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Star Tribune’s 2011 ad revenues already under budget

All things considered, the Star Tribune had a bang-up 2010 – cash flow was so strong that employees got profit-sharing bonuses and reinstated 401(k) matches.

However, 2011 is off to a rocky start. Star Tribune CEO Michael Klingensmith confirms overall ad revenue is below budget, due to weak national advertising.

“The softness, which is being experienced by most major metro papers, is coming from three categories — pharmaceuticals, telecom and national automotive,” Klingsenmith says. “Meanwhile, local business, classified, and digital are all up, but not enough to offset these national accounts.”

How steep is the revenue drop? A knowledgeable Strib source says the figure of “more than a million dollars” is floating around the executive suites, a double-digit decline for the first two months. Klingensmith declined to “reveal or confirm specific numbers.”

The Strib was able to give out bonuses for 2010 not because sales rose, but because cost-cutting and conservative revenue assumptions (incorporating a sales drop) lifted cash flow. This year, the revenue assumptions aren’t starting out conservative enough.

Klingensmith — who has been remarkably forthcoming and accurate in his year-old tenure — says he does not necessarily expect the first-quarter trend to persist for the full year, stating the fall-off “means absolutely nothing to employment at the paper. Overall, our business remains very stable and we continue to make gains in consumer revenue (circulation) as well.”

The latest news comes just before the Strib’s newsroom labor contract expires on July 31. Workers, despite the profit-sharing and 401(k), will want to undo some of the deep cuts they absorbed during 2009’s bankruptcy.

Klingensmith has already stated that profit-sharing won’t be as large in 2011 because the Strib is making long-overdue investments in things like its website. Skeptics might view the latest news as a tactic to deflate future demands, though that wasn’t my source’s intention and management has not been poor-mouthing prospects to the troops.

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Comments (9)

  1. Submitted by David Hanners on 03/30/2011 - 01:51 pm.

    “The Strib was able to bonus employees last year….”

    When did “bonus” become a verb?

  2. Submitted by David Brauer on 03/30/2011 - 02:14 pm.

    If OMG is now in the dictionary …

  3. Submitted by Dan Mitchell on 03/30/2011 - 04:06 pm.

    Sorry, no. “Bonus” as a verb is just awful. And “OMG” isn’t really “in the dictionary.” It’s recognized by the OED, which is a non-prescriptive encyclopedia of language. So it doesn’t mean you’re allowed to use horrible grammar now.

  4. Submitted by David Brauer on 03/30/2011 - 04:11 pm.

    I can handle almost any pressure except from grammarians. Awfulness fixed. Douse your torches, ground your pitchforks!

  5. Submitted by John Reinan on 03/30/2011 - 06:09 pm.

    Jeez, it’s a tough time to have a labor contract come up. It’s hard to imagine the paper will want to give back many of the cuts — as you point out, David, they were at the core of 2010’s financial success. The management may be genuinely good guys, want to treat the news staff fairly, and still feel they have to preserve the cuts to be viable going forward.

    Certainly all the newspaper industry contracts signed over the last couple years have been pretty unfavorable to the journalists, so that can’t be encouraging to the Guild.

  6. Submitted by Hal Sanders on 03/30/2011 - 08:19 pm.

    The life of a pedant is a lonely one.

  7. Submitted by Paul Udstrand on 03/31/2011 - 09:02 am.

    I’ve been bonused by Bauer’s grammer.

  8. Submitted by B Maginnis on 03/31/2011 - 10:15 am.

    WTF?

  9. Submitted by Norman Larson on 03/31/2011 - 11:21 am.

    Paul: grammer?

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