Tuesday, March 18, 2008

More bad news for McClatchy

Houston Chronicle:

Late Monday the Sacramento, Calif.-based-based publisher of The Miami Herald, The Sacramento Bee and other newspapers, said its revenue slipped almost 12 percent last month on declining ad sales, with particular softness in California and Florida.

Goldman Sachs analyst Peter Appert said McClatchy's 2008 ad sales are coming in below expectations so far.

"As a pure-play publisher in an exceptionally challenging industry with greater exposure to particularly troubled markets, McClatchy has a fundamental story that remains extremely challenging, in our view, and we continue to recommend that investors sell the shares," he wrote in a client note.

The analyst lowered his price target to $8 from $11 and cut his 2008 profit forecast to $1.11 per share from $1.20 per share. He also trimmed forecasts for 2009 and 2010.

McClatchy shares closed at $8.91 on Tuesday. To put that into perspective the company's stock traded above $44 in October of 2006. Imagine losing 81% of your wealth in a year and a half. Ouch

8 comments:

Anonymous said...

What's more is that McClatchy's Florida properties (Miami Herald and its far smaller sister Bradeton Herald) posted the company's greatest declines in print ad revenue (-20%).

Seriously, McClatchy might be bankrupt soon and then what?

Will Miami Herald be sold down the river to a "cut and gut" chain or worse, "local businessmen"?

We all love to rip The Herald, lord knows it deserves it, but does S. Florida have a contingency plan for a post-Herald world?

What/who will be the government watchdog, the region's cheerleader and critic?

Better start planning know the way things are going at The Herald.

Henry Gomez said...

The Miami Herald won't close but perhaps it will become the first newspaper to go to an all electronic edition. I mean with wireless devices the way the are what's the point of carrying all of those costs? I can already read the herald on my ipod or iphone or smart phone.

Anonymous said...

Henry,

An all electronic Herald seems inevitable but there simply are not the revenues to support it.

February online ad revenues McClatchy reported were just 13% of its print revenues.

The Herald can't operate on so little revenue.

That would be quite a diet, like going from eating three meals a day to three meals a week.

E-Herald will be just a ghost of its former self, that's if it even lives!

Henry Gomez said...

I would argue that those electronic revenues are low because they aren't doing electronic well. When they change the business model they are going to have to the electronic thing much better.

I would also argue that a good proportion of the expenses come from the printing and distribution of the fish wrap. Without those expenses you won't need to replace all of the revenues.

Kofoed said...

The Miami Herald and its reporters are as jaded as their headquarters. The building provides a nostalgic trip back to the 1950s. They should raze it or turn it into a museum like they did with the Freedom Tower, former headquarters of the Miami News.

James L. Knight said...

Great blog. Too bad nobody reads it.

I agree with "anonymous". He/she knows the newspaper business.

Take out the printing and distribution costs and you still have a massive news gathering payroll that meager online revenues simply can't support.

Bye bye Herald...

Henry Gomez said...

Oh you'd be surprised by WHO reads it. And yes online revenues are meager but they are growing, but what else can the Herald say that about? And they are meager because the herald's web site blows. They are working on it but it still blows. One of the biggest online ad revenue generating features would be their archive, if they opened it up like WaPo and NYT. Herald.com is about 1% of the size it could be.

Pablito El Cholo said...

I read this blog religiously.