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Annual Report Markets and Journal Brands

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Annual Report Markets and Journal Brands ANNUAL REPORT MARKETS AND JOURNAL BRANDS ARIZONA MICHIGAN KGUN-TV (ABC)—Tucson WSYM-TV (Fox)—Lansing KWBA-TV (CW)—Tucson KMXZ-FM 94.9 (Contemporary)—Tucson NEBRASKA KQTH-FM 104.1 (News/Talk)—Tucson KMTV-TV (CBS)—Omaha KGMG-FM 106.3 (Oldies)—Tucson KEZO-FM 92.3 (Rock)—Omaha KFFN-AM 1490 (Sports)—Tucson KSRZ-FM 104.5 (Contemporary)—Omaha KQCH-FM 94.1 (Contemporary)—Omaha CALIFORNIA KKCD-FM 105.9 (Rock)—Omaha KMIR-TV (NBC)—Palm Springs KXSP-AM 590 (Sports)—Omaha KPSE-TV (MNT)—Palm Springs NEVADA FLORIDA KTNV-TV (ABC)—Las Vegas WFTX-TV (Fox)—Fort Myers/Naples Car Connection—Northeast OKLAHOMA Clay Today/Clay County Leader—Clay County KFAQ-AM 1170 (News/Talk)—Tulsa Florida Mariner—Statewide KVOO-FM 98.5 (Country)—Tulsa Jacksonville Register—Jacksonville KXBL-FM 99.5 (Country)—Tulsa Pelican Press/Marketplace—Siesta Key, Sarasota Ponte Vedra Recorder—Ponte Vedra TENNESSEE St. Augustine Underground—St. Augustine WCYQ-FM 93.1 (Country)—Knoxville WWST-FM 102.1 (Contemporary)—Knoxville IDAHO WKHT-FM 104.5 (Contemporary)—Knoxville KIVI-TV (ABC)—Boise WKTI-AM 1040 (Nostalgia)—Knoxville KNIN-TV (CW)—Boise KSAW-LP (ABC)—Twin Falls WISCONSIN KJOT-FM 105.1 (Rock)—Boise WTMJ-TV (NBC)—Milwaukee KQXR-FM 100.3 (Rock)—Boise WGBA-TV (NBC)—Green Bay KTHI-FM 107.1 (Classic Hits)—Boise WACY-TV (MNT)—Green Bay* KRVB-FM 94.9 (Adult Alt.)—Boise WTMJ-AM 620 (News/Sports/Talk)—Milwaukee WLWK-FM 94.5 (Classic Hits)—Milwaukee KANSAS Journal Sentinel/JSOnline.com—Milwaukee KLIO-AM 1070 (Oldies)—Wichita Lake Country Publications—Hartland KFDI-FM 101.3 (Country)—Wichita NOW Publications—Southeastern Wisconsin KICT-FM 95.1 (Rock)—Wichita Merrill Foto News—Merrill KYQQ-FM 106.5 (Regional Mexican)—Wichita Rhinelander North Star Journal—Rhinelander KFXJ-FM 104.5 (Rock)—Wichita Waupaca County Post—Waupaca KFTI-FM 92.3 (Country)—Wichita Buyers’ Guide Group, Marketplace, Silent Sports, Wisconsin State Farmer, Wisconsin Horsemen’s News MISSOURI *Operates under local marketing agreement KSGF-FM/AM 104.1/1260 (News/Talk)—Springfield KTTS-FM 94.7 (Country)—Springfield KSPW-FM 96.5 (Contemporary)—Springfield KRVI-FM 106.7 (Variety)—Springfield FINANCIAL HIGHLIGHTS $ millions, except share and per share data 2010 2009 At December 26 At December 27 Revenue $376.8 $365.5 Broadcast license impairment — $(20.1) Operating earnings $53.0 $9.6 Net earnings $34.4 $4.3 Diluted earnings per Class A and B share $0.59 $0.05 Class A common stock price per share High $6.52 $4.79 Low $3.08 $0.37 Close $5.10 $3.92 Total assets $431.8 $473.2 Notes payable to banks $74.6 $151.4 Total equity $208.9 $171.1 Common shares outstanding Class A 43,196.3 41,783.0 in thousands; not including treasury stock Class B 8,594.5 9,642.3 Class C 3,264.0 3,264.0 3 LETTER TO SHAREHOLDERS DEAR FELLOW SHAREHOLDER, This show combines local lifestyle and entertainment content with in-show advertising opportunities. We also grew our Journal Communications experienced a successful 2010. digital revenue by launching a number of digital projects We enhanced our core local brands and valuable franchises. including “buy local” advertising programs with coupon We narrowed our overall business focus by exiting the direct sites and directories in ten of our markets. mail business and printing services segment. We continued to refine our local strategy by expanding new content and PUBLISHING evolving in an increasingly digital world. Publishing revenues of $182.8 million were down 5.9% from 2009. Advertising revenue at the daily newspaper was For the full year, Journal Communications delivered net down 9.2%, a reduction in the prior year rate of decline of earnings of $34.4 million on revenue of $376.8 million. 32.0%. Digital revenue, including online classified revenue, Our revenue growth in 2010 was driven in part by robust grew. Print classified advertising revenue leveled, performing political and issue advertising and Olympic advertising in better than we expected. We targeted new small business broadcast. We also saw a reduction in the rate of revenue advertisers to offset losses in key retail categories like travel decline in publishing as well as a resumption of growth and department stores. We are optimistic about our potential in digital advertising. Across our businesses we remained future revenue opportunities from additional commercial disciplined on costs, and we used our cash to reduce our debt, print and delivery contracts with other publishers. ending the year at $74.6 million in notes payable to banks. Digital revenue was up 13.1% in publishing during 2010, which reflected a return to growth. We enhanced digital REVIEW OF 2010 RESULTS content on JSOnline.com™ and launched both free and paid iPhone applications, expanding the reach of our products. BROADCAST JSOnline.com launched a PolitiFact® site in 2010 which Broadcast revenues of $194.4 million increased 13.3% with provided election coverage that galvanized