As more readers turned to online outlets during the COVID-19 pandemic, Tribune Publishing grew digital subscribers by 30.7%, ending the first quarter with 370,000 digital subscribers. By comparison, at the end of the first quarter of 2019, Tribune Publishing reported 283,000 digital subscribers. Total revenues were down to $216.5 million, an 11.5% decrease compared to $244.5 million in the first quarter of last year. The company reported a net loss from operations of $44.0 million, or $1.26 per share, compared to $4.7 million, or $0.13 per share, in the first quarter of 2019.
Terry Jimenez, president and CEO of Tribune Publishing, commented on the company’s first quarter results.
“We began 2020 with a sharp focus on growing our digital-only subscriber base and managing costs to offset secular revenue declines. The onset of the COVID-19 pandemic in the first quarter required us to accelerate these efforts in order to manage the impact of the economic slowdown on our advertising partners and thereby our business. We have continued to see strong growth in digital-only subscribers which increased 30.7% year-over-year as of the end of the first quarter and continue to grow rapidly as we progress through second quarter,” Jimenez said in a June 5 news release.
“We have taken extensive and aggressive steps to mitigate the economic impact of COVID-19 including modification of manufacturing and distribution processes, reducing and freezing spending, eliminating incentive and discretionary bonuses and delaying non-essential repairs and maintenance along with difficult decisions that resulted in the elimination of positions, salary reductions and employee furloughs. While we are not on the other side of the pandemic, I am very appreciative of our team’s ability to move with agility to navigate through the pandemic’s storm,” added Jimenez.
Jimenez also mentioned that the company needs to continue to emphasize its digital strategies and to make sure the company is nimble to be sustainable long term. This means “aggressively flattening” the organization, selling real estate, and cutting costs among other things.
Other highlights from the earnings report include the following:
- Advertising revenues decreased 20.6%, or $20.0 million.
- Circulation revenues decreased 3.1%, or $2.9 million.
- Home delivery revenues decreased $4.4 million, and single copy revenue decreased $1.1 million.
- Revenue declines were partially offset by an increase in digital subscription revenue of $2.6 million.
- Total operating expenses for Q1 were $278.5 million.
- Adjusted EBITDA was $13.3 million, consistent with company guidance.
- Capital expenditures during the first quarter were $3.5 million.
- As of March 29, the unrestricted cash balance was $48.8 million. The company has another $37.3 million in restricted cash.
In its earnings report, the company withdrew its full year guidance, similar to what other companies have done. The economic impact of COVID-19 is unpredictable. However, Jimenez said he believes the company will have positive cash flow for the year. For the second quarter, Tribune Publishing estimates total revenue between $172.0 million and $175.0 million and adjusted EBITDA between $10.5 million and $12.0 million.
On its earnings call, transcribed by Seeking Alpha, Jimenez shared some additional operational highlights:
- In March, according to comScore, Tribune Publishing had 69 million visitors to its digital sites, a 48% increase year-over-year.
- Digital-only subscribers grew by 36,000 in the first quarter, and the company expects growth in digital subscribers to continue into the second quarter.
- Though the company is not making any additional capital investments at this time, they continue to work on improving the digital customer experience.
- BestReviews had revenue growth of close to 50% year-over-year.
“…we made concerted efforts to help the businesses in our communities recover from the negative business impact they’ve suffered as a result of the virus. We look forward to helping our advertising partners emerge out of COVID-19 and the civil unrest stronger than ever,” Jimenez said on the earnings call.
“We support the businesses in our communities, and we are looking forward to helping them open their doors, as the economy begins moving in a positive direction again. We believe we have positioned ourselves to weather through the storm and we are confident in our titles and company succeeding as our nation and communities get to a better place,” added Jimenez.
Tribune Publishing’s CEO addressed pay cuts, staff reductions and furloughs in the earnings call. What he did not mention, however, was the company’s annual shareholders’ meeting in May in which two representatives of Alden Global Capital were elected to the board of directors. In November 2019, Alden grew its ownership of Tribune Publishing to 32% with the agreement that it would not acquire more shares prior to June 30. With two elected board members, Alden is tightening its grip on Tribune, and seems likely that an acquisition will take place later this summer.
In the meantime, some stakeholders – including shareholder Mason Slaine, a 7.9% owner, Chicago Tribune investigative journalists and community members – believe Tribune Publishing would be better off if the newspapers it owns were sold to the owners in their local communities. Tribune Publishing owns The Chicago (Illinois) Tribune, The (New York) Daily News, The Baltimore (Maryland) Sun, The Hartford (Connecticut) Courant, The Orlando (Florida) Sentinel, The (South Florida) Sun-Sentinel, the Daily Press (Virginia), The Virginian-Pilot (Virginia) and The Morning Call (Lehigh Valley, Pennsylvania). It is anybody’s guess how Alden Global Capital will change Tribune Publishing’s newspaper assets if/when it gains controlling interest.