Journal Communications’ Q1 revenue of $106.8 million decreased 20.4% compared to $134.3 million in Q1 ‘08. Operating loss was $0.6 million compared to operating earnings of $12.6 million. The net earnings of $0.1 million compares to net earnings of $6.7 million, which included $0.4 million of earnings from discontinued operations.
Said Steven Smith, Chairman/CEO: “In the midst of the most difficult economic conditions our industry has faced, advertising expenditures continue to be muted across all of our local markets in the first quarter, leading to lower revenue. And we have seen little signs of improvement as we enter the second quarter. We continue to be focused on finding additional efficiencies in our businesses, as well as driving revenue initiatives.”
Smith said Journal reduced total operating expense by over $14 million in the quarter. “We also used the cash generated by our businesses to pay down debt. Total outstanding debt is down by approximately $15 million compared to 2008 year end.”
Overall, total operating expenses of $107.5 million decreased 11.7% compared to $121.7 million, primarily driven by workforce reduction initiatives in 2008 and early 2009 and reduced expenses related to revenue declines. Several other cost reduction initiatives were implemented during the quarter. In February, the company’s matching contribution on its 401(k) Plan was suspended. In March, the Board approved amendments to the company’s Pension, 401(k) and Supplemental Benefit Plans to suspend the accrual of retirement benefits for all active employees for 18 months beginning 7/1. These initiatives reduced expenses in the first quarter by $0.9 million. Additionally, in April, a 6% employee wage reduction program was announced for the remainder of the year. The aggregate cost reduction of these additional initiatives for 2009 is around $8 million.
Broadcasting revenue decreased 20.5% to $39.2 million compared to $49.4 million led by decreases in local advertising revenue of 18.3% and national advertising revenue of 27.3%. Total broadcast political and issue advertising revenue was $0.1 million compared to $1.9 million. Retransmission revenue was $1.3 million compared to $0.3 million. Broadcasting operating earnings of $0.9 million decreased 88.0% compared to $7.1 million.
Revenue from television stations for the first quarter decreased 19.8% to $26.0 million compared to $32.4 million. Television political and issue advertising revenue was flat compared to $1.7 million. Operating earnings from television stations of $0.1 million decreased 98.1% compared to $3.6 million. Television operating expenses (including KWBA-TV that was acquired 7/08) are down 9.9% compared to last year primarily due to the reduction in payroll related costs.
For Q1, revenue from radio stations of $13.2 million was down 21.9% compared to $17.0 million. Operating earnings from radio stations of $0.8 million decreased 77.5% compared to $3.5 million, largely reflecting the declines in revenue partially offset by a 7.5% decrease in radio operating expenses primarily due to the reduction in payroll related costs.
Said Doug Kiel, Journal President and CEO of Journal Broadcast Group: “Traditionally, the first quarter is always our most difficult—especially in non-election years. Local, national and political revenue were all down. When we look deeper into our revenue categories, Auto revenue, our largest category, continues to show significant declines.”
Auto revenue was down 45.2% compared to Q1 2008.
“So we’re working diligently to replace that auto revenue with other business,” Kiel said. “One way was through developmental revenue. And while developmental revenue in Q1 was softer than last year by 12%, it grew to 16.4% of our total revenue. And this is a significant help to us in this kind of economic environment.”
Kiel said for radio, the Communications, Building and Hardware and Medical categories also dropped. However, for Television there were some revenue categories that grow for the quarter, including Supermarkets, Package Goods and Financial. They all grew by double digits, in fact. Television inventory sell-out levels were higher than projected for the quarter as well, positioning Journal well for Q2 which will include Mother’s Day and the May sweeps. Retrans consent revenues grew strongly in Q1 from last year. They have finalized 45 retrans contracts covering 55% of their subscriber base. More are coming as well.
Radio sell-out levels had a slight decline in Q1 compared to last year. But Kiel was enthusiastic about Q2 bringing Milwaukee Brewers Baseball to WTMJ.
For the quarter, publishing revenue decreased 20.7% to $48.1 million compared to $60.7 million, largely due to continued weakness in the classified and retail advertising categories. Operating loss from publishing was $1.6 million compared to operating earnings of $4.3 million. Revenue from printing services decreased 13.5% to $14.3 million compared to $16.5 million.
For Q2, the company currently anticipates that its publishing, television and radio revenues will be down compared to the prior year period, reflecting continued challenges across nearly all of its businesses.
