Same Industry, Different Results

It's earnings season again, and newspaper publishers are weighing in with their latest quarterly results. As ever, their industry faces hard times; in the past couple of weeks, both Belo (NYSE: BLC  ) and E.W. Scripps (NYSE: SPP  ) have announced that they'll separate their papers from other, more robust, operations. That same gloom will likely touch many other such publishers, too.

Let's look at two of the earliest publishers to release their latest earnings. Dow Jones (NYSE: DJ  ) targets a specific audience with its Wall Street Journal's higher-end demographics. Meanwhile, McClatchy (NYSE: MNI  ) , publishes 31 dailies and 50 non-dailies in 29 markets across the U.S.

Dapper Dow Jones
Unless you're hung up on one-time stuff that really doesn't matter much from an operating perspective, Dow Jones' last performance before joining News Corp. (NYSE: NWS  ) was quite admirable.

In the quarter ended in September, the latest company to be acquired by Rupert Murdoch earned adjusted earnings of $23.1 million, or $0.27 per share, up from $9.4 million, or $0.11 a share, a year ago. Throw in a charge of $0.09 per share this year related to costs associated with the Murdoch acquisition, and an accounting benefit of $1.07 per share from last year, and the company earned $13.8 million, or $0.16 a share, versus $105.4 million, or $1.26 a share last year.

The company's most meaningful number may be the 2.9% decline in ad revenues for the U.S. edition of the Wall Street Journal. That slippage was partially offset by a 7.8% gain in online advertising. (Consider that figure further fuel for Murdoch to drop the registration wall at The Wall Street Journal's online site.)

At the same time, as it moves toward its Murdoch marriage, the company is benefiting from strength in its Enterprise Media group, which includes news database service Factiva, the Dow Jones Newswires, and the market indexes. Assuming that Factiva had been part of the company's operations in both periods -- during the past quarter, Dow Jones bought the half of the service it didn't already own -- the unit's operating income would have increased by 40% year over year.

McClatchy's malaise
McClatchy, whose properties include The Sacramento Bee, The Charlotte Observer, The Fort Worth Star-Telegram, and The Miami Herald, reported a 55% drop in its quarterly profit. Revenue fell 9.2% to $540.3 million. Income from continuing operations slid to $23.5 million, or $0.29 per share, compared to $52.6 million, or $0.65 a share, a year ago.

The company's results are preliminary, and they don't yet include an expected non-cash charge relating to asset writedowns. They do, however, include a $0.03-per-share charge involving tax positions taken by the company.

McClatchy CEO Gary Pruitt noted the effects of geography and real estate on the company's results, stating, "... our Florida and California newspapers were disproportionately hurt." In fact, its properties the two states accounted for 68% of the quarter's decline in advertising, but only 33% of the company's total revenue.

Despite his company's worsening performance, Pruitt characterized McClatchy as "a solidly profitable company." Furthermore, it's "re-engineering its operations" to allow it "to navigate through a changing environment."

A brighter day
So there you have it. Dow Jones, a specialized newspaper and financial information provider, will exit stage left. Its final public performance was worth more than polite applause. Meanwhile, McClatchy faces roughly the same woes that New York Times (NYSE: NYT  ) and Tribune (NYSE: TRB  ) will likely report with their own quarterly results next week.

I'm looking forward to an almost certainly lively competition between The New York Times and Murdoch's Journal. In the meantime, as Americans increasingly shift toward the Internet for their news, I'd suggest that Fools continue to read newspapers -- but not invest in them.

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