Pruitt: Cutting home delivery could hurt

By Rick Edmonds
Poynter Online

During Tuesday’s earnings call, McClatchy CEO Gary Pruitt was asked if the company has considered discontinuing home delivery some days of the week. His answer:

We are loathe to do that. Though your assumption is not wrong — some days, especially early in the week, have little advertising. … But we are very cautious. When someone is in the habit of reading the paper every day, we don’t want them to go somewhere else on Monday. … I can’t prove it, but I think (if home delivery was unavailable some days of the week), we might lose some of the circulation that helps us on Sundays.”

Sunday circulation at the Detroit Free Press, which began home deluivery only three days a week three yeas ago, fell from 605,000 in 2008 to 494,000 in 2010. (Because of auditing rule changes, more recent figures are not comparable.)

But as Pruitt’s comment suggests, there is no way to tell how much of that decline had to do with lesser frequency and how much was due to a price increase and other factors.

Asked if he foresaw an “inflection point” in the company’s digital transformation, Pruitt replied:

I don’t think there will be a moment that is a turning point… As we have gone through it, it has been a slog… We have responded with some (cost-cutting) initiatives we would rather not make. But when you pause and look back you can see a lot of progress.

Industry figures for circulation have not been announced because of changing auditing rules. However, McClatchy did report its totals for 2011. Its 30 papers were down 4.3 percent daily for the year, but Sunday was up 0.2 percent.

McClatchy, like the other publicly-traded newspaper companies, no longer reports monthly results. However Pruitt volunteered that January 2012 revenues were down 7.6 percent compared to January 2011.

That’s the first real numbers report on this year’s advertising, expected to be down again — but perhaps a slight improvement on the declines of 2011.

McClatchy cut its advertising losses to 5.7 percent year-to-year for the fourth quarter, had operating expenses down nearly 10 percent less and beat Wall Street earnings expectations. Its shares rose 21.4 percent for the day.

The fourth quarter accounted for four-fifths of the year’s net profit of $54 million on $1,270,000,000 revenue. That works out to a net margin of 4.3 percent.