February 22, 2017 Last Updated 8:40 am

tronc Q4 ad revenue falls 13.7%, but company manages a profit due to reduced headcount

The publisher of the LA Times and Chicago Tribune also announced that Timothy Knight, once CEO of Wrapports, named president of the tronc’s digital content division troncX

There were no major surprises with tronc’s fourth quarter earnings report, and that itself was a bit of a surprise (at for me).

tronc is, of course, the new name being used for what was once called Tribune Publishing – and Tribune Publishing is the print company spun off of what was once The Tribune Company. I suppose as we are now in 2017 I won’t have to repeat that every time I write about the company, but I am sure there are still those that say “tronc, what the hell is that?” Well, it is the publisher of the Los Angeles Times and Chicago Tribune, among other papers. TNM is one of the few that adheres to the company’s preferred way of displaying the company’s name, with a lower “t” in front, even if it leads off a sentence.

The company’s revenue, like other newspaper chains, was down in Q4 – in this case, 6.9 percent. Ad revenue fell 13.7 percent, a bit more than some newspapers have reported.

But it improved its bottom line thanks to a 14.2 percent reduction in expenses. That reduction was achieved though headcount reductions, of course.

I suppose the big news coming out of the report is that Timothy P. Knight will be returning to Chicago as president of the tronc’s digital content and commerce division troncX. Knight was the CEO of Wrapports LLC, which owns the Chicago Sun-Times and Chicago Reader, before bolting to become president of Advance Ohio just 17 months ago. From 2004 to 2009, Knight was publisher of publisher, president and CEO of Newsday.

Here is the tronc’s earnings report for Q4:

CHICAGO, Ill. – February 22, 2017 — tronc, Inc. today reported financial results for its fourth quarter and full year ended December 25, 2016.


  • Net Income increased by over $9 million compared to 2015
  • Earnings Per Share increased by $0.30 from prior year
  • Adjusted EBITDA grew to $181 million, an increase of $23 million over prior year
  • Total operating expenses decreased $95 million, and Adjusted total operating expenses declined by $123 million compared to 2015
  • Cash on the balance sheet increased to $198 million creating substantial liquidity for the Company to execute its strategy in 2017

“2016 was a transitional year for our company and despite unexpected distractions we delivered strong financial results for the full year of 2016, including total revenues of $1.61 billion, and Adjusted EBITDA of $181 million, which was well ahead of our November guidance and consistent with our January year-end guidance update,” said CEO Justin Dearborn.  “We continued to make progress in growing our digital audience, with our average monthly unique visitors in the fourth quarter of 2016 up 16% year-over-year and our total paid all access subscribers reaching just under a million at the end of 2016. With a focused strategy and strong balance sheet in place, we believe we are well-positioned to further develop our business transformation in 2017.”


Total Revenues in the fourth quarter of 2016 were $425 million, down 6.9% compared to $457 million in the fourth quarter of 2015.  Advertising revenue was down 13.7% from the prior-year period, however, circulation experienced an increase of 6.0% compared to prior-year with the majority of the growth attributed to the Chicago TribuneLA Times and Baltimore Suburban papers.  Total Revenues for the full year 2016 were $1.61 billion, down 4.0% from 2015.  Total revenues, excluding revenues from The San Diego Union-Tribune, were down 6.7% compared to 2015.

Total Operating Expenses, including depreciation and amortization, for the fourth quarter of 2016 were $384 million, down $63 million or 14.2% compared to $447 millionin the fourth quarter of 2015.  Total Operating Expenses declined by $95 million for the full year 2016 compared to 2015 largely due to a decrease of $53 million in compensation expense related to the headcount reduction from the Employee Voluntary Separation Program (EVSP) implemented in fourth quarter of 2015 and the information technology outsourcing (ITO) implemented in the first quarter of 2016.  Total operating expenses for the twelve months ended December 25, 2016, adjusted to exclude expenses relating to The San Diego Union-Tribune for comparability and other restructuring and related costs, resulted in a total savings of $123 million from the prior-year period (as set forth in the Non-GAAP reconciliations below).

