US publisher MCClatchy sinks deeper into red
24 Apr 2009
US newspaper publisher McClatchy Co's losses widened in the first quarter of the year amid layoff charges and falling advertising revenue, even as pressure grows on the publisher to meet commitments to lenders.
McClatchy, the California-based company, which publishes 28 newspapers including the The Miami Herald and The Sacramento Bee, announced a first-quarter net loss of $37.5 million, or 45 cents a share, compared with a net loss of $849,000, or 1 cent a share, a year earlier. Revenue fell 25 percent to $365.6 million.
McClatchy, which last week received a delisting notice from the New York Stock Exchange because of its low share price, has been taking drastic action to save money as it deals with more than $2 billion in debt related to its purchase of Knight Ridder Inc in 2006.
Gary Pruitt, chief executive of McClatchy Co, said that he doesn't expect the newspaper publisher's stock to be delisted. He said the company is in discussions with the exchange about "operational plans" to improve the company's performance, and that de-listing for McClatchy's stock is "not imminent''.
McClatchy's performance during the quarter is similar to that of other newspaper publishers across the US, from Gannett Co Inc to The New York Times Co, which are all facing mounting losses and heavy debt payments.
In March, the company said it would cut 1600 jobs, or 15 per cent of its workforce, and slash executive pay by 10-15 per cent. It also has suspended cash dividends.
Excluding $19.7 million in charges related to the layoffs, McClatchy reported a loss of $22.9 million, Ad revenue fell 29.5 percent to $284.7 million, including a nearly 5 per cent fall in online ad revenue.
So far, Pruit sees no silver lining. "The economic environment is still weak and, like everyone else, our visibility on advertising trends is limited," he said.
McClatchy plans to use its cash primarily to keep paying off debt. It said it has no debt maturities until 2011. Earlier this month, it paid off $31 million in debt. The company also said it is in compliance with the borrowing terms it set up with its lenders.
In a Thursday conference call with analysts, McClatchy executives repeatedly expressed confidence that they will remain in compliance with two key measures that lenders require the company to meet. The company has debt of roughly $2 billion.
Falling out of compliance could force McClatchy to enter prickly negotiations with its lenders, as it had to do last fall to win greater flexibility at the cost of higher interest rates and requirements for more collateral.
Debt problems already have played a key role in the bankruptcy filings of five newspaper publishers since December.
