Most major media companies got hammered financially in the third quarter, as they faced an unprecedented loss of advertising following the Sept. 11 terrorist attacks.
Even before the attacks, media companies were struggling against what is arguably the worst ad market since World War II.
The notable exception was McGraw-Hill Cos., publisher of Business Week, which reported a rise in third-quarter earnings, mainly due to the fact that many of the company’s products are not advertising-driven. The publisher reported third-quarter net income of $239.5 million, or $1.22 a share, compared with a profit of $215.6 million, or $1.10 a share, in the same period last year. The company also said it anticipated revenue growth for this year would be between 6% and 8%.
Primedia Inc. announced that its third-quarter earnings were up 7% to $407.5 million, compared with $381.8 million in the same period last year. However, revenues for the company’s b-to-b group were down 13% to $104.4 million, from $120.2 million.
Dow Jones & Co. earned $16.7 million, compared with a loss of $33.9 million in the third quarter of 2000. Revenue fell 20.5% in the quarter, to $397.6 million.
Among the companies reporting poorer earnings were:AOL Time Warner Inc., which posted a net loss of $966 million for the third quarter, compared with a net loss of $902 million a year earlier. Revenues for the period were $9.3 billion, up from $8.8 billion for the same quarter in 2000, led by a 13% gain in subscriptions. However, advertising and commerce revenues declined 5% to $1.9 billion. The New York Times Co., whose earnings fell 26.5% to $46.3 million, from $63 million a year earlier. Advertising revenue, excluding revenue from businesses that have been sold, fell 14.5% in the quarter to $452.7 million. Tribune Co., which reported a third-quarter net loss of $139 million, compared with a profit of $79.2 million a year earlier. Revenues fell 7% to $1.28 billion. Knight Ridder Co., which earned $55.7 million, down from $76.1 million a year earlier. Revenue dropped 10% to $693 million, from $769 million a year earlier.
No short-term relief
Media analysts said the fourth quarter won’t be any better than the third and, if earnings continue to slide, media companies will have to make additional layoffs.
"There’s some root canal going on right now," said Reed Phillips, managing partner in the media investment bank DeSilva & Phillips. "Some companies are cutting to the bone, and future cuts will make them feel very uncomfortable. … Some are worried that things are going to get worse, so they’re making the adjustments now."
Wilma Jordan, president-CEO of media investment bank Jordan Edmiston Group Inc., said Wall Street is already writing off the fourth quarter, so most media companies are planning for 2002. "They’re going to have to be conservative on the cost side, and there may be more cutbacks," she said. "They’re also going to have to push hard on the marketing side to gain as much share as possible."