Like the Washington Post’s newspaper business (WPO) and other major newspaper companies, McClatchy (MNI) is in trouble. The company’s revenue dropped 10% in October, a slight acceleration from almost equally devastating drops in prior months. Release
Yes, there is some cyclical weakness here, but McClatchy’s not just going through a “rough patch.” And online revenue gains aren’t even beginning to offset the lost print revenue: Bizarrely, at McClatchy, they’re declining, too…
As analyst Doug McIntyre at 24/7 Wall St observes, McClatchy is carrying a $2.6 billion debt load that requires $48 million in quarterly interest payments, and in Q3, the company generated only $90 million in operating income.
October’s revenue dropped $24 million year over year: extrapolate that drop over a full quarter, and McClatchy’s after-interest profit will quickly be wiped out. Extrapolate it over two quarters, and the company’s operations will be burning cash. Time to start selling assets and restructuring. Or worse.
WashPost (WPO) Newspapers to Start Losing Money
Gannett Revenue Drop Accelerated in October
Woe is Newspapers: Even Mighty USA Today is Axing Jobs
Bloody Sunday: Newspaper Circulation Even Worse Than It Looks