McClatchy Provides Outlook at UBS Conference
Dec 08, 2010, 08:00 ET
SACRAMENTO, Calif., Dec. 8, 2010 /PRNewswire-FirstCall/ -- The McClatchy Company (NYSE: MNI) management today provided an update of business trends for 2010 and an outlook for 2011. Management noted that it saw a continuation of improving advertising revenue trends in October and November 2010. Advertising revenues were down 5.8% in October and November 2010 combined, compared to declines of 6.4% in the third quarter, 8.2% in the second quarter and 11.2% in the first quarter of 2010. Year-to-date advertising revenues through November 2010 were down 8.0%. Total revenues for October and November 2010 combined were down 5.1% and were down 6.2% year-to-date through November 2010.
Management noted the improving advertising trends in 2010 have been led by classified advertising, and in particular, improving trends in employment classified advertising. Employment advertising at McClatchy turned positive in May 2010 and has grown 2.1% over the last seven months.
Gary Pruitt, McClatchy's chairman and chief executive officer, said, "We have seen improvement in revenues in every quarter of 2010 and that has continued into the fourth quarter. For all of 2010 we expect cash expenses to be down in the 9 to 10 percent range, excluding severance costs associated with our restructuring plans, and operating cash flow to be up a few percentage points from last year. Looking forward to 2011, we expect advertising revenues to continue to improve, and we will remain vigilant in controlling expenses.
"We also expect to receive a dividend this month in the range of $20 million to $25 million from Classified Ventures, a growing internet company in which we own a 25.6% interest. Classified Ventures owns two of the nation's premier classified websites, the auto website Cars.com and the rental site Apartments.com, and has been a significant contributor to our earnings in 2010. We expect to use the dividend to repay debt.
"Classified Ventures is but one of our valuable equity investments that have contributed to our earnings in 2010," Pruitt said. "We are especially pleased with the performance of our internet investments—these companies provide important products to our newspaper websites and are strategic partners in our digital success."
Pruitt noted that digital advertising revenue from its newspaper websites now makes up 18.2 percent of McClatchy's total advertising revenue—among the highest in the industry. The company expects to generate digital advertising revenue of about $190 million in 2010.
Pat Talamantes, McClatchy's chief financial officer, said, "We expect to repay all of our outstanding bank term debt by year-end 2010. As a result, we will have repaid more than $174 million in debt in 2010 and will have $1.775 billion of outstanding debt at the end of our fiscal year. This leaves us with a very manageable maturity schedule with only $18 million of bonds maturing in mid 2011 and then none until 2014. We expect our leverage ratio to be about 4.6 times cash flow at year-end, down from 5.3 times at the end of 2009."
McClatchy management will review the company's business and strategies in a presentation at the UBS 38th Annual Global Media & Communications Conference at the Grand Hyatt New York today at 11:30 a.m., Eastern Time. The company's presentation will be webcast live on its website, www.mcclatchy.com, and on www.ibb.ubs.com. McClatchy's webcast presentation will continue to be archived at its website for future reference.
The McClatchy Company is the third largest newspaper company in the United States, publishing 30 daily newspapers, 43 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets which extend its audience reach. The websites offer users comprehensive news and information, advertising, e-commerce and other services. Together with its newspapers and direct marketing products, these interactive operations make McClatchy the leading local media company in each of its premium high growth markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, The Charlotte Observer and The News & Observer (Raleigh).
McClatchy also owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, the nation's largest online job site, 25.6% of Classified Ventures, a newspaper industry partnership that offers two of the nation's premier classified websites: the auto website Cars.com and the rental site Apartments.com and 33.3% of HomeFinder, which operates the real estate website HomeFinder.com. McClatchy is listed on the New York Stock Exchange under the symbol MNI.
Statements in this press release regarding future financial and operating results, including revenues, anticipated savings from cost reduction efforts, cash flows, debt levels, as well as future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the duration and depth of the economic recession; McClatchy may not generate cash from operations, or otherwise, necessary to reduce debt or meet debt covenants as expected; McClatchy may not consummate contemplated transactions, including the sale of certain land under contract to be sold in Miami FL, to enable debt reduction on anticipated terms or at all; McClatchy may not achieve its expense reduction targets or may do harm to its operations in attempting to achieve such targets; McClatchy's operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; increases in the cost of newsprint; bankruptcies or financial strain of its major advertising customers; litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in printing and distribution costs from anticipated levels; changes in interest rates; changes in pension assets and liabilities; increased consolidation among major retailers in our markets or other events depressing the level of advertising; our inability to negotiate and obtain favorable terms under collective bargaining agreements with unions; competitive action by other companies; decreased circulation and diminished revenues from retail, classified and national advertising; and other factors, many of which are beyond our control; as well as the other risks detailed from time to time in the company's publicly filed documents, including the company's Annual Report on Form 10-K for the year ended Dec. 27, 2009, filed with the U.S. Securities and Exchange Commission. McClatchy disclaims any intention and assumes no obligation to update the forward-looking information contained in this release.
SOURCE The McClatchy Company
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