We deal with a lot of publications here at Mediabids on behalf of thousands of customers and, based on his earning statements, I don't think that McClatchy CEO Gary Pruitt understands what goes on at his own papers. In his earnings report Pruitt said that the digital side of his products was growing but that print upsells (a combination print and online buy) were dragging down earnings. I suspect there is some creative accounting going on to arrive at this conclusion. Publications will tell you (McClatchy publications included) that they can give enormous discounts on print but they have to keep the online rate card intact. So if you buy a combination for, let's say $1,000, you think you are pending $600 on print and $400 on online, but when they generate a bill they will make it $900 online and $100 print (I am using these numbers as an example but propotionally they are pretty accurate). That doesn't mean that the advertiser only wanted to spend $100 in print or that they would have spent $900 online but publications bill out in that way to give someone like Pruitt a happy story to tell. I hope they don't believe that advertisers are actually willing to pay their online rates without the print side discounts.

Here is part of the story, from paidcontent.org:

Earnings Call: McClatchy’s Pruitt: Digital Growth Returns; But Print Upsells Still Drag Online Revs

After posting an online revenue decline of 2.9 percent in Q2, McClatchy (NYSE: MNI) was able to reverse that trajectory to see digital revs rise 3.1 percent in Q3. As print continues to decline—and McClatchy chairman and CEO Gary Pruitt didn’t surprise anyone on the Sacramento company’s earnings call by saying print would fall further in Q4—online is showing signs of more stability and, most importantly, more independence from print. “As online grows, we’re less vulnerable to print declines and we’ll be less burdened by print costs,” Pruitt said.

Unfortunately for McClatchy this time out, print upsells remained a particular drag on its web ads. Pruitt told investors that a little less than half of McClatchy’s web ads are pure online sales, not tied to print. It’s hard to say if it’s improved online sales on its own—plus its 14.4 percent stake in web recruiter CareerBuilder—or the decline of print, but just over 50 percent of McClatchy’s online help wanted revenues are directly from the web. Once the economy rebounds, that tilt in favor of online and away from print is expected to accelerate.

Full story here