Parent Company's Q4 Newspaper Profits Slip
Albuquerque Joint Operating Agreement Profits Fall
Year-to-Year Newspaper Division Profits Plunge 25 Percent
Probably Means Big Drop in Profits at The Abq. Journal As Well
The news isn't good for The Albuquerque Tribune, this city's afternoon newspaper. Faced with a plunging circulation (9,600), a parent company that put it up for sale last year, and a potential buyer who couldn't pull the deal off, it now has to deal with news that could assure its quick closure.
The Trib's parent company, E.W. Scripps Co., reported that its newspaper division's profits (Scripps owns papers in 16 markets) fell by 12.3 percent in the fourth quarter of 2007.
More than that, the media company's profits as part of its joint operating agreement (JOA) with the Albuquerque Journal fell by 11.4 percent in the final three months of 2007.
Even more shocking, Scripps' newspaper division's profits were off by 25.2 percent in 2007 from 2006. According to Scripps' annual report, its newspaper profits dropped to $146.4 million in 2007, down from $195.7 million in 2006.
That's all bad news for The Tribune, which Scripps put up for sale last August. At the time, Scripps said it would close the paper if a qualified buyer wasn't found. On Feb. 1, those potential buyers, Doug Turner and Tom Carroll of the Albuquerque PR firm DW Turner, dropped their effort to buy the sinking newspaper.
Ironically, Turner and Carroll announced the end of their bid to buy The Tribune the day after Scripps released its annual report that showed the big drop in its newspaper profits.
Falling newspaper profits won't do anything to convince Scripps to keep The Trip open for any longer than it has to. In fact, the Cincinnati-based Scripps has been putting the pieces in place to close The Trib as soon as the required paperwork clears government regulators.
Any sale of The Trib would not include the JOA with the Journal, Scripps said when it put the paper up for sale. In fact, in its annual report, Scripps said it would terminate the JOA upon selling or closing The Trib. But, Scripps has reached a deal with Journal owner Tommy Lang to retain a 40 percent ownership in the Albuquerque Publishing Co., which publishes both The Tribune and the Journal. After The Tribune is gone, Scripps will still get 40 percent of the Journal's profits.
"The Partnership will direct and manage the operations of the continuing Journal newspaper and we will receive a share of the Partnership's profits commensurate with our our residual interest," the annual report said.
According to Scripps' annual report, fourth-quarter profits at the Albuquerque JOA fell by 11.4 percent in the fourth quarter of 2007 to $2.4 million. Those profits were $2.7 million in the fourth quarter of 2006.
For the year, the JOA's 2007 profits fell to $9.8 million, down from $10.6 million in 2006. That's an 8.3 percent drop.
More troubling for Scripps, the Albuquerque Journal and the newspaper industry in general is what happened to advertising revenue in the fourth quarter at Scripps' newspapers.
Total newspaper revenue fell by 9.6 percent to $165 million.
Total ad revenue fell by 12 percent to $131 million.
Local ad revenue at the papers dropped by 15 percent to $38.7 million.
Classified ad revenue fell by 19 percent to $40.3 million.
National ad revenue dropped by 10 percent to $9.1 million.
Circulation revenue remained even at $29.5 million.
There was one bright spot in the quarter: online ad revenue. It increased by 6.6 percent to $9.2 million. That's a good increase, but not enough money to keep a stable of newspapers and their staffs running.
Total newspaper revenue for Scripps in 2007 fell to $658 million, down from $716 million in 2006. That's an 8.2 percent drop.
Scripps is a public company and is required to file public financial statements. The Albuquerque Journal is privately owned and doesn't have to make its finances public. But the Journal's circulation has been sliding, as I wrote in December 2007:
"The Journal's circulation took a major hit in the six month reporting period that ended September 30th. According to figures from the Audit Bureau of Circulations, the firm that tracks newspaper and magazine circulation, the Journal’s Monday-Friday circulation took a 3.8 percent hit, falling from 105,966 to 101,981. It’s even worse on Sundays, where circulation fell by 4.5 percent, from 146,931 to 140,395. The Journal’s Saturday circulation fell as well, dropping 3 percent from 111,951 to 108,658."
You can bet that the Journal's profits have taken a hit as well.
Newspaper circulation and revenues will only get worse if we do spin into a recession. It means more doom and gloom for the newspaper business, which has suffered heavy hits to circulation and revenues in the past several years.