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Earnings: Discovery Networks Revs Rise 11 Percent; Ad Revs Gain 5 Percent
Discovery (NSDQ: DISAB) Communications (NSDQ: DISCA) offered further proof that cable growth is cutting through the downturn, a day after Cablevision (NYSE: CVC) swung to profit and saw revenues gain 15 percent year-over-year. The Silver Spring, Md.-based network posted an 11 percent revenue gain to $845 million, while net income from continuing operations of $94 million ($0.31 per share), up 213 percent from $30 million last year. The programmer's ad revenue was up a decent 5 percent to $249 million as distribution revs grew 8 percent to $231 million. The former benefited from higher sellouts and pricing, which were partially offset by lower ratings at TLC and Discovery Channel, while the latter got a boost from additional subscribers.
Release | Webcast (8:30 AM EDT)
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Earnings: Local.com Narrows Net Loss; Revs Climb 82 Percent
Search engine company Local.com beat its guidance for its Q3 net loss, narrowing its shortfall to $1.7 million ($0.12 per share) from last year's $9.3 million. Revenue was $10.2 million, which was below guidance, but represented an 82 percent increase from Q307. The company's earnings come on the same day as a fairly pessimistic report by Borrell Associates was released. The report expects local online ad spend growth rates to begin leveling off next year.
-- Revenue per thousand visitors (RKV) was $278, up 65 percent in Q3. Sequentially, that figure represents a 9 percent gain from the $254 RKV in Q2. The Irvine, CA.-based company had 6,900 at the end of October, up from 5,000 in August. Local.com continues to believe it can attract 50,000 advertisers by the end of 2009. Local.com's search traffic reached 27 million monthly uniques on the main site and through its network, up from Q307's 3.7 million and 18 million in Q2.
-- Outlook: The company is calling for Q4 revenue to range from $9- and $10 million, roughly a 52 percent and 69 percent increase over Q407. As for the net loss, Local.com expects to see it fall between $2.3 and $2.1 million, or $0.16 to $0.15 per share.
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Earnings Call: Playboy's Hefner: The Brand Will Get Us Through; So Will Deep Cuts And Restructuring
Playboy's saving grace is the power and iconography of its brand. So said CEO Christie Hefner during the company's Q3 earnings call, in which she acknowledged that Playboy (NYSE: PLA) is facing challenges on all fronts—from dwindling print circulation and ad revenue, to the push to revamp its digital property, to an overly competitive adult entertainment market in the U.K., and the credit crunch that's hindering the development of new properties. But it's the brand that will get them through the coming quarters, even if they have to auction branded antiques and artwork to do so. Hefner laid out the company's battle strategy, which includes tons of cost cutting measures for dealing with a "weakening global economy" that will produce a "weak ad market in print and online, and softer consumer spending."
Meanwhile, the long-awaited Playboy.com revamp is slated to launch in Q109 (pushed back from the Q4 launch Hefner alluded to back in Q2). Hefner said it would be the "glue" between all of the company's divisions: media, events, retail, and venues like the Palms.
Photo credit: Playboy Enterprises
-- ON job cuts: Playboy has eliminated a total of 140 positions this year—or about 17 percent of its workforce—including the 80 or so layoffs it announced just weeks ago. CFO Linda Havard said the cuts would amount to a $5 million headcount savings, most of which would be realized in 2009, though there may be a slight (positive) impact in Q4.
-- More on global cuts: The global cuts hit the corporate (HR, administrative, etc.) and media (editorial, productions, marketing and circulation) divisions, as well as the DVD business the company's trying to get out of. Havard also said managers would forego incentive compensation—though it's unclear whether that's just for the coming quarter or indefinitely. All told, Playboy is aiming to add $7 million in savings to its previously stated goals of $12 million in magazine-related cost reductions phased in from 2005 - 2007.
—Print and digital publishing: The cost reductions offset a decline in Q3 print publishing revenues, but Bob Meyers, EVP and President of Media said that the company couldn't support double-digit losses. "We've seen significant declines in circulation and ad revenues, and we want to evolve the print model to balance the costs ... We've lowered paper manufacturing costs, the staff reductions, the outsourcing of certain functions, and next year we'll have a special summer double issue that will incorporate July and August in one package."
Release | Webcast (11:00 AM EDT)
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Earnings: Primedia's Q3: Housing Market Presented Small Pluses, Large Minuses
Primedia (NYSE: PRM), adjusting its focus on real estate content these days, saw its Q3 net income fall $381.8 million, which the company said was related to the sale of the Enthusiast Media segment in May 2007. Specifically, the company reported net income of $12 million ($0.27 per share) in Q3 compared to $393.8 million ($8.92 per share) a year ago. Revenue in the quarter was also down, sliding 4.9 percent to $76.4 million from $80.3 million in Q3.
