Journal Communications Q2 revenue results were $104.4 million, up 0.1% compared to $104.3 million in Q2 2009. Operating earnings of $14.4 million are compared to an operating loss of $9.5 million which included a $19.0 million impairment charge for broadcast licenses. The loss from discontinued operations of $0.2 million is compared to a loss of $0.3 million. Net earnings were $8.1 million compared to a net loss of $4.8 million.
In quarter, basic and diluted net earnings per share of class A and B common stock were $0.14 for both. This compared to basic and diluted net loss per share of $0.11 for both in 2009.
Broadcasting revenue increased 7.5% to $47.0 million compared to $43.8 million. Local advertising revenue, excluding political advertising, increased 1.3% and national advertising revenue increased 16.1%. Total broadcast political and issue advertising revenue was $1.9 million compared to $0.6 million. Retrans revenue was $1.6 million compared to $1.0 million. Broadcasting operating earnings were $9.7 million, including a $0.2 million gain related to insurance proceeds for the completion of the Wichita tower replacement compared to an operating loss of $11.8 million, which included a $19.0 million impairment charge for broadcast licenses and a $1.7 million gain related to the initial estimate of the insurance proceeds for the Wichita tower replacement.
Revenue from television stations for the quarter increased 10.0% to $29.3 million compared to $26.7 million. Television political and issue advertising revenue was $1.7 million compared to $0.4 million. Operating earnings were $5.4 million compared to operating earnings of $2.0 million, excluding a $14.8 million impairment charge. Television operating expenses decreased 3.0%, excluding the impairment charge in 2009 due to the reduction in employee related costs and in syndicated programming expense as they move to more local programming.
Revenue from radio stations increased 3.5% to $17.7 million from $17.1 million. Radio political and issue advertising revenue was $0.2 million in each of 2010 and 2009. Operating earnings from radio stations were $4.2 million compared to $3.5 million, excluding a $4.1 million impairment charge and a $1.7 million gain related to insurance proceeds from their Wichita tower replacement in 2009. Excluding the impact of the gain related to insurance proceeds from the tower replacement in both years, radio operating expenses were essentially flat.
Said Steve Smith, Journal Chairman and CEO in the conference call: “Our revenues in both broadcast and publishing reflect the continued cautious behavior of both advertisers and consumers. While we are seeing some improvement, persistent high unemployment, lack of strong economic growth and continued uncertainty, temper our optimism.”
Smith says they continue to focus on several key priorities: “In broadcast, we are developing and enhancing original local content. So far this year, we have introduced three morning blend shows in Omaha, Tucson and Las Vegas.”
In publishing, they continue to expand their digital content and have introduced mobile applications and new online products, such as Deal Watch.
Smith added, “And of course, we continue to be aggressive in managing costs. While YOY expense reductions have begun to moderate, operating expenses were still down 6.7% in Q2, excluding the impairment charge and tower gain, and are down just over 10% for the first half of the year on the same basis.”
In response to their improving financial situation compared to 2009, Journal informed employees in a 7/21 letter that they will be providing additional compensation in a one-time 2% cash bonus to employees who took a cut in their base pay. They also intend to reinstate the 401k match starting next year.
While the economic recovery seems to be somewhat uneven across the country, Smith also said they were encouraged by the operating results for the quarter at most of our local markets including Sun Belt markets like Nevada and Florida.
“In the second quarter, Broadcast revenue increased as automotive advertising was up 31% compared to the prior year and we recorded $1.9 million in political and issue advertising,” said Smith. “The rate of decline in advertising revenue moderated in our Publishing business, down 8.5% in the second quarter versus down 13.0% in the first quarter compared to the prior year.”
Overall, total operating expenses of $90.0 million decreased 20.9% compared to $113.7 million. That’s excluding the $19.0 million impairment charge and the $1.7 million gain related to the initial estimate of the insurance proceeds for the Wichita tower replacement, total operating expenses last year were $96.4 million.
Publishing revenue decreased 4.1% to $47.4 million compared to $49.4 million, largely due to continued decreases in all advertising categories offset by an increase in commercial print revenue. Operating earnings from publishing were $6.6 million compared to $4.4 million, an increase of 51.7%. Total newsprint and paper expense in publishing was $4.6 million compared to $4.5 million, a 2.5% increase primarily due to an increase in the price per ton of newsprint.
Community newspapers and shoppers revenue for the second quarter decreased 11.9% to $8.4 million compared to $9.5 million. The decrease was primarily due to declines in automotive, retail and real estate advertising revenue. Operating earnings from community newspapers and shoppers was $1.2 million compared to $1.0 million, an increase of 14.1%.
Revenue from printing services decreased 10.0% to $10.1 million compared to $11.2 million due to continued weakness in the printing industry and the anticipated reduction in revenue from certain printing customers. Operating earnings were $0.5 million compared to an operating loss of $0.2 million. The business continues to align its cost structure with its reduced revenue base.
For Q2, the loss from the discontinued operations of PrimeNet Marketing Services was $0.2 million compared to $0.3 million.
For Q3, Journal anticipates that publishing and printing services segment revenues will continue to be down compared to the prior year period reflecting challenges with publishing advertising revenue and printing volumes. Broadcasting segment revenues are expected to be up compared to the prior year period due to increased political, local and national advertising.
