With print advertising continuing to decline and putting a drag on bottom-line revenue, The McClatchy Co., publisher of The Sacramento Bee, said Friday that it will continue to ramp up digital initiatives and move away from its traditional print base.
The Sacramento-based company said it lost $11.3 million from continuing operations in the first three months of 2015.
The loss of 13 cents a share compared with a loss of $16.1 million, or 19 cents a share, in the first quarter of 2014. Once one-time expenses were excluded, the net loss from continuing operations totaled $8.7 million for the first quarter of 2015, compared with $6.1 million in the same quarter of 2014.
Overall revenue in this year’s opening quarter was $257.1 million, down nearly 6.9 percent from $276.1 million in the year-ago period.
In a conference call, McClatchy President and Chief Executive Officer Pat Talamantes said company revenue in this year’s first quarter was again affected by the continued decline in print retail and national advertising, particularly among large advertisers. He said national advertising revenue of $9.5 million in this year’s first quarter was down more than 25 percent from $12.8 million in the initial quarter of 2014.
For more than a century, print advertising was a primary moneymaker for publishers of newspapers. However, the industry, along with other traditional media, has struggled for the past decade with a major shift of readers and advertisers to the Internet.
Talamantes said the company, which publishes The Bee and 28 other newspapers nationwide, continues to diversify away from its traditional print base. Online advertising rose 4.4 percent in the first quarter compared with the same period of 2014, and circulation revenue climbed 4.8 percent.
Revenue other than print advertising now makes up 67.2 percent of the company’s total revenue, compared with 62.6 percent in the first quarter of 2014, he said.
Pointing to continued growth in the company’s digital sectors, Talamantes said McClatchy is prepared to continue moving in that direction, investing in programs that he believes will pay off later: “To help offset advertising trends, we are undertaking a number of initiatives that involve incremental expense at the start of the projects, but which should be more than offset by cash flow benefits in the future.”
He did not elaborate on specific initiatives that could be launched later this year, but said: “We’re not sitting still at McClatchy ... We are moving quickly with our digital transformation.”
In Friday’s conference call following the morning release of the company’s financial results, Talamantes also noted that McClatchy’s net debt fell below the $1 billion threshold at the close of the first quarter, to $959 million. That’s down, he said, from about $3.2 billion at the close of 2006, the year of the company’s $4.4 billion purchase of Knight Ridder Inc.
In recent years, McClatchy has made various moves to reduce debt, including using cash from $406 million in after-tax proceeds from the August 2014 sale of its share of Cars.com to Gannett Co. Inc. At that time, McClatchy’s debt was about $1.5 billion. Last year’s moves also included McClatchy selling Cars.com’s sister website, Apartments.com, and the Anchorage Daily News in Alaska.
McClatchy shares closed Friday at $1.48, down 5 cents, on the New York Stock Exchange.
Call The Bee’s Mark Glover, (916) 321-1184.