Publishing was down, television was down, but would have had growth were it not a political off-year and radio was in the black as Journal Communications posted an overall 4.4% loss to $87.8M in Q3 revenue. Looking ahead, it sees a murky future that is better on the broadcast side, but only low single-digit better.
“Journal Communications remained focused on growing our local market revenue share in a soft economic environment in the third quarter,” said Steven Smith, Chairman of the Board and Chief Executive Officer of Journal Communications. “While total Broadcast revenue was down, core revenue, excluding political and issue advertising, was up. On the Publishing side, a challenging advertising revenue environment was offset by improved circulation revenue and a solid increase in commercial print and distribution revenue.
The broadcast revenue total of $46.9M was down from $48.5M, but almost all of that traced to political, which fell from $4.7M Q3 2010 to $2.2M – a number that was surprisingly good in its own right for an off-year. Without the political category put aside, broadcast revenue increased 2.2%.
The political category benefitted from recall elections in Wisconsin and a mayoral race in Las Vegas NV; the impact of the loss in political was felt primarily on the television rather than the radio side.
TV revenue was $27.9M, down 6.8% YOY. It would have been a 1.6% increase without the political category, which fell from $4.3M to $1.8M. Local advertising was up 2.5%, but national fell 10.5%, mainly due to automotive decreases.
Retransmission was a bright spot, increase from $1.7M to $2.2M in income. During the Q&A portion of the company’s conference call, it noted that there are no major contracts with any MVPDs in the queue until late 2012.
Radio was up 2.7%, increasing from $18.5M to $19M. Political revenue was flat at $400K, a very impressive achievement in an off-year. One station in particular – Milwaukee icon WTMJ-AM, had a trifecta of benefits – excellent performances from the NFL Green Bay Packers and MLB Milwaukee Brewers, added to the testy political year that gripped Wisconsin during the year.
Smith said the company, as always, is on the lookout for sensible broadcast acquisitions, but if nothing appears on its radar screen that makes sense, then Journal will continue to pay down debt instead.
The newspaper side of the business continued to be a challenge. Publishing revenue decreased 5.9% to $40.9 million, and that side of the business took a $1.3M hit for workforce reduction, which nevertheless was less than the $3.1M hit it took the previous year.
Smith said that looking ahead, he expected low-single digit increases for both sides of the broadcast business, and continued losses in print. Although the pace of business picked up as Q3 proceeded, he said the advertising environment remains highly challenging and visibility continued to be murky.
“We continue to position Journal Communications for growth in our markets by expanding our relevant local content, investing in interactive media and providing an enhanced value proposition for our advertising customers,” Smith concluded.
Here is the Journal-selected highlight list for the quarter:
* Revenue of $87.8 million, down 4.4%; Core broadcast revenue, excluding political and issue advertising revenue, up 2.2%
* Operating earnings of $8.1 million, down 26.9%
* Pre-tax workforce reduction charge of $1.3 million
* Sold remaining community newspapers and shoppers in Florida
* Diluted EPS of $0.07, or $0.08 excluding workforce reduction charge and gain on sale of remaining Florida operations; down from $0.11
* Repurchased 603,200 class A shares for $2.1 million
* Funded debt ratio of 0.75-to-1