October 23, 2017 Last Updated 11:29 am

Tough earnings season begins with big losses for McClatchy

Several of the big techs report this week, as does Meredith and New Media, with many of the companies that have recently announced cutbacks reporting in early November

Th P&L can be a fungible thing when one takes into consideration impairment charges, deferred or accelerated revenue, and the like. Still, at some point one has to pay the piper and the earnings report will eventually have to reflect performance.

This week things get going in earnest with Amazon, Google (Alphabet), Meredith and New Media Investment Group (GateHouse Media) all reporting earnings on Thursday. The following week it will be NYTCO, tronc, Gannett and Facebook reporting. Time Inc and News Corp go the week after that.

A number of companies will be on the spot after already announcing cutbacks or divestitures. Some of the techs, especially Apple, have pushed some sales forward, basically giving up on this year. The iPhone X, for instance, will be figure into this quarter’s sales, having been pushed into the 2018 fiscal year which started October 1.

An example of how some P&Ls can be influenced by a single line item is McClatchy, which was among the first to report this quarter. The publisher of the Sacramento Bee and Miami Herald reported an adjusted net loss of $5.9 million. The company pointed to Hurricane Irma for both boosting audience growth, and hurting ad revenue by approximately $625,000.

“We reported record audiences in the third quarter of 2017, reaching 89 million unique visitors in the month of September. Our progress in newsroom reinvention, technology improvements and our reporting on Hurricane Irma boosted our audience growth,” Craig Forman, McClatchy’s president and CEO, said. “And while hurricanes and other events posed challenges to our communities, our people, and our operations in the third quarter, we still dramatically reduced the rate of decline in our adjusted EBITDA — down 7.7% excluding Hurricane Irma’s full impact compared with a 21% decline in the first half. We remain resolute in moving toward stabilized operating results, reducing leverage and accelerating the pace and cadence of our digital transition.”

For the third quarter McClatchy said total advertising revenue was $115.3 million, down 13.4 percent, though digital ad revenue grew 8.2 percent. Audience revenue was down 4.3 percent in the quarter.

That single line item that effected the bottom line was deferred taxes totaling $224.5 million which led to a total net loss in Q3 of $238.9 million. Still, even taking that out, the quarter came in looking pretty weak. Nonetheless, McClatchy’s stock has bounced back from the earnings news and is trading about a dollar above where it was last week.

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