local audiences, television revenue up 18.7% and radio revenue up 4.8%. We receiving the highest local online audience of any regional received a boost early in the year when Olympic viewership at PolitiFact® site. our three NBC stations helped generate $2.2 million in revenue. Milwaukee’s WTMJ ranked third in viewership in In April, Journal Sentinel reporter Raquel Rutledge was the country for the 17-night Olympic run. In fall, heavily awarded the Pulitzer Prize in the local news category for her contested elections in Nevada and Wisconsin helped political series “Cashing in on Kids.” This is the second Pulitzer Prize and issue advertising revenue reach $16.7 million, well for local reporting that our paper has received in three years. exceeding our expectations. Our investment in enterprise journalism also included the breaking medical series “One In a Billion,” a year-long, Core advertising revenue in many of our Broadcast markets multi-media investigation into a young boy’s mysterious grew in 2010 driven by strong auto advertising which grew condition, and the team of local doctors who made history 25.6% from 2009. We focused on growing our local direct when they used DNA sequencing to save his life. business seeking to add new local customers. We made strides building local content with the addition of three Like the daily newspaper, Journal Community Publishing new Morning Blend ™ shows. Group saw a slowdown in the rate of revenue decline. We continued to streamline our portfolio of community news- papers, and redesigned several of the NOW™ publications. 4 Milwaukee Journal Sentinel Milwaukee Left to right: Andre Fernandez, Executive Vice President, Finance and Strategy and CFO; Elizabeth Brenner, Executive Vice President, COO Publishing; Steven Smith, Chairman of the Photo credit: Gary Porter/Photo credit: Board and CEO Some publications in our Northern Wisconsin Group 3. Grow publishing advertising market share through product, including Wisconsin State Farmer™ showed continued pricing and distribution advantages. To that end, in 2011, strength in advertising revenue. we added a Wednesday paper delivery for Sunday only Journal Sentinel subscribers and transitioned our non- IPC PRINT SERVICES AND PRIMENET subscriber carrier delivered product to the mail also on We narrowed our strategic focus with the sale of IPC Print Wednesday. These moves have drawn solid advertiser support. Services, our printing services segment, to Walsworth Publishing Company in December 2010. In February 2010, 4. Invest in digital media. We will enhance digital content in an we also sold our direct marketing business PrimeNet. These effort to drive audience in key markets such as Milwaukee divestitures allow us to focus on our core Broadcast, and Las Vegas. We will create additional applications for Publishing and digital media assets. audiences to access our content from any mobile device. We will encourage and pursue new entrepreneurial digital business initiatives from our local business leaders. 2011 STRATEGIC PRIORITIES 5. Maintain financial discipline. We will remain disciplined Across Journal, we have significant strengths. We are a focused on costs, helped by the continued centralization of local media company with strong local brands, several cross- shared business activities, while investing in our people media markets, significant assets, a solid balance sheet, and and products to help drive future growth. a seasoned management team. We are strategically positioned to grow our local market Moving into 2011, core growth will be a priority in a non- businesses in the long term due to the quality of our products, Olympic and non-political year. Successful future growth the dedication of our talented staff, and the prudent will require us to depart from strategies of the past as we management of our assets. We are committed to reaching transition to a digital era. To that end, our strategic priorities our objectives and maximizing the value of our exceptional for 2011 and beyond include: business. 1. Enhance our core business. We possess strong brands in Thank you for your continued commitment to Journal both broadcast and publishing. We will protect key fran- Communications. chises and grow our local markets by understanding the needs of our local customers and by seeking opportunities to expand established brands to reach growing audiences. 2. Expand local programming initiatives like The Morning ™ Blend as well as morning news programming. Original Steven J. Smith programming creates significant value for specific targeted Chairman of the Board and Chief Executive Officer audiences that are attractive to our local customers. 5 STRONG LOCAL MARKETS GROWING LOCAL AUDIENCES We build loyal audiences on our stations and serve our local communities and our advertisers. In Journal markets, we serve local audiences across radio, television, publishing and digital properties with the objective In our television-only markets—Fort Myers, Green Bay, of growing local market share.
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