Like so many other media companies, Journal Communications has re-evaluated its asset values and is taking a non-cash charge in Q4. CFO Andre Fernandez was quick to note that the write-down will not impact the company’s ability to generate cash.
Just how big of a charge Journal will take is not yet known. It could be as large as 100% of the “goodwill” on the company’s books – which at the end of Q3 was $240.4 million. The charge will have no effect on cash flows, but will reduce reported earnings per share for Q4 and full year 2008.
“The challenging economy and precipitous decline in the stock market is impacting our stock and the stock of other media companies. We believe that the current stock price understates the value of Journal Communications and the significance that our advertisers and audiences find in our products and services. The quality of our products and the strength of our brands in our local markets cause us to be optimistic about the long term prospects for our Company,” said Journal CEO Steve Smith.
“We believe that we are well positioned to weather cyclical advertising weakness as well as longer-term industry evolution. The expected charge will be a non-cash charge to GAAP earnings and will not affect our ability to generate cash. We will continue to position the Company for success beyond the current economic environment,” said CFO Fernandez.
Journal Communications also reported that November revenues were down 10% to $36 million. All divisions were down for the month.
Journal Broadcast Group saw revenues decline 7.9% to $16.9 million. Radio was down 12% to $6.1 million, reflecting declines in all radio markets except Springfield, Wichita and Omaha, partially offset by a $340,000 increase in political and issue advertising. At the television group, revenue decreased 5.4% to $10.8 million, primarily due to softness in the Ft. Myers, Boise, Palm Springs, Milwaukee and Tucson markets, partially offset by a $2.2 million increase in political and issue advertising.
For publishing, revenues declined 11.7% to $19.1 million. Advertising revenue was down 18.2% to $13.4 million, with retail down 18.3% and classified down 30.9%. National, however, was up 9.1%.