Tribune Publishing shareholders agree to sell company to Alden Global Capital for $633M.

Tribune Publishing Reports 40% Growth in Digital-Only Subscribers in Q2

Digital-only subscription revenue was up nearly 50%.

Tribune Publishing reported that the company’s digital-only subscribers increased 39.7% to 419,000 at the end of the second quarter of 2020. At the same time last year, Tribune Publishing reported 300,000 digital-only subscribers. The company reported digital-only revenue of $10.1 million, compared to $6.8 million in Q2 2019, a 49.9% increase. During the first quarter of 2020, Tribune Publishing grew digital-only subscribers by 30.7%.

Comments from president and CEO

“The COVID-19 pandemic has rapidly accelerated our transition to digital. We continue our efforts to expand our digital subscriptions business, which netted 49,000 additional subscribers in the second quarter. That growth marks our highest single quarter of digital subscriber acquisition since we launched our Digital Subscription product line many years ago, and we are pleased that these new readers recognize the value in our product,” said Terry Jimenez, president and CEO of Tribune Publishing, in an August 5 news release.

“We also continued to aggressively manage our cost structure to substantially offset both secular revenue declines and incremental advertising and other revenue losses brought about by the pandemic.  In the second quarter of 2020 we took substantial and necessary expense actions across all of our business units and functions,” Jimenez added.

Second quarter financial highlights

Additional financial highlights for the quarter include the following:

  • Total revenues for the quarter were $183.1 million, a 26.9% decrease from $250.3 million in revenue for Q2 2019.
  • Advertising revenue was $53.8 million, a 48.1% decrease, for the period, due to significant declines in advertising related to the COVID-19 pandemic.
  • Circulation revenue was $87.3, a 4.75% decrease over the same period last year.
  • Home delivery revenue decreased $4.4 million, and single copy sales decreased $3.4 million. These decreases were offset by a $3.4 million increase in revenue from digital-only subscribers.
  • Total operating expenses were $183.8 million, a 24.1% decreased compared to Q2 2019, as the company reduced costs.
  • Net income was $1.6 million, a 70.9% decrease from $5.3 million for Q2 2019.
  • Adjusted EBITDA was $18.1 million, a 23.1% decrease from $5.6 million for Q2 2019.
  • Capital expenditures for the quarter ended June 28, 2020 were $3.1 million

Third quarter outlook

The company estimated total revenue between $188.0 million and $193.0 million, and adjusted EBITDA between $24.0 million and $27.0 million for the third quarter of 2020.

Company status update

Tribune Publishing owns The (New York) Daily News, The Baltimore (Maryland) Sun, The Hartford (Connecticut) Courant, The Orlando (Florida) Sentinel, The (South Florida) Sun-Sentinel, the Daily Press (Virginia), The Virginian-Pilot (Virginia), Chicago Tribune, The Morning Call (Lehigh Valley, Pennsylvania) and Best Reviews. The company has made headlines frequently over the last year with Alden Global Capital’s continued interest in securing controlling interest in the company.

In early July, Tribune Publishing announced that it had extended its cooperation agreement with hedge fund Alden Global Capital until after the company’s 2021 annual meeting with some exceptions. In addition, the company has expanded its board from six to seven members, adding another member – Randall D. Smith – from Alden to its board of directors, effective immediately.

In related news, Tribune Publishing disclosed in a regulatory filing that is has received rent abatements and deferrals for leases on approximately 11 properties, and other leases were modified or terminated during the second quarter, reports the Chicago Tribune. In addition, the company is in negotiations to leave its office in the Prudential Plaza overlooking Millennium Park in Chicago.

COVID-19 has accelerated Tribune Publishing's plans to grow its digital-only subscribers and digital revenue.
Image courtesy of Tribune Publishing

Insider Take

Tribune Publishing is in the same situation as many other newspapers and media organizations across the country. They are getting more readership, particularly digital-only subscribers, but they are not getting enough print or digital advertising to offset COVID-related declines. During the second quarter, Tribune Publishing boasts the addition of 49,000 new digital-only subscribers. While that might be impressive for a single property, Tribune Publishing owns 10 media organizations/newspapers. That’s an average of 4,900 digital-only subscribers per publication. Considering the high demand for content and information right now, we’d expect to see higher numbers. Perhaps the third quarter will yield even better results for the company.

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