JimmyCsays: At the juncture of journalism and daily life in KC

Quarter after quarter and year after year, McClatchy Co. officials have been trying to convince investors that they are producing butterflies when, in reality, they have been mired for more than a decade in the caterpillar business.

And so it was again today when Craig Forman, McClatchy’s CEO, emphasized only the few positives about his company in the fourth quarter, 2018, earnings-report call with analysts and investors.

Before the call — which lasted about 45 minutes and which I listened in on — McClatchy released its fourth-quarter results.

The headlines from those results were impossible to sugar coat: McClatchy incurred a net loss of $27.5 million, or $3.52 per share of stock, in the fourth quarter of last year.

For all of 2018, the company reported a net loss of nearly $80 million, or more than $10 per share. (The stock price closed today at $5.25 per share, down almost three percent.)

For years, McClatchy has stuck relentlessly to one refrain: its “continuing digital transformation.”

It is in that area that McClatchy is always looking for signs of hope, and Forman found some.

Forman

“We grew digital-only subscribers by 51 percent year-over-year in the fourth quarter, and they were up 13.5 percent…from the third quarter of 2018,” Forman said in the news release accompanying the fourth-quarter report.

Another point he could brag about: “This is the eleventh consecutive quarter of digital subscription growth, and indicates that the digital subscription platform we have built is delivering value, keener insight and benefit to our business.”

The problem is the platform is unsteady. McClatchy owns and operates 29 daily papers, and its total number of digital-only subscribers is 155,500. That’s about 5,360 per paper — lame when you consider that The New York Times has more than three million digital subscribers (to its various digital products), and The Boston Globe has more than 100,000.

The Kansas City Star has about 8,500 digital-only Sunday and weekday subscribers.

**

In the conference call, a media-industry analyst from Connecticut, Craig Huber, asked Forman about the prospect of shutting down its print operations in the next “three, four, five years.”

Deciding when to go all-digital, Forman replied, “has been the $64,000 question.”

Beyond that, he would not speculate, saying, “I’m not going to put some sort of date on (eliminating) print.”

He acknowledged, however, that print was becoming a “premium product,” meaning McClatchy has begun demanding extremely high rates from people who are wedded to their print subscriptions…Although the price of print subscriptions is somewhat negotiable, The Star is now asking upwards of $700 a year for seven-day-a-week print subscriptions. (The only reason I still take the print edition is I get a “retiree” rate of $129 a year.)

I’ve told a few people it wouldn’t surprise me if, in the relatively near future — this year, next year, the year after — McClatchy announced one day that it would be eliminating all print publications on a certain date.

Such a move would cost the company a lot of revenue, but it would significantly reduce expenses and would force people to make the transition to digital or find their news elsewhere.

**

One final point…That big debt that McClatchy has been hauling around lack a sack of coal since it bought the Knight Ridder chain in 2006 is still very heavy.

The company’s principal debt was $745.1 million at the end of 2018. The company finished the quarter with $21.9 million in cash, resulting in net debt of $723.2 million.

At the end of 2017, net debt was $705.6 million.