Posted on 02/28/2008 3:34:26 PM PST by abb
The McClatchy Co. reported Thursday that it incurred a $1.43 billion after-tax loss on the fourth quarter of 2007 -- after taking yet another huge goodwill impairment charge.
McClatchy said its loss from continuing operations of $17.42 per share -- which compares to a $3.40 per-share loss in the same period in 2006 -- includes a non-cash after-tax impairment charge related to goodwill and flagging newspaper mastheads of $1.47 billion.
The impairment charge on goodwill and other non-tangible assets -- reflecting a loss in the fair market value of the nation's third-largest newspaper chain -- follows a goodwill write-down of $1.4 billion in the third quarter of 2007. The swoon in McClatchy stock, which has lost more than half its value since the Knight Ridder deal, made the impairment charges inevitable, and CEO Gary Pruitt had warned more than a month ago that a Q4 charge was coming.
In effect, McClatchy has written off half the value of the $4.4 billion blockbuster purchase of Knight Ridder in the summer of 2006.
The impairment charge includes a write-down of $1.39 billion to goodwill, and $166.6 million to newspaper mastheads, McClatchy said.
McClatchy said Thursday its loss from continuing operations for all of 2007 was $2.73 billion or $33.26 per share, including the non-cash impairment charges. McClatchy's total net loss, including discontinued operations, was $2.74 billion, or $33.37 per share.
Chairman and CEO Gary Pruitt said the big write-down was necessitated by the continuing decline in the stock price on top of the "recessionary outlook."
"It's important to understand that this non-cash charge does not reflect our view of the long-term health of the newspaper industry or the value of McClatchy," he said in a statement. "However, when completing the goodwill impairment assessment, GAAP required that we reconcile the sum of the fair values of our reporting units to our current market capitalization. ... We believe investors should focus on the more important fundamentals of our business. We continue to produce strong cash flows and are quickly moving to become a successful hybrid print and online news company. We are focused on four major areas: driving new revenues, with a particular emphasis on online advertising; focusing on growing total audience; providing high quality public service journalism; and reducing our cost structure."
McClatchy did not break out advertising revenue by category, but said overall ad revenue fell to $489,405 for the quarter from $576,123, a drop of 15.1%.
ping
If you’d start reporting news in an unbiased manner, and include some coverage of uplifting events, perhaps people would buy your newspapers.
Wall Street Punishes Newspaper Stocks Thursday For Sins Of A Few
By Mark Fitzgerald
Published: February 28, 2008 6:20 PM ET
CHICAGO On a day when Gannett Co. and Journal Communications posted predictably gloomy January numbers, Wall Street punished nearly the entire newspaper sector — including shaving nearly 10% off the price of Lee Enterprises shares.
It didn’t seem to matter whether there was news about a publicly traded newspaper company or not, investors simply soured on the business.
Lee (NYSE: LEE), for instance, was the biggest percentage loser on the day, closing at $10.61, down $1.51, or 9.78%. The 1.7 million shares traded was more than double the stock’s usual volume, as well.
Lee spokesman Dan Hayes said the Davenport, Iowa-based community newspaper publisher was not aware of any news or analysis that would move the stock price.
Journal Register (NYSE: JRC) also got hammered, dropping more than 10% during trading, but rebounding to end the day at $1.09, down 10 cents, or 8.4%.
Gannett (NYSE: GCI), which reported before the start of trading that its January newspaper ad revenue was off 9.2%, closed at $30.23, down $1.52, or 4.79%.
That was a new 52-week low for Gannett, which had traded in a range of $31.26 to $61.68.
The McClatchy Co. (NYSE: MNI) closed at $9.84, down 28% or a relatively modest 2.77%. After the 4 p.m. EST close of trading, McClatchy announced it was taking a $1.43 billion after-tax loss for the fourth quarter of 2007 that includes a goodwill impairment charge of $1.47 billion.
This makes for a lovely evening!
I know, I know, "good will" is a technical term in accounting. But this phrase curiously sums up the basic problem of these media giants:
GOODWILL IMPAIRMENT
http://www.sacbee.com/103/story/748492.html
McClatchy takes $1.47 billion write-down
By Dale Kasler - dkasler@sacbee.com
Published 12:00 am PST Friday, February 29, 2008
The McClatchy Co. announced another big write-down of its assets Thursday, this one totaling nearly $1.5 billion, a sign of a difficult business climate and the drop in McClatchy’s stock price.
The $1.47 billion post-tax write-down was an accounting charge and won’t actually cost Sacramento-based McClatchy any cash. But it’s a reflection of the state of the newspaper industry and the troubles McClatchy has encountered since buying fellow publisher Knight Ridder Inc. in 2006.
Although The Bee’s owner said it remains optimistic about its long-term future, the write-down signals a diminished value of the company’s assets, especially the 20 papers acquired in the Knight Ridder deal.
The entire industry is suffering because of the real estate slump, a weakening economy and the migration of advertising and circulation to the Internet. McClatchy is particularly vulnerable because it gets one-third of its revenue from California and Florida, where the housing market is especially soft.
The write-down “reflects the downturn in advertising that has hit us, particularly in California and Florida,” said McClatchy Treasurer Elaine Lintecum.
McClatchy absorbed a $1.37 billion non-cash write-down in November, mainly because of worsening business conditions.
The latest write-down became necessary almost entirely because of the decline in McClatchy’s stock price.
snip
“A billion here, a billion there, pretty soon it adds up to real money.”
Senator Everett Dirksen
US politician (1896 - 1969)
What a joke.
This dinosaur fishwrap ownership daring to claim good will.
Sure :
another huge goodwill impairment charge.
Liberals and liberal controlled organizations have no honesty, humor nor good will.
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