-- The home ownership market might be tough, but the weak economy might be turning once prospective buyers into renters, which would be a good thing for Primedia's business, which has been struggling the past few years. Still, Primedia's results at this point remain mixed. The company's Apartments segment—which includes Apartment Guide, ApartmentGuide.com and Rentals.com—was up 2.3 percent to $53.6 million from $52.4 million in Q307. The unit represents approximately 85 percent of Primedia's total ad revenues. Revenue from Primedia's online single-unit real estate rental product line, Rentals.com, grew 8.9 percent sequentially from Q2, but it declined by 8.9 percent compared to Q307. Release | Webcast (10:00 AM EDT)
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Earnings: AH Belo's Online Revenues Declined 19 Percent
Newspaper companies used to be able to count on their internet units as a bright spot. Not anymore. AH Belo (NYSE: AHC) (NYSE: BLC), the newspaper half of the old Belo Corp., saw its online revenues drop for the second consecutive quarter, as internet ad dollars fell 19 percent to $11.4 million in Q3. Online's share of AH Belo, publisher of the Dallas Morning-News and two other papers, is now 7.4 percent of the publisher's total revenues.
Overall, AH Belo posted $153.8 million in revenues—a 15 percent decline—and a net loss of $17.3 million ($0.84 per share) in Q3. The loss was attributed to $11.1 million in expenses related to staff buyouts. Ad revenue, including print and online, was down 22 percent, mostly due to classifieds, a sore spot at most newspapers these days. Circulation revenue, which has been in decline across most newspapers recently, actually grew in Q3, as AH Belo said it was up 12 percent.
Release | Webcast (10:00 AM EDT)
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Earnings: ValueClick Net Income Plummets 88 Percent
Online ad firm ValueClick (NSDQ: VCLK) had previously warned investors that Q3 would be rough and its earnings report on Wednesday clearly bore that out: the company's GAAP net income was $2 million ($0.02 per diluted common share), down 88.1 from $16.8 million ($0.17 per diluted common share) in Q307. Net income was affected by the completion of an offer to purchase up to 4.9 million stock options with exercise prices ranging from $25.66 to $29.73 per share. It was also impacted by tax adjustments. Excluding those two items, Q3 net income per diluted common share would have been $0.15, ValueClick said.
-- Revenue was down 2.5 percent to $152.9 million compared to $156.9 million for the third quarter of 2007.
More after the jump
-- A rough year so far: The Westlake Village, Calif-based company has clearly been having a rough time this year. It began with a $2.9 million settlement with the FTC over deceptive online ad charges, and then was hit by the decline in display advertising. Last week, ValueClick COO David Yovanno departed to head widget distributor Gigya.
-- More weakness sooner, opportunity later: In a research note, UBS analyst Ben Schachter identified some of ValueClick's weakness ahead. The wider economic meltdown will continue to put pressure on ValueClick's display business, Schachter wrote. The display market may recover somewhat by the end next year, but a number of ad networks will likely fold amid the continued downturn, allowing ValueClick the chance to consolidate some of that market share. Longer-term, Schachter says that expansion of larger internet players and their goals of building display platforms may pose a new threats to ValueClick.
-- What a difference a year makes: Additionally, Motley Fool points out that ValueClick is expecting revenue to slide sequentially from Q3 to Q4, with revenues ranging between $140 million and $145 million—far less than the $167.7 million that industry analysts had been expecting and the $183.1 million generated just last year.
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Earnings: WPP Sales Up In Third Quarter; Expects 'Very Tough 2009'
Ad holding company WPP Group reported a 16 percent rise in sales in the third quarter, boosted by the stronger dollar and euro against the pound. Revenues came in at £1.72 billion ($2.8 billion), compared to £1.48 billion ($2.42 billion) a year ago. Adjusting for inflation, revenue was six percent higher; on a like-for-like basis--stripping out acquisitions and currency fluctuations--growth was three percent.
As rivals Publicis, Interpublic and Aegis reported earlier this week, WPP expects that the "disintegration in the financial markets" will continue to have a "significant negative effect" on consumer and corporate confidence, with 2009 shaping up to be "a very tough year." CEO Martin Sorrell told Bloomberg that the "real recovery" will come in 2010, when events such as football's World Cup and the Winter Olympics games should boost sales.
In Q3, emerging markets and central and eastern Europe were the group's strongest growth regions, with North America, the weakest, hit particularly hard by the credit crunch. It had flat revenues in Q3, compared to first-half growth of six percent. UK sales also softened in the third quarter, growing 2.9 percent in constant currency terms. Asia Pacific, Latin America, Africa and the Middle East saw revenues climb 16.5 percent. Continental Europe grew at 7.2 percent, with western continental Europe, to WPP's surprise, accelerating in the third quarter. Central and eastern Europe grew 16.3 percent.
