Monday, March 24, 2008

Want To Buy Some JRC Stock?

Hartford Business Journal

The Cost Of Running Media Into The Ground
Dailies In Danger
JRC, parent company of New Haven Register, Connecticut Magazine, in financial crisis

By Sean O’Leary
Hartford Business Journal Staff Writer

The finances of the Pennsylvania parent company of 75 Connecticut publications, including the New Haven Register and Connecticut Magazine, have hit an all-time low, prompting surprise newsroom layoffs and threatening the delisting of its stock.

The decline of the Journal Register Co.’s financial condition has been swift and steep. After earning $42.4 million in 2005, the company lost $9.7 million in 2006 and $130.1 million in 2007.

And its financial woes continue to worsen. Last month, the New York Stock Exchange halted floor trading of shares of JRC because they slipped below the exchange’s $1.05 per share floor-trading threshold.

In a recent Security and Exchange Commission filing, the company acknowledged that if it can’t prevent the New York Stock Exchange from delisting its shares, it could be a crippling blow to the stock and to the company’s chances of tapping public equity markets in the future.

Its stock traded above $15 a share in January 2006 before dipping to $6.71 the first week of 2007. The slide continued when it opened 2008 at $1.85 and fell below a dollar in February.

Although the shares can still be traded electronically, the NYSE could delist the Journal Register stock if its daily closing price fails to average $1 over 30 consecutive trading days or if its market capitalization fails to average $25 million over a similar period.

The shares were trading between 70 cents and 90 cents most of the week. When the stock trades at 80 cents, the company’s market capitalization — its share price times it total shares — is roughly $31 million.

JRC owns Connecticut dailies in New Haven, New Britain, Bristol, Torrington and Middletown with a combined daily circulation of about 110,000. It also owns Connecticut Magazine, which claims a circulation of about 88,000, and a host of non-dailies.

Staff Layoffs

On March 11, The New Haven Register, JRC’s Connecticut flagship with a circulation of 76,648, unexpectedly axed five staffers, including its star capitol bureau chief, Greg Hladky.

The’s Capitol Watch column labeled the Hladky layoff as “boneheaded,” and an anonymous blogger chimed in with: “Connecticut has lost a superb reporter. He’ll quickly find another job, but we all lose when bean counters fire smart people to save a few dollars.”

The publishers of The New Haven Register and Connecticut Magazine did not respond to phone calls and e-mails seeking comment. And calls and e-mails to JRC’s corporate headquarters also were not returned.

Contributing to the company’s woes were the acquisitions of 85 publications in Michigan in 2004, followed by the acquisition of eight more in 2006. Revenues there have lagged, due in part to the softness of the Michigan economy.

The company reported having 3,400 employees at the end of 2007, an 8.8 percent decline from yearend 2006. The JRC eliminated 30 publications, mostly small non-dailies, last year.

In 2007, JRC sold various assets, including the Middletown building that had housed the Middletown Press, which moved to another building. The company reported that it netted $2.6 million on the transaction.

For Sale

It has also been reported that the city of New Britain is looking to purchase the New Britain Herald Building from JRC.

Also last year, JRC sold its two groups of community newspapers in Massachusetts for $72 million to Gatehouse Media and then sold three daily newspapers and its weekly newspaper group in Rhode Island for $8.3 million.

The asset sales helped the company offset losses in ad revenues, which fell by $40 million, or 10.2 percent, last year. That included an 11 percent decline in classified ads and a 17.9 percent drop in real estate ads.

JRC attributed the hits taken on its circulation and ad numbers to competition from online and digital outlets.

During a conference call with securities analysts in February, JRC Chairman and CEO Jim Hall said his company was striving to shift from print to multimedia and become the leading “entrepreneur-driven multimedia company in our local markets.”

“We have asked our publishers to be more entrepreneurial in running their properties,” Hall added, “and we are convinced that this model is the way to continue to improve our performance going forward.”

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