Following up on this morning’s pre-market earnings report, Gary Pruitt, The McClatchy Company’s (NYSE: MNI) chairman, president and CEO, outlined the Sacramento, CA-based newspaper publisher’s recent troubles and hopes during the investor conference call:
– Classifieds down: The real estate market downturn in California and Florida has had a negative impact on McClatchy’s classified revenues, which were down 20 percent in Q4, for months. Those regions represent 33 percent of McClatchy’s Q4 revs and accounted for 58 percent of the company’s total ad revenue decline. In terms of web-based real estate ads, online revenues in that area fell back 6.5 percent as print ads in the total category dropped 32.7 percent. Turning to recruitment, employment ads were down 24 percent in Q4, as online help wanted ad revs fell 15 percent during the period, mainly due to the downward pressure related to print upsells. More after the jump.
– Retail and autos: The total category was down 2.7 percent in Q4. But it would have been worse if it weren’t for online retail ad growth of 36.6 percent. Other online categories fared better, as online auto ads rose 30.5 percent in Q4, mainly from Cars.com; print auto ads dropped 19 percent.
– National ad revs: Weakness in telecom ad spending hurt McClatchy papers across the country. Nevertheless, online ad revenues grew 5.2 percent nationwide in Q4. There were some revenue discrepancies in the second half of 2006, due to differences in the way Knight Ridder and McClatchy counted online advertising the case of its ads sold through third parties by ad network Real Cities. Accounting for any related disconnect on national online ad revenues, Pruitt said that national interactive was up in the “mid-single digit range” for 2007.
– 2007 Online Ad Revs: Online categories that are less reliant on upsells from print ads did well over the past year. Online retail ad spending increased 52.6 percent in 2007 and web-based auto ads were up 20.1 percent for the year. Overall, online advertising makes up 8.6 percent of McClatchy’s total annual ad revenues.
– Help from Yahoo: McClatchy is pinning a lot of hopes on retail ads, especially as classified advertising revenues become more and more squeezed. During the Q&A, Pruitt said the company expects “double-digital online retail advertising growth.” He didn’t touch on what effect – good or bad – Microsoft (NSDQ: MSFT) ownership of Yahoo (NSDQ: YHOO) would have. As it stands, later this year, McClatchy will be picking up all of the local inventory for Yahoo’s websites and will be selling that locally as well. Pruitt: “The numbers that we expect to see in online retail ads will flow into 2009 and will significantly help our online efforts. That is a particular focus for us this year and next.” Its overall deal with Yahoo on display ads, content sharing and search ads, won’t have an impact until later this year as well.
– Careerbuilder: The deals between Careerbuilder and newspapers were more beneficial to the newspapers than to the company, when Knight Ridder owned it. McClatchy believes that its renegotiated contract with Careerbuilder will fix any imbalance in that arrangement.
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