Release in PDF | Presentation In PPT | Webcast
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Earnings: MSLO Online Ad Rev Up 35 Percent, But Overall Revs Flat; Takes Stake In Pingg.com
The big picture: MSLO's Q3 revenues were relatively flat year-over-year. They came in at $66.5 million, down 0.2 percent from $66.9 in Q307 (excluding revenue from Blueprint, the home decor magazine the company shuttered late last year)—pulled and pushed by tanking print sales and strong online growth.
-- Internet revs rise; new investment: Online revenues came in at $3 million in Q3, up 36 percent from $2.2 million in Q307—growth that was driven largely by an influx of ad revenue. Online ad revs were up 35 percent year-over-year, with pageviews up 57 percent across the entire network. MSLO's internet gains are especially notable given the overall online ad slowdown. In Q307, MSLO's online revs climbed 17.9 percent. Not too many companies are seeing even that kind of double digit growth, though MSLO had begun a slow rebuild last year, including a major website revamp. Wenda Harris Millard, MSLO's co-CEO and president of Media, noted that investments in properties like wedding planning site WeddingWire.com were paying off, and announced a new deal to acquire an equity stake in events planning company and Website Pingg.
-- Pingg stake: Though terms of the deal were not disclosed, MSLO believes that Pingg.com's premise is a good fit for MSLO's target audience: the site lets members create themed pages, invitations and thank you notes for special events. Pingg operates on a hybrid ad sales/paid services model, and will turn its national ad sales over to MSLO. The events planning tools will also be featured on MarthaStewart.com. More to come.
Wenda Harris Millard, co-CEO and president of media, will be speaking tomorrow at our EconWomen conference in NYC.
—Sagging publishing revenues : Q308 publishing revenues came in at $34.5 million, down 25 percent from $46.2 million in Q307. Print ad revenue dropped by 18 percent, a stark contrast from last year, when MSLO reported 40 percent growth. It raises the question of whether we'll see staff cuts come at the four remaining mags: Martha Stewart Living, Everyday Food, Martha Stewart Weddings and Body + Soul. The company trimmed about 12 staff from across the board in August.
—Broadcast's Booming : The company's broadcast business cleared $14.3 million in Q308, up 62 percent from $8.8 million in Q307. Much of the growth came from the Emeril media properties, which MSLO acquired for $50 million in February.
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Earnings: Sohu Q3 Revs Continue To Climb, Rising 134 Percent; Profits Up 316 Percent
Chinese portal Sohu.com's growth rate is hardly slowing, as the Beijing company posted Q3 GAAP net income of $40.3 million ($1.02 per fully diluted share) for a 316 percent year-over-year gain, though it was essentially the same dollar amount as in Q208. Revenues were $120.7 million, up 134 percent year-on-year and 18 percent quarter-on-quarter, exceeding the high end of company guidance by $4.7 million, the company said. Much of that boost came in concert with the Beijing Olympic games. While the company remains confident—at least in the press release—that it can maintain this kind of growth into Q4 as even China's economy starts to slow due to the global economic crisis, that remains an open question. In terms of specific highlights from Q3:
-- Brand ad revenues were up 66 percent to $49.4 million, while general ad revenues were $51.1 million, gaining 62 percent year-over-year.
-- Online game revenues came in at $54.6 million, up 330 percent from Q307. In particular, Sohu's in-house developed massive multiplayer online role-playing game Tian Long Ba Bu ("TLBB") generated revenue of US$51.0 million, up a sequential 12 percent from Q208.
-- Non-advertising revenues $69.5 million, up 248 percent from last year.
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Earnings: Journal Communications' Q3 Loss Widens, Revs Fall 5.6 Percent; Interactive Up 16 Percent
Apparently, being small and local isn't any kind of safe haven for newspaper companies these days. While Journal Communications' total interactive revenue was up almost 16 percent in Q3, as remains typical among its larger newspaper publisher peers, it was not enough to counter the losses on the on the print side. The Milwaukee company's Q3 revenue was $136.3 million, a 5.6 percent decline compared to $144.4 million last year. Journal Communications' net loss grew to $17.1 million during the period, compared to Q307's $13.1 million.
The publisher of the Milwaukee Journal Sentinel—its only daily, as Journal Comm owns a few weekly community papers—said interactive ad revenue at the newspaper rose 14.1 percent to $3.8 million compared to Q307's $3.4 million. Overall, publishing revenue fell 8.8 percent to $59.4 million. Broadcast revenue was basically flat at $54 million, while revenue at its radio properties was down 3.3 percent to $21.7 million. As a publisher, Journal Comm is hardly comparable to companies like McClatchy (NYSE: MNI), which swung to profit in Q3 and the NYT, which earlier today reported a loss for the quarter, but the pressures all are facing remain the same, even as interactive becomes a larger part of their operations.
