Newspaper companies report drop in earnings

April 24, 1991|By Michael Dresser

The twin blows of recession and the Persian Gulf war contributed to an advertising slump that slashed first-quarter earnings for the publishers of The Sun and the Washington Post, their parent companies reported yesterday.

Times Mirror Co., the Los Angeles-based parent of The Baltimore Sun, reported that per-share earnings fell to half those of the same quarter of 1990, from 36 cents to 18 cents. Operating profit sagged from $94.2 million to $57.4 million, a figure that included a $9.6 million pretax gain on the sale of assets.

The decrease was even more dramatic at the Washington Post Co., where operating income for the quarter plunged to about one-third of the previous year's profit -- $13.6 million, or $1.15 per share, compared with $39 million, or $3.16 per share. However, that decline was exaggerated because of a one-time gain from sales of property in an already strong first quarter last year, said Jay Morse, chief financial officer of the company.

The grim reports from the two publishing companies reflect serious problems in the U.S. newspaper industry, which has seen revenues dive in recent quarters as sagging consumer demand, the chilling effect of the war and a consolidation in the retailing industry have curbed advertising expenditures.

Times Mirror reported an 11.6 percent drop in first-quarter ad revenues for its Newspaper Publishing Group, which includes the Los Angeles Times, the Hartford Courant in Connecticut and Newsday in New York. The Post Co. cited a 13.5 percent decrease in its newspaper division.

At The Baltimore Sun, advertising lineage was down 21.5 percent for the quarter, said Suzanne Hovedy, Times-Mirror director of corporate communications. She said that was in line with the 21.1 percent decline in the newspaper group as a whole.

"Essentially everything that can go wrong is going wrong in this quarter," said Kara Chesby, publishing industry analyst for Legg Mason Wood Walker. Besides the first-quarter advertising drop, she cited higher newsprint costs and increased costs for coverage of the Persian Gulf war.

The problems are compounded in Baltimore and Washington by the depth of the regional recession, she added. Ms. Chesby said the news for the industry is likely to improve after the first quarter. "I think things are bottoming," she said. "I think this is going to be the worst quarter."

Michael J. Davies, publisher of The Sun and The Evening Sun, said he has hope that the newspapers might be near a rebound but has seen little tangible evidence. "Some of the psychological signs look good, but it does not seem to be translating into a real pickup," he said.

At the Post Co., Mr. Morse was even less upbeat about short-term prospects. "There's a couple of areas yet where we haven't hit bottom," he said, "and we don't know where the bottom is."

Times Mirror Co.

Three months ended 3/31/91

.. .. .. .. .. .. Revenue .. .. .. .. .. Net .. Share

'91.. .. .. ..864,049,000 .. .. ..23,276,000 .. .0.18

'90.. .. .. ..875,152,000 .. .. ..46,013,000 .. .0.36

% change .. .. .. .. -1.3 .. .. .. .. .-49.4 .. -50.0

Washington Post Co.

Three months ended 3/31/91

.. .. .. .. .. .. Revenue .. .. .. .. .. Net .. Share

'91.. .. .. ..317,132,000 .. .. ..13,604,000 .. .1.15

'90.. .. .. ..340,966,000 .. .. ..39,020,000 .. .3.16

% change .. .. .. .. -6.9 .. .. .. .. .-65.1 .. -63.6

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