Tuesday media highlights

Here are some of the day’s top stories in the media industry:

U.S. business magazines face a shakeout (Reuters)
Robert MacMillan writes: “Business news publishers rubbed their hands in glee when the financial crisis grabbed headlines last fall, saying the meltdown would deliver a windfall blown in by widespread interest in their stories. It did not turn out that way. Appetite for news does not always translate into revenue, especially at a time when blogs, wire services such as Bloomberg and Thomson Reuters and other outlets crowd into news analysis territory that the big magazines had long claimed.”

McClatchy quarterly profit rises on cost cuts (Reuters)
“U.S. newspaper publisher McClatchy Co reported higher quarterly income on Tuesday because of cost cuts, pushing shares up as much as 67 percent, even as advertising revenue fell by nearly a third. McClatchy, publisher of The Miami Herald and Sacramento Bee, also said it reduced the amount of debt that it owes and sought to reassure investors that it will not violate the terms of its lending agreements,” reports Robert MacMillan.

Economist Group Buys Congressional Quarterly (WSJ)
Kevin Kingsbury writes: “The deal, terms of which weren’t disclosed, will create a new company called CQ-Roll Call Group. Roll Call is owned by the Economist Group, the London-based publisher of its namesake magazine. Roll Call is buying Congressional Quarterly from Times Publishing Co., whose primary operations is the St. Petersburg Times and related assets.”

James Murdoch Approved Payment to Phone Tap Victim (Bloomberg)
“James Murdoch, the son of News Corp. Chairman Rupert Murdoch, agreed to a 700,000-pound ($1.1 million) payment to a victim of phone-tapping by the News of the World, the editor of the company’s newspaper said,” writes Robert Hutton.
> Ex-Murdoch paper editor says phone taps not policy (Reuters)

Conde Nast September Monthlies Lose 1,680 Ad Pages (NYO)
tumbled to 427 pages total, down 36 percent from last September. W is down 53 percent; Allure and Gourmet are down 51 percent; and Self is down 50 percent. Vanity Fair came in just above average for the company, dropping 36 percent,” writes John Koblin.

Newspapers plot survival as quietly as they can

Newspapers are in the business of making information public so readers can benefit. Newspaper publishers are in the business of revealing as little as possible unless someone springs a leak.

In the case of the two-dozen newspaper publishers who met in the Chicago area to discuss ways to get people to pay for the news they read online, the leak landed in the hands of The Atlantic. Here is an excerpt:

There’s no mention on its website but the Newspaper Association of America, the industry trade group, has assembled top executives of the New York Times, Gannett, E. W. Scripps, Advance Publications, McClatchy, Hearst Newspapers, MediaNews Group, the Associated Press, Philadelphia Media Holdings, Lee Enterprises and Freedom Communication Inc., among more than two dozen in all. A longtime industry chum, consultant Barbara Cohen, “will facilitate the meeting.” …

McClatchy will make $200mln from digital this year

McClatchy Chief Executive Gary Pruitt shared some details of the newspaper publisher’s operations in his speech on Tuesday at the Newspaper Association of America’s annual meeting. Here’s what he said, based on a transcript posted at the NAA’s website:

At McClatchy, 15% of our advertising revenue today comes from online. McClatchy, a company founded before the advent of electric lights, will generate nearly $200 million dollars in digital revenue this year at a higher profit margin than our print business.

What significance is this?

    Fifteen percent is above the average newspaper publisher’s take from digital $200 million would be almost enough to run The New York Times’s newsroom operations for a year. Not bad.

Higher profit margins than print? We know Gary is a big fan of pop music to highlight his industry presentations, and that he likes the Rolling Stones in particular. Maybe “Time Is on My Side” would be a decent choice for those kinds of numbers.

Sound familiar? McClatchy cutting jobs

These have been a couple of ugly weeks for the newspaper industry. First, EW Scripps pulled the plug on the Rocky Mountain News, and then, today, McClatchy said it was cutting about 1,600 jobs, representing 15 percent of its workforce.

For those who like to look at the bright side of things, McClatchy isn’t shutting down The Miami Herald, Sacramento Bee or Anchorage Daily News. But the staff cuts are deep and undoubtedly will hurt  the quality and depth of coverage at some of those newspapers. How couldn’t they? After all, they come on top of two other major rounds of layoffs at McClatchy.

The move isn’t really a surprise, given that McClatchy said back in early February that it had to come up with a plan to cuts more costs given the deterioration of the industry. Still, it seems job cuts at the company come as frequently as seasons change.

S&P upgrades McClatchy, man bites dog

mcclatchy.jpgMcClatchy’s third-quarter financial results could have been written last quarter, or two quarters ago… or last year. Short story: Ad revenue plunged some more, the company is doing everything it can to pay debt, online revenue is rising but not by enough, [insert here boilerplate paragraph on newspaper grappling with financial crisis/cyclical trends/slow decline of industry] and so on.