-- On Yahoo APT: During the conference call, Journal Comm COO Elizabeth Brenner, noted that the company was trying to reduce print upsells to online—much like McClatchy, Gannett (NYSE: GCI) and others have been focusing on—and said that Yahoo's new ad targeting and delivery platform APT got off to a good, albeit slow, start last month, producing $40,000 in revenue for its daily paper in September. That represented a small contribution to the Journal Sentinel's 13.8 percent rise in total interactive ad revs $1.37 million last month. September revenue release.
Release | Webcast (12:00 PM EDT) | Transcript
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Earnings: Olympics Pump Baidu Q3 Profits Up 91 Percent
Boosted by increased usage during the Beijing Olympics, Chinese search engine Baidu's Q3 profits came in at $51.2 million (347.9 million yuan), or $1.47 per share, up 91 percent from last year's $24.2 million (181.7 million yuan). Revenues increased by 85 percent, to $135.4 million (919.1 million yuan), from $66.3 million (496.5 million yuan) in Q307. The company beat estimates (via WSJ) although just barely for revenue; analysts polled by Thomson Reuters (NASDAQ: TRIN) expected earnings of $1.28 per share on revenue of $135 million. The engine was also able to attract more advertisers—and get them to spend more—than in previous quarters. Baidu (NSDQ: BIDU) had 194,000 customers in Q3, up 7 percent from Q2, and up almost 36 percent year-over-year. Average revenue per customer came in at 4,700 yuan ($692), up 6.8 percent from Q2 and up 34 percent year-over-year.
Still, Baidu's stock price fell by as much as 4.4 percent after it posted earnings, after a forecast in the low range of estimates and against a backdrop of uncertainly about China's post-Olympics economy. The engine forecast Q4 profits to be in the 1,025 million yuan ($151 million) to 1,055 million yuan ($155 million) range, up 80 to 85 percent from last year, and up 12 to 15 percent from the previous quarter.
Release | Webcast (8:00 PM ET) | Transcript
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Earnings Call: Yahoo's Q3 Ads Had 'Mixed Trends'; Display Was Weak, Search Was Strong
Following the announcement of 10 percent cut in its roughly 1,500-member workforce and its anemic 1 percent revenue growth. CEO Jerry Yang introduced the call by saying Yahoo (NSDQ: YHOO) saw "mixed trends" in Q3: while there was strong growth in search and display, though U.S. saw display weakness in ad categories like finance. Europe and Asia. Other ad-related highlights from the call:
--Google (NSDQ: GOOG) pact not dead yet: Yang: Yahoo and Google are continuing to work with the Department of Justice, which is examining the pact for antitrust issues. We look forward to bringing this pro-competitive agreement to the market. While the ad market goes through this downcycle, online advertising will benefit.
-- Pain and gain from market volatility: Sue Decker, Yahoo's president, then came on to address the impact of the global financial crisis. She reiterated the higher usage brought by the twists in the financial markets, but noted the weaker performance in premium display. In addition APT, Decker focused on audience trends and monetization products. Growth in display and search queries in general were up in the double digits.
-- Another redesign?: While it was barely a year ago that Yahoo redesigned its homepage, Decker insisted that the company is going much deeper this time and that this shouldn't be considered yet another redesign. Decker: "We are embracing more open and social features, that will make the site more relevant. we will continue organize spending around new tools like APT, the company's ad targeting and display delivery system. The Social Profile will be leveraged across several forthcoming products. We're also testing ways to serve more targeted content. We're changing from a one-stop portal model, but to a starting point for the rest of the web." More after the jump
Release (PDF) | Webcast (5:00 PM EDT) | Slides
-- Display woes: Guaranteed volume and pricing—i.e., premium display—were perceptively weaker, resulting in a deceleration in display. O&O display was up 3 percent in Q3. In Q307, the same category had year-over-year gains of 21 percent, a considerable difference. Search, which is a smaller part of Yahoo's business, was up 17 percent. Decker: Slower growth is expected in Q4, but we're hearing from media buyers who consolidating their ad budgets around larger brands like Yahoo. We've also seen more demand for performance display. There is a weakening trend in Asian markets for display, but in general, international remained strong. We're seeing cancellations in categories like travel, but we are seeing some advertisers increase their budgets.
