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Newspapers Weigh DownTV Earnings

As media companies report fourth-quarter 2011 earnings, the difference between the performance of their broadcast divisions and newspaper outfits is becoming starker. While the local TV outlets are up against rough comparisons to fourth quarter 2010’s massive political spending, core revenue is typically up close to double digits. And local TV’s 2012 looks bright, thanks to giant-tent TV events such as American Idol and the Olympics—and the reported $3 billion in political monies said to be coming to TV this year.

The language describing the newspaper divisions in earnings calls these days is more about workforce reductions and major restructuring, and pushing digital alternatives to print.

Belo and Sinclair are among the broadcasters reporting earnings this week. Media General, with 18 TV stations and 23 newspapers, hinted at the depths of its fiscal ills on its Jan. 26 earnings conference call.

“Despite the strong and favorable prospects for our broadcast business this year, we have become uncomfortable with our ability to remain in compliance with our covenants,” said CFO James Woodward, who added that Media General is seeking modifications to those covenants.

Some station executives employed by pure-play broadcasters say the absence of print in their parent’s portfolio has allowed them to take a bite out of the competition. “Every day, I thank my lucky stars my company doesn’t have newspapers,” said one general manager who asked not to be named. “I’ve seen what happens to the competition when you have newspapers.”

Gannett, Media General, Tribune and Scripps are among those companies with considerable newspaper and local broadcast outlets. Gannett and Media General have mandated furloughs for some staffers in 2012, and Tribune has spent the last three-plus years in bankruptcy.

Scripps, which recently doubled down on broadcast when it acquired the McGraw-Hill stations, increasingly views itself as a local TV company. “From a profit perspective, today we are predominantly a television and digital enterprise,” said Rich Boehne, president and CEO. Newspapers, he added, “are a great option on the future of the industry.”

While Nielsen numbers indicate that more people than ever are watching television, no one really knows if the newspaper sector has yet bottomed out. Investment bank M.C. Alcamo & Co. has calculated revenue for so-called pure-play broadcasters versus companies with both print and television. Seven TV-only groups, including Belo and Gray, saw a 4.6% decline in revenue in 2011’s third quarter compared to 2010, while the “integrated” groups, including Gannett and Journal Communications, posted an 8.6% drop.

Some companies that run stations with sister newspapers speak of how pooled resources in editorial, sales and marketing have helped their local operation. But others say the concept of newspaper- TV synergy has been dramatically overplayed in the recent past. “We’re past convergence and onto success in divergence,” said Boehne.

While broadcasters are not exempt from the anxieties caused by digital content delivery, their medium appears much better built for the long term. Marshall Morton, Media General president and CEO, suggested as much during his earnings call, citing increases in automotive and core advertising on broadcast among the “positive trends.” Another bright spot, he added, was that “the decline in print revenues moderated to 6.6%.”

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