Weak Florida Economy Drags Journal Communications

Total broadcasting revenue fell 4.6 percent to $53.5 million with just $700,000 in political and issue advertising revenue in the quarter.
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Milwaukee-based Journal Communications saw revenue and net income drop in the second quarter of fiscal year 2008 compared to the same quarter of 2007.

Q2 revenue was $140.1 million, a 5 percent drop from a year ago. Earnings from continuing operations were $9.0 million, down 29.1 percent. Earnings per share were 16 cents, down from 21 cents in Q2 2007.

Total broadcasting revenue fell 4.6 percent to $53.5 million with just $700,000 in political and issue advertising revenue in the quarter.

Revenue from television stations decreased 4.3 percent to $32.6 million compared to $34.0 million, and operating earnings fell 24.4 percent to $4.6 million thanks to declines at the company’s Ft. Myers/Naples, Fla., Tucson, Milwaukee and Las Vegas stations.

“The economy continued to impact advertising revenues at Journal Communications during the second quarter,” said Chairman and CEO Steven J. Smith. “While television revenue grew in markets like Palm Springs, Omaha, Boise and Lansing and radio revenue grew in Omaha, our larger growth markets continued to experience subdued advertiser spending. ... We were also pleased to see continued increases in online advertising revenues at both the publishing and broadcast sites. Total online revenue was up 15.9 percent in the second quarter to approximately $4.7 million.”

Broadcast headcount is down about 6 percent since the end of 2007, and July 2, the company’s flagship Milwaukee Journal Sentinel announced a plan to reduce its workforce by an additional 10 percent. The company figures that will save it $5.6 million to $6.0 million this year.

“We believe our company is strong financially because we have maintained a solid balance sheet while prudently using capital to repurchase shares,” Smith said. “We continue to execute on our growth strategy to grow our total audience and expand our presence in our local markets.”

Journal touted its new television duopoly in Palm Springs, Calif., and said it closed July 23 on the acquisition of KWBA-TV in Tucson, Ariz., forming a duopoly there. It also is acquiring a station in Boise, Idaho, to form another duopoly.

For the third quarter of 2008, the company anticipates a low-double-digit rise over Q3 2007 in the television revenues period primarily due to political and issue and Olympics advertising. Radio and publishing revenues are expected to be slightly down compared to last year.

In addition to the Milwaukee Journal Sentinel, the company owns 52 community newspapers and shoppers in Wisconsin and Florida, along with 35 radio stations, 11 television stations and 121 online enterprises.