-- Losing share to ad nets?: JP Morgan internet analyst Imran Khan asked how much of the meager 3 percent display growth was to do general economic forces and how much was caused by ad nets cutting into Yahoo's ad business. Decker: Until other other companies report, we won't exactly know how much was due to the wider economy and how much was related to the growth of ad networks. That said, looking over the last few quarters, we have reason to believe that we've been growing much more strongly than them. As I've said, the performance piece of display grew in the double digits for us. That gives us confidence versus our competitors.
-- On APT: Good order flow operation in just the first month, and orders are strong for the rest of the year. APT can take advantage of the growth in performance display.
-- During the Q&A, Decker was asked what Yahoo is doing to improve its O&O marketing position. The answer, mainly, is to move more Yahoo inventory into the APT platform. On the affiliate revenue side, Blake Jorgensen, the CFO, said that the company expects . Asked about the mix between performance and premium, Decker said that Yahoo's biggest business is in the latter, but the growth is in the former. Premium prices were down to flat, while performance was up strongly.
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Earnings Call: McClatchy: Q3 Revs Brought Down By Real Estate And Autos; Sticking With AP
The real estate downturn has had a wider effect on The McClatchy (NYSE: MNI) Company's ad revenues apart from just lower classified dollars coming in. As chairman and CEO Gary Pruitt explained at the start of the company's Q3 conference call, anything related to purchases for the home, such as furniture and department stores, all pulled back on advertising. Nothing that the ad market remains weak, Pruitt ticked off the print declines and the online revenue growth—with employment ads being a particular exception.
-- Retail was down 12.6 percent, while online, the category grew 89 percent.
--Classifieds were down 30.1 percent. Employment ads fell 40.8 percent, while online revs were down 29 percent. Asked how much is cyclical versus secular, Pruitt said, "Secular pressures are greatest in classified, but the majority of the decline is cyclical and therefore, temporary. But it might get worse, before it gets better. California got into this recession first and we are seeing different results in different markets. We won't see a significant rise of classified in a recovery, but classified display will pick up."
-- Autos were down 21 percent, online was up 28.7 percent, as dealers shifted spending. During the Q&A, Wachovia analyst John Janedis asked for some specifics about dealership closings. Pruitt said the fall has been gradual, but not precipitous. "We do expect our Cars.com to continue to take advantage of the shift from print to online."
-- Real estate dropped 36.5 percent; online gained 18.3 percent
-- National ads fell 18 percent. Pruitt said online was up, but didn't offer specifics.
-- Moving away from print upsells: Pruitt: "We have been focused on becoming a hybrid digital and print company for some time. We are building out online ad sales in their own right, as 52 percent of internet ads were not tied to print upsells and were sold directly. Online advertising continues to remain the fastest growing part of our business." More after the jump
Release | Webcast (12:00 PM EDT)
-- Any asset sales planned? It's a tough market to sell newspapers, but Pruitt said "We like our portfolio and we think we're operating in the right places in the right way. We don't comment or speak about potential asset sales of any kind, as we feel it sparks speculation. But we constantly evaluate our assets in good times and in bad times."
-- Sticking with AP: Asked about the recent two-year cancelation orders issued among some AP members—including, most recently, Tribune Company --over the changing pricing structure, Pruitt said McClatchy has signed a new deal with AP and was pleased with the rate reduction. That doesn't mean our editors don't have issues, but we are not part of the group that issued cancelations of memberships. And we don't plan to.
-- On Yahoo: The new APT targeting and ad delivery system is still a little too new for the company to extract any results. Nevertheless, Chris Hendricks, VP, interactive media, claimed that McClatchy had best performance in the Yahoo (NSDQ: YHOO) Newspaper Consortium, both with run of site and behavioral targeting and in particular, with autos. However, you just will have to take his word for it. Hendricks: "We cannot release numbers, as we agreed with the partners not to."
-- We will have growth: In a relatively tense exchange with one analyst, who expressed extreme doubt about Pruitt's pronouncements of a return to growth once the recession eventually recedes, Pruitt tried to remain upbeat. "I'm not in the business of making economic conditions, but I can say we are making sensible decisions about costs and driving internet revenues, I can say we will have a successful future."
-- Headcount: The company had about 14,000 staffers and will down about 1,000 employees by year's end. Pruitt also told analysts to expect more job losses through attrition next year.
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Google Q3 Call: Outside, The Larger Economy Appears Dire, But Inside Google, Continued Optimism
After reporting Q3 earnings that beat analysts' estimates, Google's conference call began with CEO Eric Schmidt noting that new CFO Patrick Pichette, who signed on this summer, joined at an interesting time. Search, Google's (NSDQ: GOOG) core, is where the company will put a lot of its investment and will add more personalization and tools to help advertisers manage their ad budgets. YouTube is now running ads with 90 percent of its partners. The integration with DoubleClick will bring more targeting for display, but the focus will be on keeping costs down. Schmidt concluded his opening remarks saying that while the macro-economy looks bad, he remains optimistic about Google's ability to keep growing.
