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Journal Register Co. (NYSE: JRC)
Journal Register Co. (NYSE: JRC)
State Street Square 50 West State Street
Trenton, N.J. 08608-1298 609-396-2200
Chairman, President and CEO:
Robert M. Jelenic
Revenues (FYE December 31, 1998): $426.8 million
Net Earnings (FYE December 31, 1998): $41.1 million
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Business New Haven
4/5/1999
By: BNH
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Extra, extra! Every day approximately 653,000 readers pick up a daily newspaper published by companies owned by the Journal Register Co. If you live in greater New Haven you are likely to be one of those readers.
The Journal Register is the parent of 24 daily newspapers including the New Haven Register, its largest daily paper, and 185 non-dailies. The Register has daily circulation of 100,000 and Sunday circulation of about 112,000 (as of September 1998).
But the Journal's tentacles extend far beyond the Elm City. Ownership in Connecticut includes the New Britain Herald, the Bristol Press, the Register Citizen in Torrington and the Middletown Press. The company's non-dailies in the state include the Shore Line Newspapers, Elm City Newspapers, Imprint Newspapers, the East Hartford Gazette and Thomaston Express, Connecticut's Country Kids, Tradewinds, Gamer Publications and the Foothills Trader.
But Connecticut itself is only part of the readership market for the JRC. Operations also include Rhode Island and Massachusetts, Ohio, Philadelphia, St. Louis, the mid-Hudson Valley and Capital/Saratoga areas of New York state. Several of the company's publications now have online internet sites.
The JRC was formed in 1990, but many of its newspapers have been in business for more than a century, including the New Haven Register (founded in 1755). In 1997, the company experienced a consolidation of entities under the common control of finance giant E.M. Warburg, Pincus & Co., LLC. The initial public offering of 9.375 million shares of common stock sold at $14 per share. Proceeds of $123 million were applied toward the retirement of outstanding subordinated notes (held by Warburg, Pincus and its associates) and to pay part of the outstanding balance under a term loan.
Company-wide advertising revenues for the 1998 fiscal year were $312.9 million, which accounted for 73 percent of the Journal's total revenue base. Circulation revenues accounted for 21 percent and commercial printing six percent of remaining of revenues. Advertisers in JRC papers are largely local and provide an income stream that in some respects is more steady than that of national advertisers.
The company's acquisition strategy targets daily and non-daily newspapers and related publications. The JRC's strategy is based on clustering where it can take advantage of synergies within a region to produce cost efficiencies by sharing facilities, production, editorial and administrative functions and to increase advertising revenues by cross selling. The company also targets new growth areas and considers those with favorable demographics.
Its acquisitions in 1998 continued those trends. Early in the year the JRC acquired HVM, L.L.C. in New Milford, which publishes eight weekly papers and three monthly magazines, in a cash deal worth about $3.8 million. In mid-year the company acquired the New York, Pennsylvania and Ohio newspapers of the Goodson Newspaper Group for $300 million. This acquisition strengthens the company's presence in the Philadelphia and Ohio clusters and represents the core for its new mid-Hudson Valley cluster.
In September, the company celebrated its 13th acquisition since 1990 with Taconic Media, headquartered in Dutchess County, N.Y. This acquisition included seven weekly newspapers with aggregate 1997 revenues of about $2.2 million. JRC executives believe this will fit nicely into its mid-Hudson region cluster.
But stop the presses. Looking at the balance sheet as of September 30, 1998 gives one pause. The company had an accumulated deficit of $598.2 million. With additional paid in capital of $358.2 million, the net stockholders' deficit was $239.5 million. Senior debt, less maturities, was $782.0 million.
For the three months ended December 31, 1998 total revenues increased by 29 percent to $121.2 million, from $94.2 million for the comparable 1997 quarter. Net income rose six percent to $14.4 million (30 cents per diluted share) from $13.5 million (28 cents per diluted share) the year before. For the year ended December 31, 1998 the company posted a 19-percent growth in revenues to $426.8 million, compared to $359.4 million for the prior year. Advertising revenues rose 17 percent to $312.9 million, compared to $266.9 million for the 1997 year.
Net income for 1998 rose to $41.1 million (85 cents per diluted share) compared to $22.9 million (51 cents per share) for the previous year. Note the current year includes an extraordinary charge of $4.5 million; the prior year includes a special charge of $31.9 million.
The company does not pay dividends at this time. JRC directors recently announced that they had authorized a share-repurchase program of two million shares. Repurchases of the stock will be financed either by borrowing under the revolving credit facility or through cash flow.
But the company's high debt position and dependence on local economies in a highly competitive business may be dampening its stock's performance. The company's stock has been trading in the $10 to $15 dollar range, a level comparable to the IPO price of two years ago ($14). It closed at 12 1/16 on March 19 - about half its 52-week high of 23 7/8.
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