McClatchy Vows to Cut Expenses in ’09

The McClatchy Co. Thursday reported a fourth-quarter net loss from continuing operations of $20.4 million, or 25 cents per share, that includes a pre-tax non-cash impairment charge of $59.6 million on the value of its newspapers.

McClatchy’s Q4 report offered no hope that the bleeding has stopped in advertising revenue, which was down 12.7 percent — but plummeted in key classified categories.

Help-wanted classified revenue was down an astonishing 50.7 percent. Real estate classified plunged 40.7 percent, and automotive was down 33 percent. Overall classified fell 35.9 percent, McClatchy said.

In a flurry of bad news, McClatchy also announced it was working on a plan to cut costs by $100 million to $110 million — or 7 percent of its 2008 expenses — over the next 12 months.

While details are still being worked out, McClatchy said the company will freeze its pension plans and temporarily suspend the company match to its 401(k) plans beginning March 31. The company said it would offer a new 401(k) plan later in 2009 that would include a matching contribution and “a supplemental contribution that is tied to cash flow performance.”

A salary freeze for senior executives that was begun in 2007 will continue through this year. McClatchy said Chairman and CEO Gary Pruitt has declined any bonus for 2008 and 2009, and other senior executives will not receive bonuses for 2008.

McClatchy also announced that it was notified Wednesday by the New York Stock Exchange (NYSE) that it is not in compliance with listing standards, because its stock has closed below $1 a share on average over the past 30 trading sessions. McClatchy said it would tell the NYSE it plans to come into compliance to stay on the Big Board.

In early morning trading Thursday, McClatchy stock (NYSE: MNI) was at 75 cents a share, up 9 cents, or 13.6 percent, from its open.

Analysts had expected McClatchy to swing to a profit for the fourth quarter, on what was expected to be an easy comparable to Q4 2007, when McClatchy reported a loss of $1.43 billion, or $17.42 per share, which included a non-cash after-tax impairment charges related to goodwill and newspaper mastheads of $1.47 billion, or $17.86 per share.

In the 2008 fourth quarter, McClatchy took its first impairment charge of the year, also related to newspaper mastheads, of $59.6 million.

Without the unusual items, McClatchy had earnings from continued operations of $21.8 million, or 26 cents per share.

Revenue in the fourth quarter of 2008 plunged 17.9 percent to $470.9 million.

Ad revenue plummeted 20.7 percent to $388.3 million. McClatchy said online ad revenue jumped 10.3 percent, and were 10.9 percent of total advertising revenue — up from 7.8 percent a year ago.

McClatchy Chairman and CEO had a grim assessment of the company and the newspaper economy.

“The advertising environment continues to be weak and we expect print advertising revenues to continue to be down,” he said. “While we do not have final advertising revenue results for January, we know that the month was slower than the fourth quarter. We don’t have any better sense than other market observers as to how long the current recession will last and we do not yet have visibility of revenue trends.”