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VIACOM TELLS INVESTORS IT WON'T DO 'ANYTHING STUPID'
CFO Delivers Cautiously Optimistic Outlook for Media Company
CNN-ABC NEWS MERGER TALKS ON HOLD
Richard Parsons Cites 'Very, Very Complicated' Nature of Such a Deal
AD SPENDING TO INCREASE IN 2003
Two Forecasts Predict Modest Growth Led By TV Spending
AD AGENCIES WARY OF RECOVERY PREDICTIONS
Maintain Conservative Plans Despite Improved Forecasts
MEREDITH REPORTS STRONG PERFORMANCE
Earnings Projections Raised In Report to Analyst Conference
Starting off the day on a glum note was Dow Jones & Co., which remains wracked by a wretched economy for business-related titles and sustained softness in crucial categories such as tech and financial -- an environment Richard Zannino, executive vice president and chief operating officer, characterized as "brutally difficult."
Though Dow Jones has holdings in small daily newspapers, its fortunes are tightly tethered to business publications' economic cycles. the company's flagship paper, The Wall Street Journal, Mr. Zannino said, accounts for 50% of company revenues.
Ad recovery not expected
"There isn't much we can do to change factors" contributing to this economic state, he added, before bluntly concluding that "we don't see a sustained ad recovery" despite narrowing ad linage losses.
Nevertheless, the company's stated focus on cost containment appears to be paying off. It raised its earnings guidance to mid-20 cents per share. Analysts had not expected the company to break the 20 cent mark. This does come at a cost, as a recent round of layoffs at the Journal prompted even a financial analyst at today's presentation to ask if staff reductions were cutting out "muscle" at the company. Dow Jones has slashed company head count by 16% since 2000.
"We'd also like to get a bonus again, sometime," commented a droll Mr. Zannino.
One bright spot is the Journal's new thrice-weekly service section Personal Journal, which Mr. Zannino said was currently exceeding company expectations.
Better news from Knight Ridder
Better news was reported by Knight Ridder. Steve Rossi, president of its newspaper division, forecast next year's ad revenues would rise 4%, based on assumptions of a "modest improvement in the economy." The company, which derives 70% of its revenues from its top major-market metro dailies, affirmed existing earnings guidance for 2002 and '03 of $3.44 and $3.84 per share, respectively.
But Mr. Rossi made clear that this year had been difficult. The decline in help-wanted advertising -- the key component in newspapers' classifieds category -- was, Mr. Rossi said, "deeper" than in the last newspaper recession in the early 1990s. The company, tellingly, expects full-time positions to decline slightly in next year despite the modest recovery it's forecasting. Its Knight Ridder Digital online unit would be "modestly profitable" in 2003, said Hilary Schneider, president of that unit.
Bull of the ball
The bull of the ball -- at least in relative terms -- was the New York Times Co. The company continues to reap bottom-line benefits from its strategy to roll out nationally its flagship daily, which accounts for 58% of the company's revenues. While all newspaper companies have struggled on the ad side this year -- Knight Ridder said its ad revenues would be down 2.5% -- the Times' newspaper group's ad revenue comparisons turned positive in August. Earnings before interest, taxes, depreciation and amortization, for this year are projected to be between $680 million and $690 million, up from around $575 million (once results for its golf magazine unit, which was sold to Advance Publications, are subtracted) in 2001, said Chief Financial Officer Len Forman.
Ad revenues for this year will be flat to down 2%, Mr. Forman said, but will rise 3% to 5% next year, driven in part by aggressive plans to boost rates between 6% and 7% at the Times. Mr. Forman said the Times' circulation revenues would rise 3% to 5% in '03, after spiking up at least 8% this year -- a unique performance in the newspaper world.
"We're never going to be a low-cost producer," shrugged President-CEO Russ Lewis in remarks after the presentation, but he challenged listeners to come up with any other newspaper company that could claim such a circulation performance.
Ad plans for 'Herald Tribune'
The company also briefly mentioned the prospect of adding the International Herald Tribune, which its in the process of buying out partner Washington Post Co. to assume full control, to key advertisers, and thus broadening the scope of its potential ad packages.
At the close of the trading day, Dow Jones' stock rose $2.93 to $42.84; Knight Ridder's rose 57 cents to $62.31, and the New York Times Co. rose 43 cents to $46.76.