Online Revenues Up at McClatchy, But Print Newspapers Wither

(MoneyWatch)  The McClatchy Company, which is second in size only to Gannett among the surviving major U.S. newspaper chains, has been trying over the past year to change its image from a traditional media company to what its CEO calls "a 24-7 news and advertising company that can deliver in print, online, and to hand-held devices."

So how successful has it been? One way to measure this transition is to chart the company's growing stream of digital advertising revenue.

Here the news is fairly good. According to its latest SEC filings, digital ad revenue increased almost 40 percent, from 11.6 percet of total ad revenue in 2008 to 16.2 percent in 2009.

But will this all prove to be too little too late?

Like most newspaper companies, the overwhelming portion of McClatchy's revenue still comes from either advertising (78 percent) or circulation (19 percent.) And then there is the question of debt.

Much of the challenge facing McClatchy's management is historical in nature. Starting in the 1990s, the company began acquiring newspapers outside of its base in the San Joaquin Valley of California.The acquisition spree culminated with its colossal purchase of its larger rival newspaper chain, Knight-Ridder in 2006 for about $4 billion in cash and another $2 billion in assumed debt.

According to its annual 10-K report, much of that debt -- $1.9 billion -- remains on the books today.

Like others in the traditional newspaper industry, the chain has laid off a ton of workers over recent years, so can we at least say that the worst is now over? If the transition to a truly digital company could be sped-up, maybe, but with 83.8 percent of its overall revenue still tied to print, probably not.

Why? Because, as the circulation figures below illustrate, the chain's six biggest newspaper properties all suffered significant audience loss over the past year.

2009 Circulation 2008 Circulation

Sunday Daily Sunday Daily

The Sacramento Bee		226,329		272,738		259,223		300,510
The Kansas City (Missouri) Star		222,415		316,390		243,488		332,004
Charlotte Observer		175,565		231,243		199,956		253,393
(Fort Worth) Star-Telegram		174,991		259,011		197,672		283,914
The Miami Herald		167,998		245,849		221,736		285,246
The (Raleigh) News & Observer		144,356		194,924		162,224		207,080

However you cut it, the road ahead for McClatchy looks bumpy indeed.

Related BNET links:
McClatchy Turnaround Continues; Online Revenues Grow
McClatchy: "Give Us a Second Look"