Last year was the first time in decades that The Buffalo News did not pull in at least $100 million in annual revenues, Publisher and President Warren T. Colville told employees at the recent State of the News meetings.
Operating profits have improved, however. And 2012 was the first time the company met its own goals for making money from digital products.
Still, since the company instituted a digital subscription model, the News has fallen well short of its goals for digital subscribers.
Overall revenue has continued to drop, as circulation and advertising revenues fall.
The company continues to make decent money,Colville said, and the goal remains to keep the News profitable despite continued losses in revenues.
Colville told employees the company has to keep its revenue line and expense line at least parallel to each other, “and make a fair amount of money.”
“We want to be able to sustain a profit level,” he said, adding that he didn’t know what that number is.
Despite the decline in revenues, the News’ overall profitability improved slightly from the more than 25-year low it hit last year. The News earned slightly more than 10 cents in operating profits for every $1 in sales last year. That was a penny better than 2011, when the paper earned 9 cents on the dollar, but a far cry from its profitability during its peak days in the late 1990s, when the News earned as much as 35 cents in operating profits for every $1 in sales.
Last year, according to figures released by the company, the News had an operating profit of $10.2 million, up 9.4 percent from the $9.3 million it made in 2011.
Overall, revenues were down 3.1 percent to $99.2 million, but expenses were down even more, by a total of 4.4 percent to $89 million.
The company saved $186,402 in payroll costs, a decline of .5 percent.
“We really are not as bad off as other newspapers,”Colville said.
Overall operating expenses were $88.9 million. Since 2007, the company has reduced annual expenses by about $12 million.
“The reductions have not kept pace with the decline in revenue,”Colville said.
Circulation revenue dropped overall by 1.2 percent to $27.2 million.
On the print advertising side, revenue dropped 6.8 percent last year to $61.2 million. The company saw print advertising revenue fall from $65.6 million in 2011.
The biggest percentage drop in print advertising was in classified advertising, which fell 14.7 percent to $15.6 million.
Local retail advertising revenue, however, grew by 2.8 percent.
On the digital side, the company experienced “very good growth,”Colvillesaid. The News brought in $5.9 million in digital revenues, an increase of more than 17 percent. That’s a sharp improvement compared with 2007, when the company took in $1.8 million on the digital side.
Last year, many other newspapers saw that digital revenue figure shrink,Colvillesaid.
“We’re very fortunate that line continues to go up,” he said.
Digital classified revenue was up 22 percent, while digital advertising was up about $875,000.
While more than 70,000 users have registered on buffalonews.com, the company fell well short of its goal of getting 17,000 digital-only subscribers,Colville said.
Since moving to the digital subscription model, only 1,620 customers have signed up for a digital-only subscription. The total grows to about 2,900 when you include customers who don’t put a vacation hold on their digital subscription when they put a hold on their print subscription.
Colville said he had serious concerns about not seeing those digital subscribers, though he added he expects the number to continue to grow.
“The whole model is based on reaching that number,” he said.
Since the paywall went up, the overall number of visits to buffalonews.com is down 12.8 percent. Although the number of unique visitors is up 17 percent, the number of page views is down 11.3 percent.
In terms of print circulation numbers, Sunday home delivery was down 1.9 percent to roughly 173,000 copies. Single copy sales of the Sunday paper were down 8.2 percent to about 47,299.
“We must find ways to slow the decline of our Sunday edition,” Colville said.
Daily home delivery was down 2.9 percent to 113,660 copies, while daily single copy sales were down 8.1 percent to 26,055.
With overall print circulation continuing to drop,Colville stressed the importance of combating that trend.
“We really need to do everything we can to slow that line down and grow our digital subscriptions,” he said.
The company offers a home delivery of the Sunday paper with a digital subscription for $1.99 a week.Colville said that in a recent call, News Chairman Warren Buffett described that offer as an “incredible value.”
In expenses, overall payroll costs were down half a percent to $36.2 million.
When asked about the possibility of further employee buyouts, Colville said that’s always an option, but there are currently no plans for that at this time. Such a move wouldn’t be necessary if things stabilize, he said.
He praised the work of the newsroom, saying, “We have something no one else has, and that is the great journalism on the third floor.”
Colville said the company “needs to do a lot more” to drive revenue “in nontraditional ways,” including commercial printing. In total, those nontraditional moneymakers brought in $11 million last year.
“That’s $11 million dollars that we didn’t have five years ago,”Colville said.
Since 2009, the News has used it rotary print business to print other newspapers, and is looking to add more,Colville said.
Colville also said it’s imperative the company get paid for the content it produces.
Colville noted that the company is in the midst of a two-year, $1.8 million marketing campaign. A series of ads on NFTA buses is slated to begin soon and run through September.
The News is also running 15-second “bookend” TV spots promoting its sports coverage through the end of February.
A number of newspaper section changes are also in the works.
Beginning March 7, the Gusto section will move from Friday to Thursday, and HomeFinder will move from Saturday to Friday.
A new health, parenting and fitness-themed section, Refresh, will become a weekly feature in the News on Saturdays starting March 9.
“If we don’t continue to evolve,”Colville said, “we’ll become extinct.”
The State of the News meetings held on Jan. 31 were the first since Colville took over as publisher from Stan Lipsey on Jan. 1.
David Robinson contributed to this report.
Buffalo Newspaper Guild CWA Local 31026 