The Providence Journal’s parent company, A. H. Belo Corp., has written down The Journal’s goodwill value to zero as the company’s losses widened in the first three months of this year.
A. H. Belo last week posted a net loss of $103.07 million, or $5.03 per share, in the three months ended March 31, compared with a net loss of $8.72 million, or 43 cents per share, in the same period last year. The Dallas-based company’s quarterly revenue fell 19.8 percent to $128.49 million, compared with $160.19 million a year ago.
However, the company said about three-quarters of the $103 million quarterly loss was caused by its decision to wipe out its estimate of the value that it gave to The Journal in excess of its asset value when it bought the paper for $1.5 Billion in 1997, through what is known as a goodwill impairment charge.
The company also had a $4 million one-time charge related to a recent round of layoffs, which affected about 500 A. H. Belo employees nationwide, including 100 at The Journal, for an estimated annual savings to the company of $27 million.
Excluding those two charges, A. H. Belo said it lost $18.1 million, or 91 cents per share, in the first quarter, nearly double the amount it lost in the same period during 2008.
“A. H. Belo continues to face significant revenue challenges in 2009,” Robert W. Decherd, A. H. Belo’s chairman, president and CEO, said in a statement.
Advertising revenue at A. H. Belo’s four major papers – The Dallas Morning News, The Journal, The Press-Enterprise of Riverside, Calif., and the Denton Record-Chronicle – and its smaller holdings continued to plummet, falling 28.2 percent compared with the first quarter of 2008, to $89.33 million from $124.42 million a year ago. The company said declining classified revenue was the primary cause of the decrease.
By comparison, circulation revenue edged upward by 9 percent, to $31.71 million from $29.11 million in the same quarter last year, thanks to higher newsstand and home delivery prices for The Journal and The Dallas Morning News.
Last week’ s final goodwill write-down means The Journal’s paper value has been reduced by a total of $410.62 million since it was purchased 12 years ago. But Alison K. Engel, A. H. Belo’s senior vice president and chief financial officer, told Providence Business News the reduction was more of a technical accounting exercise than a real business valuation, and should not be seen as a reflection on how the parent company views The Journal’s worth.
“Just to be clear, we assign a lot of value to The Providence Journal,” she said. “The goodwill write-down doesn’t mean we wouldn’t be able to sell The Providence Journal, or have anything to do with what kind of value we would put on [The Journal] if we ever made that decision which is not, obviously, in the cards right now.”
Despite the goodwill write-down, the company also reported that The Journal posted the best margin of earnings before interest, taxes, depreciation and amortization of any of the company’s properties in the first quarter, including The Dallas Morning News.
Excluding charges related to the employee layoffs, A. H. Belo said its newspapers earned $1.3 million before interest, taxes, depreciation and amortization. The company did not break out results for its individual papers. In 2008, The Journal’s revenue fell 13.3 percent to $131.47 million, according to the company’s annual report. •
