Earnings report: Paywalls could add more than $20 million to McClatchy coffers

McClatchy, the parent company of The Kansas City Star, lost $100,000 in 2012, in part due to debt restructuring, compared to a profit of $54.4 million in 2011, the company reported today in its quarterly earnings report.

But company officials claimed a new paywall program – called “Plus,” which went into effect across the company Dec. 5 – added more than $1.2 million in revenue – could take in more than $20 million over the course of the year.

The company cited debt restructuring as a major reason for losses. The 2012 reporting period included an extra week, and the company said that resulted in an extra $4 million loss., and said revenues were up 1.2 percent from Q4 2011, with an intake of more than $355 million.

Ad revenue was down 6.3 percent ($253.9 billion). Circulation revenue was down 1.9 percent ($65.7 million). Digital advertising, however, proved to be a bright spot, growing 3.5 percent over 2011; digital-only ad revenue was up 14.9 percent. Total digital advertising represented 20.2 percent of all company ad revenue in 2012, compared to 18.5 in Q4 2011.

The company’s new digital ad agency, along with its direct marketing efforts, helped contribute 36 percent of the company’s digital ad revenue. The program, ImpressLOCAL, is currently in the Kansas City and Fort Worth markets; it will roll out to more markets this year.

On a conference call with reporters, CEO Pat Talamantes said more than 8,400 people have opted into the company’s paywall program, which will also enroll existing print subscribers when their subscriptions are renewed. However, Talamantes said that the company will make exceptions for subscribers who don’t have computers.

Talamantes said the paywall program “is exceeding our initial expectations.”

The early results are promising: a vast majority of renewing subscribers have accepted the program, telling us our print readers value our content and high-quality journalism and are willing to pay for it in a digital format. Similarly, we have added thousands of new digital-only subscribers to our paying customer base. In total, the Plus Program contributed $1.2 million in incremental revenues in 2012 which is impressive considering that most of our newspapers launched the program in the fourth quarter. We believe that the new Plus Program could result in more than $20 million in new revenues by the end of the year.

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