed chief executive on Thursday pledged to accelerate the company’s “digital transition.”

“We will work faster to know our audience better,” said Craig Forman, who was announced as McClatchy’s new president and CEO on Jan. 25. He was speaking in a conference call accompanying the release of the company’s fourth-quarter and full-year 2016 financial results.

In that report, McClatchy, publisher of The Sacramento Bee and 29 other newspapers, said it lost $34.2 million in 2016. The annual loss compares with a net loss of $300.2 million in 2015, which included non-cash charges and write-downs totaling $304.5 million.

Revenue for 2016 totaled $977.1 million, down 7.5 percent from 2015.

Overall advertising revenue for last year was $568.7 million, a year-over-year decline of 10.8 percent.

In its news release accompanying the financials, McClatchy said softness in print advertising “negatively impacted traditional newspaper advertising revenues.”

The company noted, however, that digital advertising revenue grew 4.3 percent from 2015 to 2016, and digital-only advertising was up a record 14.8 percent last year.

Like other newspaper publishers, McClatchy has sustained a prolonged decline in print advertising revenue even as it puts more resources into digital products to capture a greater audience of online readers and advertisers.

Forman, who has considerable experience in digital media, was quoted in the company’s news release as saying: “We’ve already transitioned in many respects to the foundations of a digital future. Our goal here is to accelerate that transformation, to focus on our pace. We remain vigilant on cost control and expense reduction as we align the cost structure with the decline in traditional print advertising. Our intent is to sharpen our connections to our local markets, both in terms of audience and advertising, by accelerating our digital product and sales efforts.”

Forman pointed out that the last three months of 2016 marked the “fifth consecutive quarter of double-digit growth in the digital-only advertising category.”

He said that, adjusted for non-cash impairments and other items, the company reduced operating expenses by more than $58 million in 2016.

Looking ahead into 2017, Forman said: “We are focused on delivering more and better digital products faster to our advertisers and subscribers.”

McClatchy reported fourth-quarter 2016 net income of $3.1 million, compared with earnings of $8.8 million a year earlier. The company reported adjusted net income, which excludes severance and certain other items, in the fourth quarter of 2016 of $12.9 million, compared with adjusted net income of $17.3 million in the last quarter of 2015.

The fourth-quarter and full-year results were not affected by McClatchy’s acquisition of The Herald-Sun in Durham, N.C. That paper was purchased on Dec. 25, the last day of McClatchy’s fiscal year.

McClatchy, which has wrestled with substantial debt since its $4.4 billion purchase of Knight Ridder in 2006, said Thursday that its debt at the close of last year’s fourth quarter totaled $873.7 million.

McClatchy shares closed Thursday at $11.20, down 41 cents, on the New York Stock Exchange.

Mark Glover: 916-321-1184, @markhglover