Earnings Call: McClatchy’s Pruitt: Considering Whether Paid Online Content Pays

Following another dismal earnings report, The McClatchy Company (NYSE: MNI) CEO and Chairman Gary Pruitt began by essentially pinning the company’s troubles on the economic recession. For example, Pruitt emphasized print job revenues were down 57 percent while online help wanted ads were down 39 percent. Still, the results weren’t all dark for classifieds, at least online. While real estate was again down in double digits — no surprise considering the collapse of the housing market — online real estate ads managed to grow 15.3 percent in Q4 and autos were up 8.3 percent in December.
Pruitt: “Our focus on becoming a hybrid print/online company has been in place for some time and we’re seeing some good results. Average monthly uniques were up 25 percent in Q4 and up 33 percent for the full year. Online advertising remains the fastest growing segment of our business.” Also, picking up on the recent controversies over executive compensation, Pruitt noted that McClatchy will suspend executives bonuses as part of a wider $300 million savings initiative.

We’re not just waiting for the economy to turn around: During the Q&A, training, resources and partnerships related to online ad sales will help improve McClatchy’s revenue picture. “Our emphasis on our websites will get us to higher revenues, we’re not just waiting for the economy to turnaround,” Pruitt said.

Pondering paid content: Like NYT Editor Bill Keller mused this week, McClatchy execs are considering whether some paid content actually pays off. “Our costs of delivery online is lower, so the distinction between ‘print is pay and online is free’ is wrong. We’ll experiment with paid content online. But most experiments show that you lose more online revenue than you gain per subscriber. And as much as people think newspapers are going out of style, they’re still read by most adults. And it’s worth noting that our cash flow margin was over 20 percent last year.”

Not dependent on print upsells: In response to a question from Outsell’s Ken Doctor about how much of McClatchy’s online ad revenue is internet only sells, Pruit said it’s currently about half. Separately, about six McClatchy papers are participating in the Yahoo (NSDQ: YHOO) Newspaper Consortium’s APT ad targeting and display management program. All the company’s papers will have adopted the APT platform by the end of this year, Pruitt added.

Release | Webcast (12:00 PM EDT) | Transcript (via Seeking Alpha)