What a day for S&P Equity Research to say that it’s upgrading McClatchy to a “hold” from a “sell.” Here’s what it said:

MNI reports Q3 adjusted EPS from continuing operations of $0.13 vs. $0.31, in line with our $0.12 estimate. On a GAAP basis, loss per share was $16.42. Revenues declined 16%, with advertising falling 16% and circulation off by 5%. On a positive note, online ads grew 9%, representing 12% of total ad revenues. With a restructuring plan in place for $100 million in annual savings, and MNI’s success with its credit amendment, we are increasing our 12-month target price to $5.00 from $3.00. We lift our opinion on MNI shares to hold from sell.

Private equity publicly disses newspapers

rtr1c8p7-1.jpgWhen it comes to newspapers, there’s nothing like the thrill of defeat. Scott Sperling, co-president of private equity firm Thomas H. Lee Partners, sounded anything but disappointed on stage Tuesday at the Dow Jones Media and Money conference when he told Wall Street Journal reporter Peter Lattman about dropping out of the bid for the Knight Ridder newspaper chain in 2006.

THL avoided the newspaper beat early on, Sperling said, after deciding that newspapers were just too expensive. “We looked at Knight Ridder more recently,” he said. “But we weren’t able to approach the price.”

So what does he think of the amazing advertising revenue plunge that has smacked newspaper publishers silly since then? “I would have predicted a lesser decline than what we’ve seen… We were probably too kind in our assessment of the industry three years ago.”

McClatchy: three new publishers in two days

mcclatchy2.jpgMcClatchy Co, fresh off amending the terms on paying back its debt, is busy making some changes at its newspapers. The owner of the Miami Herald and Sacramento Bee has replaced three publishers in the past two days. We don’t yet know if this is coincidence or part of a coordinated move.

Here’s where we are so far:

The Tribune in San Luis Obispo, California: Bruce Ray takes over from Chip Visci, who is retiring, according to a press release. Ray previously was chief financial officer at the paper. Visci, according to McClatchy Chief Executive Gary Pruitt, is starting “the next chapter of his life.” Visci’s previous chapter was as a Knight Ridder guy before McClatchy ate up the chain and incurred all those billions of dollars in debt.

(Visci just called back and left a message, which is worth reporting for its humorous candor: “I can assure you that there’s no such shuffle underway… If there really were something up, I probably wouldn’t have called you back.”)

All eyes on Goldman — the conference, that is

goldman.jpgWe’ll be paying close attention to Goldman Sachs today for reasons other than the wrenching financial crisis. Our interest relates to the investment bank’s Communacopia conference, an annual meeting of some top media players.

Of course, it’s impossible to escape Wall Street’s woes, even at a media conference. After all, there are questions about the ripple effect on the economy — and that includes the advertising business, the bread and butter of media.

We spoke to a number of experts and the consensus was that while financial services make up just 6 percent of advertising spending in the United States, which is no small sum, the bigger issue is the influence that the crisis has on confidence throughout Corporate America. Watching this week’s turmoil, will corporations be as free with spending?

Rolling stones with McClatchy’s Pruitt

mcclatchy1.jpgMcClatchy Chief Executive Gary Pruitt is one of those newspaper executives a reporter can get along well with because of qualities that are not always common to your typical CEO:

    He leaves the jargon behind at interviews. He is honest about bad news, making it easier to believe him when he delivers good news. He believes in the product — good journalism — as fervently as he does in his duty to please shareholders (which in McClatchy’s case includes the company’s namesake family and a bunch of other unhappy people).

Trouble is, there isn’t much good news to tell about the newspaper business. Pruitt has said as much to us and others, but in his latest interview in the Sacramento News & Review, (which we found on Romenesko) he shows us how much he feels his employees’ pain:

This has been the worst year of my life, by far.

That’s a pretty grim assessment. Then again, he’s presided over a 90 percent drop in McClatchy’s stock price, he’s cutting staff by 10 percent, and there appear to be few options open to the company to change the way it’s set up. The primary obstacle is $2 billion in debt from its acquisition of newspaper publisher Knight Ridder just before the key advertising struts supporting the company snapped.

McClatchy, other newspapers think vertically

Friday’s press release from McClatchy Corp about its new vice president for strategic initiatives includes a quote from interactive media VP Christian Hendricks that caught my eye:

It’s clear there’s a tremendous opportunity to provide local readers with a richer online experience by creating niche and vertical websites that combine our local experience and content with national brands and content… We are confident advertisers will also benefit greatly from better targeted advertising opportunities and increased traffic in topic-specific content areas on these sites.

By now you’ve realized that it was “niche and vertical websites” that got me all excited. Normally I find ways to translate that kind of jargon into English, but not this time.