Journal Communications Sees Net Income of $7.2 Million in 4Q

Journal Communications Inc. today announced that its fourth-quarter revenue decreased by 16.4 percent compared with a year ago. The media company, whose flagship newspaper is the Milwaukee Journal Sentinel, posted a net income of $7.2 million, compared with a net loss in the year-ago quarter.

Its news release reports:

"In a year where revenue has been challenged, we closed 2009 with our strongest quarter. We showed sequential improvements in revenue comparisons throughout the quarter, including an improving automotive category," said Steven J. Smith, Chairman and Chief Executive Officer of Journal Communications. "This revenue performance, together with significant, and in many cases permanent reductions in our cost structure, resulted in increased operating margins and net earnings for the quarter.

"Our focused financial discipline allowed us to generate nearly $77 million in cash from operations for the year. We reduced debt by more than $20 million in the quarter and $63 million for the year, enhancing our financial flexibility.

"As we move into the first quarter of 2010, we expect revenue comparisons to continue to improve, helped by Olympic and political advertising. We will remain diligent on cost controls and will continue to execute our local market business strategy in order to position Journal for a return to top line growth."

Note that unless otherwise indicated, all comparisons are to the fourth quarter ended December 28, 2008.

For the fourth quarter, revenue of $112.2 million decreased 16.4% compared to $134.3 million. Operating earnings of $15.4 million included a $1.2 million non-cash impairment charge for broadcast licenses and a $1.0 million charge for workforce reductions in the quarter. Excluding these two items and a $336.3 million non-cash impairment charge for goodwill and broadcast licenses and a $1.1 million charge for workforce reductions, both in the fourth quarter last year, operating earnings of $17.6 million compared to $12.6 million, an increase of 40.4%. Net earnings were $7.2 million compared to a net loss of $223.0 million.

In the fourth quarter 2009, basic and diluted net earnings per share of class A and B common stock were $0.12 for both. Excluding the impact of the $0.6 million after-tax non-cash impairment charge and $0.5 million after-tax charge for workforce reductions, basic and diluted net earnings per share of class A and B common stock were $0.14 for both. This compared to basic and diluted net loss per share of $4.46 for both in 2008. Excluding the impact of the $228.7 million after-tax non-cash impairment charge and the $0.7 million after-tax workforce reduction charge in 2008, basic and diluted net earnings per share of class A and B common stock were $0.12 for both in 2008.

EBITDA (net earnings (loss) excluding the gain/loss from discontinued operations, net; total other expense, net; provision (benefit) for income taxes; depreciation; amortization; and non-cash impairment charges) of $23.8 million increased 26.4% compared to $18.8 million.

The operating margin was 13.8% this year. Excluding the charges for non-cash impairment and workforce reductions this year and last year, the operating margin was 15.7% compared to 9.3%. The operating margin improvement is a result of significant cost reduction efforts throughout the year.

Milwaukee Journal Sentinel Lays Off 39 Employees

The Milwaukee Journal Sentinel laid off 39 business-side employees today, publisher Betsy Brenner wrote in an email to employees. The layoffs came from the advertising, circulation and other business departments.

It's the third round of job cuts this year for the newspaper.

Parent company Journal Sentinel Inc., said it represented 3 percent of its workforce.

These job reductions primarily affect the Journal Sentinel’s circulation field operations and other business departments, a press release said. No newsroom employees were affected.

The 39 employees are expected to leave before the end of the year, the company said. The company will record a pre-tax workforce reduction charge of $600,000 in the fourth quarter. Journal Sentinel Inc. is a Journal Communications, Inc. (NYSE:JRN) company.

“This difficult decision was necessary as the advertising environment continues to be challenging,” said Journal Sentinel President and Publisher Betsy Brenner. “We thank our colleagues for their exceptional service to the company and to our customers. We remain committed to our role as the leading news gathering organization in southeastern Wisconsin.”

On Aug. 4, the newspaper announced that it would reduce its workforce by 92 employees, or 6.2 percent, in a layoff that includes 37 voluntary buyout offers that were accepted by newsroom staffers.

The Journal Sentinel on April 6 laid off 26 full time and five part-time employees to reduce expenses. The Journal Sentinel previously provided buyouts to newsroom staff in summer 2008 and fall 2007, leading to job cuts of 10 percent and 5 percent, respectively.

Journal Sentinel, Union Fail to Reach Agreement on Compensation Cuts

Journal Sentinel Inc. officials and the union representing more than 200 employees in the company's newsroom failed to agree on new compensation terms this week, according to Milwaukee and Southeastern Wisconsin Business News.

According to sources involved with the negotiations, the company proposed wage cuts. The leaders of the Milwaukee Newspaper Guild Local 51 will take the company's latest offer to the full membership of the union for consideration on April 23, sources said.

One source described the company's latest offer as "pretty lousy."
If the members of the Guild vote against accepting the offer, the company has indicated it may initiate involuntary layoffs.