-- After Pichette ran through the highlights of Q3— revenues up 31 percent to $5.54 billion year-over-year, and net income of $1.56 billion (earnings per share of $4.92)—co-founder Sergey Brin was up to discuss some of the new features Google has on the tech front, including constant improvement on the ratings of landing pages designed to elevate search quality. "We continue to blend more of our books, videos into more of our search results. Especially powerful, especially when you think of video. It's a great reference tool, though most people still don't think to look for videos when they're searching for information." He also provided an overview of news about the AdSense for Games, YouTube's affiliate sales agreements, placing full-length episodes of CBS (NYSE: CBS) videos on YouTube, the coming launch of the Android mobile phone operating system and the Chrome browser. Of the latter, Brin said, "We hope it raises the bar for all browsers, as we want our services to run at their best on all of them.
-- During the Q&A, JP Morgan's Imran Khan asked Schmidt about what kind of business trends the company is seeing in October. "We see fluctuations and it's complex. It varies by country and by region, however." Google's Chief Economist Hal Varian then stepped in to offer some color, and said with a once in lifetime event, like the financial market meltdown—at least we hope it's once in a lifetime—it's just hard to predict what's going to happen at this point." More from the call, including link to transcript, after the jump.
-- Cost Cutting: Pichette said that operating efficiencies and cost containment measures have been in place for a few months. But Google will continue to look for strategic investments to grow the business. "That's the balance we're trying to strike," he said.
-- Fixing the display market: Brin: "There are a lot of opportunities in display. When we started with AdWords, it took us a number of years to catch up. We could see the same with display. We're concentrating on targeting and the return. Instead of a click, it might just be creating awareness and we have great tools for measuring that. But it will take a while until we fully develop it."
-- On Yahoo/Google: Schmidt was asked for his reaction to "the vitriol" on the part of some in the ad community to the search ad pact with Yahoo (NSDQ: YHOO), which has since been put on hold while discussions with the Department of Justice on avoiding antitrust issues continue. Schmidt was also asked how he felt about the government "meddling" in its business. Schmidt: "I'll let you use the phrase 'meddling.' For my part, we knew that our competitors would oppose it and fight it vigorously. We anticipated a four month delay. With advertisers, we've seen a balanced reaction. The negative comments are coming from people who don't understand how auctions work. Varian adds: "We're trying to communicate better how the deal would work. Even people who were using AdSense didn't fully understand. We're dealing with that now."
-- As I was listening to the call, I traded emails with Mark May, an analyst at Needham & Co., who noted that he wasn't surprised that Google's stock was trading up over $20 in after-market trading. "The key driver for strong results in my view are i) strong search query growth (18% YoY), ii) UK market doing better than feared, iii) meaningfully lower spending levels, both in terms of hiring (unseasonally low hiring for a 3Q) and significantly lower capex ($452MM vs est of $820MM); and iv) ability to offset negative impact of strong dollar w/ currency hedging."
Transcript (via SeekingAlpha)
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Earnings: Media General Reports Higher Q3 Earnings Aided By Politics, Olympics; Narrows Digital Loss
Looks like Media General (NYSE: MEG) reaped the most benefits possible from the politics-Olympics combo in Q3 but it will be a tough performance to repeat. Under fire from activist investor Harbinger and others, the company nearly tripled earnings—$6.1 million, or $.28 per share, compared with $2.5 million, or $.11 cents per share, in Q307. Analysts had higher expectations, estimating EPS of $.30, Reuters reported. Revenues dropped 10.9 percent to $193.7 million from $217 million the previous year. (The earnings release is a bit of a mess, trying to showcase results from continuing operations versus the full monty including five TV stations that "have been or will be sold.") Among the factors contributing to this quarters performance: the job cuts and other belt-tightening cut operating costs by nearly 10 percent; broadcast profits rose 24.5 percent; and the results don't include the losses from the newsprint division sold off earlier this year.
-- Interactive: A mixed bag ... revenue rose 9 percent, aided by a 29 percent increase in local advertising and a "strong performance" by DealTaker.com, acquired in Q1. But it's still in the red albeit a smaller loss: $336,000 compared with a $1 million loss last year (excluding a writedown). Some more concrete results from the Yahoo (NSDQ: YHOO) Newspaper Consortium: "the partnership with Yahoo!HotJobs generated $1.7 million in revenues in the quarter, helping to mitigate a 12 percent decrease in Classified revenues." The company attributes the local ad increases to "a continued focus on direct sales, increased staffing and training" leading to "growth in banners and sponsorships." But national and regional dropped 11 percent "due to softer advertising from national agencies, particularly at TBO.com in Tampa."
