Great news comes today from McClatchy Company, which is reporting a 50 cents per share growth in the second quarter. Well that is great, especially when a “loss seems certain” and “hardly anything has gone right at the company for the last few years” (those being from the reporter, not the experts) were the phrases from a report anticipating losses of the company just yesterday. So, who brought the champagne? Let’s celebrate. After all, early trading showed a jump in McClatchy’s stock. Not so fast. Read down to about the 11nth graph – skipping all the good news.
“McClatchy continues its transition to a successful hybrid print and online company. Our digital audience continues to grow impressively. Average monthly unique visitors to our websites were up 30.1% in the second quarter following 26.7% growth in the first quarter of 2009. Still, the recession is impacting our digital business. Our digital advertising was down 2.9% in the second quarter of 2009, hurt particularly by declining employment advertising. Excluding employment advertising, which has declined nationally both in print and online, our online advertising revenue grew 24.7% in the second quarter of this year.” – Gary Pruitt, chairman and CEO.
It’s not enough when the advertising revenue from the Web isn’t increasing. For newspapers to be sustainable into the future, it won’t be just as smaller products, but with a sustaining revenue from online operations – whatever that looks like (advertising, online subscriptions, selling products, selling hosting space, you name it). The good news is that McClatchy is closing the gap between advertising online and print operations (but mostly because print has tumbled so much). Nonetheless, Pruitt says digital advertising represented 16.5 percent of total advertising in the second quarter, up from 11.8 percent from the second quarter in 2008. Pruitt also seems to imply that the trend is continuing with June seeing 17.3 percent.
I am not going to say that the company doesn’t know that the focus needs to be online. Pruitt seems to understand that the shift to becoming more than just a “newspaper company” is essential for survival, but my hesitation is with the many publishers of the individual papers. Furthermore, the public’s perception of McClatchy still remains as largely that of a newspapers company. Even their “interactive hub” website for the company touts it as the third largest newspaper company. For a real change to happen, the company should invest in some online-only news websites not only to change the perception but to learn how online-only news operations can function properly on the business level and editorial. Pruitt says it well, I just wish everyone believed them:
Those who think of McClatchy as just a newspaper company need to take a fresh look. We are quickly becoming a 24-7 news and advertising company that can deliver in print, online, and to handheld devices.
I was an editor and publisher of The Minnesota Daily, a college newspaper that had a $2.4 million budget. A lot of the times cutting expenses is the only option, but many times we lose sight of pursuing new revenue opportunities. The focus should be on improving the product and tapping into the source that is expected to continue to grow: online.