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By Ted Nesi
PBN Web Editor
PROVIDENCE – The Providence Journal’s annual revenue fell 13.3 percent in 2008, as advertising sales shrank across every category, according to a regulatory filing by the newspaper’s parent company that paints a bleak picture of The Journal’s finances.
In its annual report, which was filed last month but has not been reported, Dallas-based A. H. Belo Corp. (NYSE: AHC) said total revenue at The Journal – the dominant news organization in Rhode Island and the oldest continually-published paper in the U.S. – fell to $131.47 million in 2008, down from $151.58 million the previous year and $162.66 million in 2006.
The news comes as A. H. Belo prepares to release its first-quarter earnings report on the morning of Monday, May 4.
The Journal’s revenue has fallen by more than 19 percent over the past two years, and the declines have occurred across all categories of advertising, the filing shows.
Retail advertising fell by 16.6 percent, or $6.69 million, in 2008, after falling 8.6 percent in 2007. Classified advertising declined by 26.2 percent, or $10.1 million, after falling 8.1 percent in 2007. General advertising fell by 40.2 percent, or $658,000, after falling 44.2 percent in 2007.
However, the paper was able to increase its circulation revenue last year by 10.7 percent, to $27.77 million, after increasing the price of home delivery and single-copy prices.
As has been the case with other newspapers across the country, The Journal’s revenue decline has accompanied a sharp slide in circulation.
During the six-month period ending March 31, the paper’s Sunday circulation fell 11.2 percent to 171,231 copies, compared with the same period the previous year, according to figures released this week by the Audit Bureau of Circulations. Monday through Friday circulation fell 13.1 percent to 120,783 copies, and Saturday circulation was down 11.7 percent to 156,980 copies.
Since October 2006, The Journal’s Monday through Saturday circulation has dropped 20.6 percent, while Sunday circulation has fallen 19.6 percent.
The Journal’s declining fortunes led Belo Corp. to write down its value by 75 percent in 2007, when it slashed its estimate of the paper’s fair value from $323.73 million to $80.94 million, according to the filing.
However, not all the news was bad. As A. H. Belo noted in its annual report, its papers’ total readership continues to grow as more people access them online. The Journal’s Web site, Projo.com, had 1.1 million unique visitors in March, according to the Audit Bureau figures.
Unfortunately, online revenue is not on track to make up the difference from declining print advertising at its current pace. A. H. Belo said its interactive revenue, which came primarily from advertising on Projo.com and the Web sites of its other papers, edged up only slightly last year, from 7 percent of total revenue in 2007 to 7.3 percent in 2008.
The Providence Journal was bought by the media conglomerate Belo Corp. in February 1997. Belo spun off its newspaper division into the separate public company A. H. Belo Corp. early last year.
In the filing, A. H. Belo said its operations have swung from a $47.82 million profit in 2005, when they were still part of Belo Corp., to a $62.3 million loss in 2008. The company says it is focused on returning to profitability.
The grim state of the newspaper industry, as well as the weak advertising market and the broader economic downturn, has taken a heavy toll on A. H. Belo’s stock price since it was first listed on the New York Stock Exchange last February.
After hitting a high of $16.35 a share soon after its debut in the first quarter of last year, the company’s stock price tumbled to less than $1 a share last month. It closed at $1.84 a share in trading on Monday.
A. H. Belo has taken a number of steps to eliminate expenses and shore up its finances. Earlier this month, the company announced a number of spending reductions, including wage cuts for employees ranging from 2.5 percent to 15 percent. At The Journal, the changes have included earlier deadlines, fewer workers and higher newsstand prices. A. H. Belo is also trying to sell The Journal’s downtown headquarters and its printing plant, both in Providence.
The decline in 2008 revenue at The Journal was worse than at A. H. Belo’s largest paper, the Dallas Morning News, where revenue fell 11.6 percent to $404.21 million last year. But it was not nearly as bad as at The Press-Enterprise of Riverside, Calif., where revenue fell 21.6 percent to $101.63 million in 2008.
The Press-Enterprise - which generated nearly as much revenue as The Journal in 2006 when it made $157.19 million - has seen its revenue drop 35.3 percent since then.
The Journal’s revenue decline in 2008 mirrored that of its parent company. Across all of A. H. Belo, which owns three daily newspapers and 12 associated Web sites, total revenue fell 13.7 percent, to $637.31 million, in 2008.
A. H. Belo said advertising sales, which have been falling since 2005, make up about 76 percent of its total revenue. Circulation sales account for 19 percent and the rest comes from the company’s commercial printing business.
“In recent years, Web sites dedicated to automotive, employment, real estate and general classified advertising have become significant competitors of A. H. Belo’s newspapers and Web sites,” the company noted in its filing. “As a result, even in the absence of a recession or economic downturn, technological, industry, and other changes specific to these advertising sources could reduce advertising revenues and adversely affect A. H. Belo’s financial condition and results of operations.”
A. H. Belo also noted that its collective bargaining agreements with the 450 Providence Journal employees who are represented by various unions expire in approximately three years. They are the only A. H. Belo workers who have union representation. The company said it had 2,950 full-time employees and 400 part-time employees at the end of 2008.
A. H. Belo said it laid off 90 employees last October companywide and bought out 410 employees the month before that. The company said it will have laid off 500 more workers by the end of June, including 100 at The Journal who were let go last month.
A. H. Belo Corp. (NYSE: AHC) owns and operates The Providence Journal, The Dallas Morning News, and The Press-Enterprise of Riverside, Calif., with a combined total audience estimated at 3.7 million readers. The company also produces a variety of specialty print and online publications and offers direct-mail and commercial printing services. For more information, visit www.AHBelo.com.
A previous version of this article said The Providence Journal's revenue declined by 13.6 percent in 2008; the figure was 13.3 percent. In addition, it has been updated to make clear that the most recent round of layoffs at The Journal took place last month.