2ND HALF OUTLOOK: DIGITAL MAY BE GOOD, BUT THAT'S IT Few public newspaper companies provide prognostications.
Not all of the eight companies that provide results gave us insights into the future, but a few did. And while The New York Times Co. didn't provide insights in its earnings report, it did provide its readers with a small look into the future.
Two weeks ago, Margaret Sullivan -- the Times' public editor -- interviewed Mark Thompson, chief executive of The Times Co., about the future, based on the news peg that he had correctly predicted that the newspaper would attain 1 million digital-only subscribers in the second quarter.
Thompson's boldest prediction is that within the next half decade the paper's digital revenue will outstrip its print revenue. "I think five years is feasible to reach that tipping point," Thompson told Sullivan. Digital ad and subscription revenue was up 14 percent year-over-year last quarter, Thompson said, and "he sees those numbers ramping up."
As part of that, Thompson believes the paper's growth comes outside of North America. "In sheer numbers, it's a very big pool to fish in," Thompson said. He told Sullivan that international subscriptions were about 10 percent of the Times' digital-only customers 18 months ago and today they're at 13 percent.
The paper's investment in journalism helps keep it ahead of all its competitors, said Thompson. The Times spends about $300 million a year -- up 50 percent since 2008 -- with a staff of 1300.
Thompson believes that digital ad rates in the future will be calculated not by unique visitors or clicks but by the amount of time a reader spends with a publication or article. "The percentage of revenue can tend toward the percentage of time spent," said Thompson.
Times Co. shares were up fractionally last week, closing at $12.33 on Friday.
Of the eight public companies, only two provided specific sections of their earnings reports on "outlook."
Journal Media Group Inc. of Milwaukee -- the newspaper company borne of the April 1 merger of the print operations of The E.W. Scripps Co. and Journal Communications Inc. -- predicts third-quarter total revenue to decline "in the high-single-digits" when compared to last year's third-quarter newspaper-only results from the pre-merger companies.
Share price at Journal increased 6-1/2 percent last week, with Friday's close at $6.74.
While The McClatchy Co. of Sacramento didn't provide such a startling prediction, it did say that digital-only ad revenue will "grow in the double-digit range," on a gross basis. It further predicted that its direct marketing products will be flat against last year because of "the continued pull back of large advertisers."
"Audience revenue" -- what other companies call circulation -- is expected "to grow in the low single-digit range." The company said that with an expectation that expenses will decline, the company expects cash flow in the second half of the year to exceed 2014's second half.
In other McClatchy news, the company said on Tuesday it had repurchased a total of $22.9 million in bonds and reduced its overall outstanding debt to $966.1 million. The company bought back $10 million of 5-3/4-percent bonds due in 2017 and $15 million of its nine-percent bonds due in 2022 in private transactions.
The move -- coupled with the announcement earlier this month it would repurchase $15 million in stock and the resurgence late last week of the overall stock market -- drove McClatchy shares up 27.2 percent last week, closing on Friday at $1.17 (the share price increased an additional 7.7 percent today, with the close at $1.26).
McClatchy said that the company's next date for bond maturity is $60 million in 2017. Earlier this month McClatchy received a warning letter from the New York Stock Exchange threatening de-listing because shares had traded for too long below $1.
McClatchy's miraculous surge in share price helped propel the NewsInc. Index up 1.4 percent for the week, compared to the S&P 500's fractional increase from the earlier week. And the company was able to avoid my suggestion of a reverse split, so a good week all around.