New Media Investment Group posts $5M profit for Q1, grows B2B segment with acquisition of Journal Multimedia
Publisher is able to report net income thanks to a tax credit – but the company, like its rivals in the industry, continues to see print ad revenues fall – 11.2 percent in this quarter
It’s earnings time and today Amazon will reveal its first quarter earnings after the bell. But before that, one of the first publishing companies to report, New Media Investment Group, dropped its earnings today, before the bell, reporting net income of just under $5 million, versus a loss of just over $6 million in the same quarter a year ago.
New Media operates newspapers under the GateHouse Media name, and is a private equity backed company that employs a roll-up strategy, aggressively buying up properties to grow its business.
For example, in this quarter, the company reported total revenues of $300.1 million for the quarter, an increase of 19.7 percent, driven by new properties on its books that were not there the year before, In this quarter the company added on, acquiring the B2B publications from Dolan, the daily newspaper the Erie Times-News.
Today, the company announced that it had acquired the assets of Journal Multimedia for $18 million in cash. Journal Multimedia publishes Pet Age, Central Penn Business Journal, Lehigh Valley Business, and others. The acquisition will join the Propel Marketing group, which is the publisher’s B2B operation.
“The acquisition of Journal Multimedia is compelling as it allows us to further build out the B2B media business we created with the acquisition of Dolan in early Q,” said Michael E. Reed, New Media President and CEO. “Furthermore, and similar to the acquisition of Dolan, we believe Journal Multimedia’s print product subscribers are the ideal candidates for Propel’s services as they consist of SMBs that market themselves online to support and grow their businesses.”
So, New Media is showing growth and recorded a profit, but besides buying up properties is it doing anything in the publishing business any different that is resulting in positive results? Apparently not as on a same store basis it recorded declining advertising revenue, just as its colleagues have.
In this quarter, New Media saw total print advertising fall 11.2 percent on a same store basis with local retail advertising falling 14 percent, preprints fall 11.3 percent, and classifies decrease 6.9 percent.
New Media’s long term debt remains about where it was last year in the same quarter. The company has total liabilities of $555 million.
Worse, if the company could not have recorded a $5.1 million tax benefit it would have had to say today its net income was in the red.
New Media was formed after bankruptcy proceedings were filed in the fall of 2013. At that time the company had assets of $433.7 million and debt of $1.3 billion. Today the company says it has assets of about $1.2 billion.