The McClatchy Company (NYSE: MNI) saw profits almost double in Q2 to $42.0 million ($0.50 cents per share) though it clearly isn’t out of the woods by a long shot, as total revenues dropped 25 percent to $365.3 million. Meanwhile, online ad revenues slipped 2.9 percent, mostly due to falling help wanteds; if job ads were excluded, online ad revs would have been up 24.7 percent.
In general, total ad dollars fell 30 percent in Q2. Individual results for the last few months suggest that ad declines might be slowing. Advertising revenues were down 31.1 percent in April, 30.7 percent in May and 28.3 percent in June. So far, July’s performance is similar to June’s, said Gary Pruitt, McClatchy’s chairman CEO, in a statement. During the conference call, Pruitt pointed to heavy cost cutting and maneuvers to reduce debt as helping to boost its net income.
—Secondly, Pruitt emphasized McClatchy’s intentions to rely less on print as it concentrates more on building up its digital offerings. Specifically, digital ad dollars represented 16.5 percent of total Q2 advertising, up from 11.8 percent from Q208. In June, digital advertising represented 17.3 percent of total ad revs.
—Reviewing McClatchy’s recent bond exchange offer, Pruitt said the company was able to reduce its overall debt principal by about $75 million. At the end of June, we had approximately $143.5 million available under our bank credit lines. McClatchy has no debt maturities until 2011. Pruitt, in a statement, said, “There has been a steady drumbeat in recent media and analyst reports about the prospects of McClatchy violating bank covenants this year. We think it is important to note that even if our advertising performance does not improve from its current run rate for the rest of the year, we would not breach our bank covenants.”
—During the call, Pruitt noted that national online CPMs have declined. Pruitt: “Most of our revenue online comes globally, and they’ve held up. We’ve seen behavioral targeting rates increase.” Later on, executives said that CPMs tied to the Yahoo (NSDQ: YHOO) Newspaper Consortium’s APT ad targeting system were around $20.
By David Kaplan