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McClatchy reports higher fourth quarter profit

The McClatchy Co. on Wednesday reported higher adjusted earnings for the fourth quarter despite a continued decline in revenue.

Sacramento-based McClatchy, which owns The Charlotte Observer and 28 other daily newspapers, said adjusted earnings for the quarter grew to $17.3 million, compared with $11 million a year earlier. The adjusted earnings factor out one-time items, notably the $347.5 million gain McClatchy recorded a year earlier from the sale of its share of automotive website Cars.com.

Total revenue fell 7.8 percent, to $292.8 million, when the one-time items were excluded. Advertising revenue dropped 11.7 percent, driven mainly by the “further decline in print-related revenues,” the company said. The slide was exacerbated by “tepid growth in retail sales” and a softening U.S. economy, the company said.

Pat Talamantes, McClatchy’s president and chief executive, said the results show the company is making progress in its evolution to a digital-first media company. He said “2015 was the year our digital transformation accelerated, clearly demonstrating our skill at evolving with the marketplace. We have been working on initiatives and strategies to reinforce our position as the leading local media company in each of the markets we serve.”

He said McClatchy’s digital-only ad sales jumped 20.3 percent in the quarter, while the digital audience grew by 16.8 percent. Digital-only advertising refers to ads sold only to online advertisers, as opposed to digital ads bundled with print ads.

Meanwhile, the company reduced expenses by 9.4 percent in the quarter.

For the quarter, including the impact of the Cars.com transaction and other one-time items, McClatchy profits fell to $8.8 million, or 10 cents a share. That compared with a year-ago profit of $302.6 million, or $3.47 a share.

For all of 2015, McClatchy reported adjusted earnings of $11.8 million, up from $7 million in 2014. However, bottom line net income for the year came to a loss of $300.2 million, or negative $3.47 a share. That figure included a previously-reported non-cash “impairment charge” to reflect declining values of McClatchy’s assets.

McClatchy shares closed Wednesday at 89 cents, down 5 percent.

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