Newspaper Firms Deliver Mixed Outlooks
Newspaper companies are giving Wall Street mixed news on the near-term earnings outlook.
Dow Jones & Co., publisher of the Wall Street Journal, saw its shares slump Wednesday after the company said fourth-quarter earnings will fall below expectations owing to weak advertising.
But rivals New York Times Co. and Knight Ridder Inc. said they expect to meet Wall Street’s estimates.
Tribune Co., publisher of the Los Angeles Times and the Chicago Tribune, said Wednesday that it expects earnings of 35 cents a share in the current quarter, below the 37-cent average estimate of analysts surveyed by Zacks Investment Research.
Dow Jones (ticker symbol: DJ) triggered a 10% drop in its stock, down $5.88 to $53.44, after executives told analysts at a media company conference in New York that fourth-quarter earnings will come in between 83 cents and 86 cents a share, compared with 85 cents a share in the same period last year and below the First Call/Thomson Financial analysts’ consensus estimate of 92 cents.
The company, which also supplies information electronically through Dow Jones Newswires, said it continues to see weaker ad trends at the Journal. Chief Executive Peter Kann also said the company expects 2001 revenue to grow at a slower rate than in 2000.
Ad volume will be flat overall in 2001, with the first half expected to experience a decline owing to tough comparisons with year-earlier levels, while the second half will see a gain, Kann predicted.
December ad volume at the flagship Journal is continuing the trend down, and linage--the number of paid ad pages--for the month will probably end up being down 30% or 20% on a per-issue basis, Kann forecast. The decline was attributed partly to soft financial advertising, especially as a result of a weak initial public offering market.
Kann said, however, that the company’s electronic businesses would be able to sustain their current double-digit growth. In recent quarters, Dow Jones has beaten earnings expectations on the back of revenue gains in its print and electronic publishing operations.
Meanwhile, New York Times told analysts that strong national advertising revenue would keep profit in 2000 in line with expectations. Ad revenue growth will be between 8.5% and 9.5% for the year, it said.
The company also said it expects earnings growth in 2001 to be in a range of 10% to 15%. The firm’s shares (NYT) rose $3.06 to $39.88 on the New York Stock Exchange.
Knight Ridder, the No. 2 newspaper publisher, said 2000 earnings would be in line with analysts’ estimates of between $3.65 and $3.70 a share as the company continues to cut costs.
The publisher of the Detroit Free Press, the Philadelphia Inquirer and the Miami Herald said it expects ad revenue to increase between 4% and 4.5% next year. Earnings should grow at a double-digit rate, the firm said.
Knight’s shares (KRI) slid 81 cents to $53.06 on the NYSE.
Tribune told analysts early in the day that revenue from publishing would be flat in the fourth quarter. But the company said it expects to post a 4% to to 6% increase in publishing revenue in 2001 as a new cross-selling effort contributes to ad sales.
Tribune forecast 2001 earnings of $1.55 a share, versus analysts’ average estimate of $1.58. But the firm said 2001 results should still be 20% above this year’s results.
Tribune shares (TRB) fell 94 cents to $37.94 on the NYSE.
Meanwhile, Gannett Co., publisher of USA Today, said its Internet unit will become profitable by the end of 2001, a year ahead of most other newspaper publishers.
Gannett shares (GCI) rose 50 cents to $54.81 on the NYSE.
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The Other Dow Jones
Shares of Dow Jones & Co., publisher of the Wall Street Journal, tumbled Wednesday after the company warned of weaker advertising growth in the slowing economy.
Wednesday: $53.44, down $5.88
Source: Bloomberg News