Net Income for the fourth quarter of 2016 was $19 million compared to a net loss of $0.1 million in the fourth quarter of 2015, which included a $46 million pre-tax charge related to the EVSP.  Adjusted net income for the fourth quarter of 2016 declined by $11 million compared to prior-year quarter, however, Adjusted net income for the full year 2016 increased by $1 million on a year-over-year basis.

Net Income per share for the 2016 fourth quarter, on a fully diluted basis, was $0.53 compared to break-even in the fourth quarter of 2015, which included the EVSP charges discussed above.  Net Income per share for full year 2016 was $0.19, or $0.30 per share more than the full year 2015.

Adjusted EBITDA for the fourth quarter of 2016 was $67 million, or a decrease of $2 million from the fourth quarter of 2015.  Adjusted EBITDA for the full year 2016 grew to $181 million, an increase of $23 million from $157 million in 2015.

Segment reporting
Beginning in the second quarter of 2016, the Company was realigned under its new management team into two distinct segments: troncM, which is comprised of the Company’s media groups excluding their digital revenues and related expenses, except digital subscription revenues when bundled with a print subscription, and troncX, which includes all digital revenues and related expenses of the Company from local websites and mobile applications, digital only subscriptions, and Tribune Content Agency, Forsalebyowner.com and Motiv8.

Included in tables below is segment reporting for troncM and troncX for the three and twelve months ended December 25, 2016 and December 27, 2015.  Corresponding information for earlier periods has been revised to reflect the change in reportable segments.

Total Revenues for troncM for the quarter were $367 million or a decrease of 8.0% compared to the fourth quarter of 2015.  Advertising revenue declined by 16.0% which was partially offset by a 4.9% increase in circulation revenues.  Operating expenses declined by $27 million or 8.0% compared to the prior-year quarter due primarily to decreases in compensation expense.  Income from operations for troncM was $56 million or an 8.0% decline from prior-year quarter as the decline in expenses was not enough to offset the decline in revenue.  Adjusted EBITDA for troncM for the fourth quarter of 2016 was $64 million or essentially flat from the prior-year quarter.

Total Revenues for troncX for the fourth quarter of 2016 were $60 million, up 1% from prior-year quarter.  Advertising revenues for troncX declined by 3.3% while content revenues, which includes digital only subscriptions and content syndication, increased by 21.2%.  Income from operations for troncX was $9 million or a decline of $2 millionfrom prior-year period while Adjusted EBITDA for the fourth quarter was flat from the prior-year quarter.

Total fourth quarter 2016 average monthly unique visitors were 57 million, up 16% from prior-year quarter while digital only subscribers grew to 160,000, up 82% from the prior year and up 17% sequentially.

Net Cash Provided by Operating Activities was $30 million for the fourth quarter of 2016 and $86 million for the twelve months ended December 25, 2016.  Capital expenditures totaled $5 million for the quarter and $21 million for the full year 2016.  Debt and Pension liabilities were reduced by $26 million during the year.  Cash increased by $158 million during the year to end at $198 million.

2017 Full Year Guidance for Total Revenues remains at a range of $1.57 to $1.60 billion and Adjusted EBITDA remains at a range of $185 to $195 million.


The Company also today announced that digital media executive Timothy P. Knight, co-founder of the digital business that created cars.com and apartments.com, has been appointed as President of the Company’s digital content and commerce division troncX, effective February 23, 2017.

“We are fortunate that Tim has joined the Company to continue the development of our digital business as we increase our audience and further leverage data and technology to expand our opportunities for growth and vitality,” said CEO Justin Dearborn. “Tim is a proven operator, who has both an entrepreneurial spirit and deep expertise in transforming media companies.”

Knight recently served as President of the digital media company, Advance Ohio, where he directed the overall strategy, sales, marketing and content of cleveland.com, one of the largest news and information sites in Ohio.  Prior to that, Knight served as the CEO of Wrapports LLC, President and CEO of Newsday Media Group and as General Manager of the Chicago Tribune Media Group.

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