-- Warning: slow growth ahead: Blockdot's declining advergaming revenues in Q3 "reflected a slower pace of incoming projects, as a result of the weaker economy, compared with the same 2007 period."
Earnings release | Webcast (11 a.m. eastern)
-- September revs down 13.9 percent: Separate from its Q3 report, Media Gen said total company revenues came in $59.7 million versus $69.3 million the year before for a 13.9 percent drop. The Interactive Media Division, though, had revenue gains of 8.1 percent, citing 17 percent growth in local advertising and as well as revenues from DealTaker. But the online side wasn't all rosy: The division's national/regional advertising fell 22.3 percent, due mostly to weakness in the Florida market. Also, online classifieds dropped 17.5 percent overall. Nevertheless, Media Gen said Interactive generated an increase in "employment liner advertising" through its Yahoo HotJobs partnership, though no specific numbers were offered. September Revenues Release More from the earnings call after the jump.
-- Not just Yahoo: [David adds] During the call, Marshall Morton, Media Gen's president and CEO said the company was looking forward to taking advantage of Yahoo's additional display offerings. He added that the company wasn't just relying on Yahoo and is looking to online revenues to be generated by real estate ads with Zillow as well. Again, revenue numbers or specific targets were not discussed.
-- Online ad price hike?: When asked about the kinds of prices Media Gen is getting from online ads given the tougher economy, Reid Ashe, the company's COO said that some publications are more "under-priced than over priced in some markets." He added that ad rates for some of its online newspapers may go up in 2009.
-- The future: Morton said he wants Media Gen to be regarded as an "information company" as opposed to a newspaper company. Certainly, given the downward trend the industry has been facing, it makes sense to want to avoid the label. But newspapers are and will remain the core of Media Gen, Morton said. But newspapers can take on different forms. "Shrinking the size of the newspaper isn't necessarily bad. It's an option in some areas. The customers who read a full newspaper these days are few and far between. But we still have to provide the information they want. We'll look at that things like shrinking newspapers' size on a market by market basis. But what will the future look like? Newspapers have a long life, even if they're not a necessarily a printed paper delivered to the front doorstep."
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Economic Meltdown Strikes Viacom, CBS Corp.; Both Warn Investors On Lowered Outlook
It looks to be a brutal Q3 reporting season: Both Viacom (NYSE: VIA) and CBS (NYSE: CBS) Corp have cut their respective outlooks, warning investors that they have been taking a hit on the ad slowdown and the wider economic pain touching all businesses right now.
-- Reuters: Viacom's Q3 earnings will come in at least 10 percent short of Wall Street estimates. The company pinned the decline on the worsening ad revenue picture. That news quickly shot Viacom's stock down 20 percent. Viacom Chief Executive Officer Philippe Dauman issued a statement saying the media giant, which owns MTV Networks and Paramount, was "moderating our near-term targets" in light of the dismal economy. In its Q2 earnings report, Viacom pointed to both retail and automotives categories as the reason for lower than expected revenues at its cable TV properties. While they held back on strong prediction for Q3, it's clear they couldn't foresee how bad things have gotten. Neither have financial analysts, who keep revising their forecasts downward. In a statement, the company is forecasting a 2 percent drop in global ad revenues, with a decrease of roughly 3 percent in the U.S. and an 8 percent gain internationally. The company will release its full Q3 results on Nov. 3
-- Marketwatch: CBS also attributed the current troubles to tightening ad budgets, saying it was lowering its outlook for the year and taking a $14 billion charge. That announcement send CBS shares down 14 percent. CBS said it now expects its third-quarter earnings excluding special items to be between 42 and 44 cents a share, compared to 51 cents a share in Q307. CBS will report its earnings on Oct. 30. Its guidance announcement is here.
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Analysts Lower Q3 Estimates For Online Ad Revenues; Offline Still Looks Worse
Given the continued downward spirals in the world's financial markets, UBS internet analyst Ben Schachter says the firm is lowering price estimates for online ad revenues ahead of the Q3 earnings report period. Still, it may be at least a small consolation that offline looks worse and some web-based companies could benefit as more companies look to cheaper and more targeted online ads. In an analyst note (PDF, not online), Schachter said that while the first two months of Q3 "were decent," September proved difficult.
He sees all companies being negatively impacted to some extent, but continues to believe that Google (NSDQ: GOOG) is relatively better positioned than the others because of its dependence on search, which remains more attractive to marketers than display. In particular, UBS expects Google's 3Q results will likely be slightly below consensus expectations. Softness in the display ads in Q3 has made UBS take a "cautious" view on 3Q results from Yahoo (NSDQ: YHOO) and ValueClick (NSDQ: VCLK).
