Advertising woes continue to buffet the Los Angeles Times, but there are signs that the months-long slump could be flattening.
Despite a 21 percent drop in classified advertising for the second quarter ended June 30 including a whopping 41 percent fall in help wanted ads Times Publisher John Puerner is among those who say that the bottom is starting to form. “The toughest numbers are behind us now,” he said.
Merrill Lynch & Co. analyst Lauren Fine also told clients last week that ad revenues for the Times’ parent, Tribune Co., appear to be stabilizing. The company reported an overall increase in help-wanted ad revenues for the first three weeks of June, though numbers for the Times were not broken out.
Wall Street is having a more difficult time assessing Tribune’s performance because of its acquisition last year of Times Mirror Co. Generally, the Chicago-based media giant appears to be taking a less aggressive approach to cost-cutting than several other newspaper chains, most notably Knight Ridder Inc.
Fine said Tribune’s overall second quarter revenues were better than expected when compared with other newspaper companies.
National ad slump
The advertising free-fall is significantly worse in Northern California, which has been hurt by the downturn in technology-related help-wanted ads. Knight Ridder reported that second-quarter ad revenues at the San Jose Mercury News fell 24.6 percent, with help-wanted ads off by nearly 60 percent.
The Times, too, has taken big hits. The paper’s total ad revenues for the second quarter were down by 16 percent and Times Mirror pro-forma operating income was off by 10 percent.
Besides classifieds, the Times is being affected by a softness in national advertising. “I look at our numbers vs. the numbers I can glean from press releases of other companies that we follow, like Dow Jones and The New York Times, and, in terms of softening revenue performance, it’s almost eerie how consistent it is across the country,” Puerner said.
Puerner attributed the downturn to a correction in the once overheated economy created, in part, by the dot-com boom. The change led to a decline in consumer spending and “took a significant amount of velocity out of the local economy but, frankly, it got us back to where we normally would be anyway,” he said.
Tribune reported net income of $66 million (21 cents per diluted share) for the second quarter, up from $31.7 million (13 cents) in the like year-earlier period. (Figures include a restructuring charge of $14.3 million.) Second-quarter revenues rose to $1.4 billion, from $1.3 billion in the second quarter of 2000.
Tribune’s publishing division, which includes the Times and several other daily newspapers, reported a drop of 13 percent in ad revenues, with classifieds down 19 percent.
No additional cuts
By contrast, the Orange County Register, owned by Freedom Communications Inc., saw much smaller losses. Second-quarter ad revenues were down 4.5 percent, with recruitment ads off by 21 percent at the privately-owned paper, according to company officials.
“Orange County isn’t as reliant on national ads,” said Nancy Souza, a spokeswoman for the Register. “We’re not hurting as badly.”
Despite falling ad revenues, Puerner said he did not expect any additional job cuts at the Times in the near future. “We think we’ve positioned the company well for the future,” he said. “We always reserve the right to fine tune our operation but I don’t view any large, structural changes at this point.”
In a cost-cutting effort, Tribune recently announced plans to cut its workforce by 6 percent through attrition, layoffs and voluntary retirements. The move, expected to generate annual savings of about $50 million, will cost the Times at least 150 employees.
The paper also went through a round of layoffs last year, losing nearly 125 employees when its “Our Times” community news section was shut down. But those cuts were tied to a newspaper-wide restructuring rather than financial considerations.
The Times has been struggling to hold onto readers. For the six-month circulation period ended March 31, the paper had an average daily circulation of 1,058,494, a 4.8-percent decline drop from the prior reporting period.
The drop was attributed to the cancellation of circulation programs, such as a distribution agreement in which La Opinion, the Spanish-language newspaper, was bundled with the Times. Home delivery was up 1.5 percent and circulation for its Sunday edition rose 0.5 percent.
Meanwhile, the Times hopes to boost its troubled classifieds section with a multimedia ad campaign, expected to debut in September. The effort will include print, radio and television ads, but company officials would not elaborate on the campaign.
“It’s kind of feast or famine. When the spending stops, it can be more abrupt with the large metros,” said Puerner. “I don’t view our situation as unique. We are in a period where hiring has slowed way down and, as a result, the promotional pressure to drive hiring is significantly slower.”
