Journal Communications Inc. (JRN)
Q1 2009 Earnings Call
April 22, 2009 11:00 am ET
Steven J. Smith – Chairman, Chief Executive Officer
Douglas G. Kiel – President, Chief Executive Officer of Journal Broadcast Group
Elizabeth Brenner – Chief Operating Officer, Publishing
Andre Fernandez – Executive Vice President Finance and Strategy and Chief Financial Officer
Craig Huber – Barclays Capital
Barry Lucas – Gabelli & Company
Dan Leben – Robert W. Baird
[Mike Trainor - Neil O'Keefe Private West]
Previous Statements by JRN
» Journal Communications Inc. Q4 2008 Earnings Call Transcript
» Journal Communications Inc. Q3 2008 Earnings Call Transcript
» Journal Communications, Inc. Q2 2008 Earnings Call Transcript
All forward-looking statements should be evaluated with the understanding of the inherent uncertainty. The written policy of forward-looking statements can be found on page one of Journal's most recently filed annual report on Form 10-K as filed with the Securities and Exchange Commission.
And now I would like to turn the call over to Mr. Steven Smith, Chairman of the Board and Chief Executive Officer.
Steven J. Smith
Andre Fernandez, Executive Vice President in Finance and Strategy and our Chief Financial Officer will participate in this morning's call. And also we have what we believe will be a positive adjustment to our call format. We've invited Doug Kiel, CEO of the Broadcast Group, and Betsy Brenner, COO of the Publishing business to address their businesses as part of both our prepared remarks and with the Q&A at the end of the call.
Any discussion of EBITA in today’s conference call may be referenced back to our unaudited reconciliation of consolidated net earnings to consolidated EBITA schedule, which accompanies today’s earnings release. Unless otherwise indicated, all comparisons are to the first quarter 2008.
This morning Journal Communications reported net earnings of $0.1 million dollars for the quarter ended March 29, 2009. In the midst of the most difficult economic conditions in our industry has faced, advertising expenditures continue to be muted across all of our local markets in the first quarter leading to lower revenue, and we have seen little sign of improvement as we enter the second quarter.
For the first quarter, revenue of $106.8 million decreased 20.4%. Broadcast revenues were down 20.5% overall with television revenue down 19.8% and radio down 21.9%. Excluding political revenue from 2008, total broadcast revenue was down 17.5%. Broadcast continues to be impacted by lower transactional revenue, especially in automotive. Doug will discuss the broadcast business later in this call.
The national recession also continues to impact our publishing business. Revenues were down 20.7%. Across publishing retail was down 21% with classified down 49%, national down 31%, and direct marketing down 57%. Outside of advertising publishing revenue showed slight improvement. Circulation revenue was up 4%. Other revenue, which consists primarily of commercial printing and delivery and event revenue, was up 4.6%. Betsy will talk more specifically about our publishing business in a moment.
Total company online revenue in the quarter was down 37%. This quarter and all of 2009 will be impacted by our new franchise arrangement with Carsoup.com. While we have experienced a revenue decline with a switch to Carsoup.com, we believe this long-term relationship positions us to retain online automotive revenues and do so in a more cost effective manner.
Our diligent focus on expense reduction continued this quarter. Total operating costs and expenses were $107.5 million an 11.7% decrease compared to last year. The decrease in operating cost was accomplished through signification actions taken throughout 2008 and in early 2009. Andre will detail the specific initiatives shortly.
We continue to effectively serve our local markets bringing audiences that advertisers are looking for. Despite economic turmoil, we continue to find ways to generate revenue and expand our local market reach and continue to reduce our operating expenses.
Now I would like to turn the call over to Andre Fernandez for more detail beginning with our expense reduction efforts.
In this difficult environment we continue to tightly manage expenses. As Steve mentioned, we made a number of difficult decisions that help to reduce operating expenses in the quarter by $14.2 million or 11.7%. The most significant cost savings initiatives were, as a result of our efforts to reduce our workforce and employee related costs over the past year, we cut consolidated payroll and employee related expense by over $8 million compared to last year.
We reduced full time employee headcount by 14% since then end of 2007. We eliminated the match on the 401(k) plan saving $0.3 million in the quarter and $2 million for the full year. We suspended pension benefit accruals and the annual employer contribution to the 401(k) for employees not covered by the pension plan, reducing expense by $0.6 million in the quarter and saving $2.9 million for the full year. Finally, we reduced travel, entertainment, advertising, and promotion costs saving $1.2 million in the quarter.
Additionally on April 2 in an effort to achieve further cost reductions, we announced a 6% pay reduction for all executive managers, market managers, supervisors, exempt and corporate staff. We also asked our contracted on-air talent and union employees to join us in this program. Employees whose salaries were reduced received ten paid personal days for use by year end. The action will enable us to save an additional $3 million for the remainder of 2009.