-- Wachovia: Media analyst John Janedis sees total U.S. ad spend slipping 0.8 percent this year and next year, also citing the deteriorating economy. Janedis says what a lot of people have been thinking: things may get worse before they get better. Reuters notes that the Wachovia analyst previously called for growth of 1.2 percent for 2008 and 1.5 percent for 2009. Online has been revised downward as well, with 2009 spending expected to grow 10 percent rather than 15 percent Janedis last called for.
-- Deutsche Bank: While entertainment companies in general should be able to manage global credit crisis, analyst Doug Mitchelson lowered his estimates and ratings on several companies in the sector. AP reports that Deutsche Bank is now forecasting a recession in the U.S. and Europe going into next year. Mitchelson slashed his ad revenue forecast for entertainment by $502 million to $44.1 billion for 2008 and by $2.36 billion to $42.37 billion in 2009. The entertainment sector derived 29 percent of its revenue from ads in 2008.
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Earnings: XFMedia Q2 Revs Up 69 Percent; Net Income 22 Percent
Chinese advertising and media firm Xinhua Financial Media (NSDQ: XFML) reported Q2 revenue of $48.9 million, up 69 percent over $29 million in the year-ago quarter. Adjusted net income grew to $7.6 million ($.10 per share) from $6.3 million ($.09 per share). The advertising group was up a strong 79 percent to $16.7 million. Print and online, which are grouped together, more than doubled to $12 million. Broadcast revenue nearly doubled to $14 million from $7.2 million a year ago.
Release | Webcast (8:00 PM ET)
Disclaimer: Our former board member Larry Kramer is also on the board of XFML.
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Earnings: China's Focus Media Q2 Internet Ad Rev Up 201 Percent; Mobile 'Push' Ads Dropped; COO Out
Internet advertising is increasing in terms of overall relevance at China's Focus Media (NSDQ: FMCN). The Shanghai-based multi-platform digital media company—its main business is out-of-home advertising—reported $76.1 million of its $211.7 million total revenue came from internet ads, roughly one-third compared to one-quarter of in Q207. Revenues from internet advertising rose 201 percent over $26.4 million in Q207 and 53.6 percent over Q1's $51.4 million.
Discontinuing "push" mobile: Focus Media took a big hit in mobile advertising earlier this year when it agreed to ban mobile ad spam—slashing expected 2008 mobile revenue by $40 million. In the release, the company says it has disposed of or is discontinuing nine subsidiaries focused on the "push based mobile advertising business." Revenue for those operations dropped to $400,000 in Q2 from $11.3 million in Q1.
COO out: The company also announced that COO Diana Chen left for "personal reasons" and will not be replaced in the near future.
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Earnings: Kids Ad Network GoFish Narrows Losses
GoFish (OTCBB: GOFH), the San Francisco based kids online ad network, has reported its Q208 numbers, and narrowed its losses from $5.9 million in the year-ago quarter to $3.6 million in Q208. Revenues were $1.28 million, a huge jump over revenues of $31,686 in Q207. Earlier in June, the company announced Tribal DDB Worldwide Founder and former CEO Matt Freeman as its new CEO. The company's original focus was on older children and young adults, but it recently decided to aim at "the 6-17 year old demographic and their co-viewing parents," according to its SEC filings, picked up by BizJournals. Meanwhile, it did save some money on cutting jobs: it halved the number of employees in general and administrative jobs from 10 a year ago to five at the end of the most recent quarter. It also cut product development jobs from 14 a year ago to 5 as of June 30. At the same time, it bulked up its sales staff in the same period, though, more than doubling from 10 people to 25.
More details in release, and its 10-Q.
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Earnings: Rodale Q2 Revenues Rise 7.6 Percent As Online Gains Top 27 Percent
Health/lifestyle mag publisher Rodale appeared to have a different Q2 than most of its print competitors. The company, which is privately held and therefore has decided to withhold dollar amounts, says that its total revenue grew by 7.6 percent in Q2, while all online revs, including ads and subscriptions, was up 27.1 percent. While impressive compared to most other pubs, the company is obviously not immune to the ad slowdown, though it surely benefited from having the books and e-commerce business to buttress its primary mag products. Last year, Rodale's Q207 online ad revs gained 117.2 percent year-over-year. Meanwhile, print ad sales were up 8.3 percent—versus what Rodale says is 4.9 percent decline for the mag industry as a whole. In Q207, Rodale said that ad pages climbed 20.6 percent.
Getting back to online, uniques and page views for Rodale's sites were up by 74 percent and 94 percent, respectively, compared to the same period last year, though the company did not report what last year's numbers for those categories were. Revenues for Rodale's magazine-branded sites increased by 14.7 percent in Q2. For the first half of 2008, the company said 36 percent its new customers have been acquired through online channels, compared to 29 H107. Release
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