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Papers cite 20.6% drop in revenue, but stay in black
Philadelphia Newspapers L.L.C. expects to see a 20.6 percent drop in revenue this year, a figure that includes a 27.7 percent fall in ad revenue, according to documents the company filed late Tuesday in its bankruptcy case.
The company projects advertising and overall revenue to continue to fall through 2011, but with the decline diminishing each year.
The company will still post positive end-of-year cash flow figures in all three years, according to the filing, largely because of how it accounts for about $27 million in bankruptcy expenses this year, and expected cuts in labor and benefits expenses.
The projections show the company trimming about $18.5 million - roughly 10 percent - of its $180 million in labor and benefits expenses by next year.
Jay Devine, a spokesman for the company, said some of the savings would be achieved through contract negotiations with the company's 14 unions. Other savings would come from cuts in wages and benefits for nonunion employees, he said.
The financial projections were part of a revised disclosure statement filed with U.S. Bankruptcy Court to provide creditors with a complete picture of the firm and its finances. Chief Bankruptcy Judge Stephen Raslavich approved it yesterday.
The disclosure statement must be filed as part of the company's reorganization plan, which calls for the media firm to pay its senior lenders $67 million in cash and property to clear $300 million in debt.
Under the plan, the company is to be put up for auction Nov. 18 to see if there are bidders willing to offer the lenders a better deal.
On Tuesday, the lenders turned down a more lucrative offer from the company that included an additional $20 million to be paid over five years.
The owner of The Inquirer, the Philadelphia Daily News, and Philly.com reported that it expected $316 million in total revenue this year, down from about $398 million last year. Total revenue in 2007 was $443 million.
Revenue is projected to fall 7.4 percent in 2010 and 2.4 percent in 2011, the statement indicated.
The company projected ad revenue this year at about $202 million, down from $279 million last year and $335 million in 2007.
Ad revenue is projected to drop 12.6 percent in 2010 and 5.8 percent in 2011.
The company expects positive cash flow of $4.6 million in 2009. It previously predicted $12 million.
It projected about $12 million in positive cash flow next year and $12.5 million in 2011.
Contact staff writer Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.
