Newspaper publisher tronc says ad revenue off 15.6% in Q1, cuts losses through expense cuts
The publisher of the LA Times and Chicago Tribune managed to cut operating expenses, to report a lost of $3M, an improvement over the $6.5M loss in the same quarter last year
The publisher of the Los Angeles Times and Chicago Tribune was among the newspaper companies reporting earnings this week — today after the bell, actually. As a reminder, the company that once was known as The Tribune Company, then Tribune Publishing, is now tronc. Don’t laugh, because you might find yourself facing jail time.
Total revenue for fell 9.2 percent, with advertising revenue falling off a cliff, down 15.6 percent. Circulation was pretty much flat, up 0.1 percent, partially moderating the revenue losses.
Net income came in at a loss of $2.989 million, which was an improvement over the $6.463 million loss reported the year before. It was actually better than that in that the company would have reported a profit were it not for the premium it recorded on its stock buyback.
The company is trying to cut its way to profitability, with pperating expenses were down 9.6 percent. This is not sustainable — well, not sustainable if you work for the company and want to keep your job.
tronc, if you recall, was spun off of The Tribune Company, and loaded with debt, as these newspaper spin offs often are (News Corp being an exception). So, that the new company is struggling should not be a surprise. But the company is also seemingly highly distracted by its shareholder troubles, some of which originated with the attempt by Gannett to acquire the company. I suppose this is why we aren’t hearing about any new initiatives, or changes with the ad/revenue teams.
Here is tronc’s Q1 earnings statement:
CHICAGO, Ill. — May 3, 2017 — tronc, Inc. today reported financial results for its first quarter ended March 26, 2017.
- Net Loss decreased by over $3 million compared to first quarter 2016
- Loss Per Share improved by $0.14 from prior year quarter
- Adjusted EBITDA was $34 million, up slightly from prior year quarter
- Total operating expenses decreased $49 million, and Adjusted total operating expenses declined by $33 million compared to first quarter 2016
- Cash on the balance sheet was $161 million providing substantial liquidity for the Company to execute its strategy in 2017 and beyond
- Pulitzer Prize winner at Chicago Tribune
“I am pleased to report that tronc continues to make progress, despite ongoing industry-wide revenue challenges. We achieved year-over-year growth in Income from Operations and Adjusted EBITDA and grew our digital audience 5%,” said CEO Justin Dearborn. “We hit a key milestone as our total paid all-access subscribers exceeded one million at the end of the first quarter. Additionally, we are proud of the recognition for our strong journalistic efforts by the winning of our 94th Pulitzer. With our strong balance sheet and focused strategy, we are confident of further progress in the coming quarters.”
2017 FIRST QUARTER RESULTS
Total Revenues in the first quarter of 2017 were $366 million, down 8.1% compared to $398 million in the first quarter of 2016. Advertising revenue was down 13.1% from the prior-year period, however, circulation experienced an increase of 1.4% compared to prior-year with the majority of the growth attributed to digital only subscribers, the Chicago Tribune and the Los Angeles Times.
Total Operating Expenses, including depreciation and amortization, for the first quarter of 2017 were $354 million, down $49 million or 12.1% compared to $402 million in the first quarter of 2016.
Net Loss for the first quarter of 2017 was $3 million compared to a net loss of $6 million in the first quarter of 2016. Adjusted Net Income for the first quarter of 2017 remained consistent compared to prior-year quarter.
Net Loss per share for the 2017 first quarter, on a fully diluted basis, was $(0.08) compared to $(0.22) in the first quarter of 2016.
Adjusted EBITDA for the first quarter of 2017 was $34 million, or an increase of $0.5 million from the first quarter of 2016.
The Company operates in 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 tronc websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency, forsalebyowner.com and Motiv8.
Included in tables below is segment reporting for troncM and troncX for the first quarters of 2017 and 2016.
Total Revenues for troncM for the quarter were $312 million or a decrease of 9.2% compared to the first quarter of 2016. Advertising revenue declined by 15.6%, which was partially offset by a 0.1% increase in circulation revenues. Operating expenses declined by $31 million or 9.6% compared to the prior-year quarter due primarily to decreases in compensation expense. Income from operations for troncM was $20 million or a 2.1% decline from the prior-year quarter as the decline in expenses was not enough to offset the decline in revenue. Adjusted EBITDA for troncM for the first quarter of 2017 was $29 million or essentially flat with the prior-year quarter.
Total Revenues for troncX for the first quarter of 2016 were $55 million, down 3.2% from prior-year quarter. Advertising revenues for troncX declined by 4.6% while content revenues, which includes digital only subscriptions and content syndication, increased by 3.1%. Income from operations for troncX was $4 million or a decline of $1 million from the prior-year period while Adjusted EBITDA for the first quarter was flat with the prior-year quarter.
Total first quarter 2017 average monthly unique visitors were 59 million, up 5% from prior-year quarter while digital only subscribers grew to 180,000, up 77% from the prior year and up 12% sequentially.
Net Cash Provided by Operating Activities was $31 million for the first quarter of 2017. Capital expenditures totaled $5 million for the quarter. Debt and Pension liabilities were reduced by $7 million during the quarter. Cash remains strong at $161 million.
2017 Full Year Guidance for Total Revenues has been updated to a range of $1.54 to $1.56 billion and Adjusted EBITDA has been updated to a range of $187 to $195 million.