Profit up at The News in 2013: Company cites expense decline as a key reason

An ongoing effort to reduce expenses and find new sources of revenue at The Buffalo News has continued to allow the company to remain profitable amid tumultuous industry conditions.

And The News has now publicly identified the profit margin that’s being sought by Berkshire Hathaway every year – company officials want to maintain a 10-percent profit margin, Publisher and President Warren T. Colville told employees at the recent State of the News meetings.

Total company operating profit jumped $2 million in 2013, Colville announced at the Jan. 31 meetings. The News made an $11.2 million operating profit last year, a 21.6 percent jump compared with the $9.26 million operating profit in 2012.

Net profit was $5.8 million in 2013 compared with $4.1 million in 2012.

“A lot of the stars lined up for us this past year,” Colville said.

Still, revenue continue to trend downward, and the company is trying to continue to trim its expenses.

Overall, revenue was down $3.5 million, while expenses were down $5.5 million, the publisher said.

Print advertising revenue continued its “pretty steady decline,” dropping by about $5.5 million to $55.5 million, a decrease of 9.1 percent from 2012.

Circulation revenue, buoyed by the elimination of home delivery discounts and a $.25 increase in the single-copy price for the newspaper mid-year, increased by about $2 million, or 7.1 percent, to $29.1 million.

The company did not meet its goal for digital revenue last year, pulling in only $5.5 million, a 5.9 percent decrease over last year and short of its $6 million goal.

The News made about $5.9 million in digital revenue in 2012.

“We had been going up pretty steadily over the past five years,” Colville said.

The goal for digital revenue this year is more than $6 million, he said.

Overall, operating revenue was down 3.5 percent compared to 2012.

The 2013 profit margin was 11.8 percent compared with 9.3 percent in 2012.

The News had a price to pay for raising prices and eliminating discounts – the loss of circulation.

In terms of newspaper circulation, Sunday home delivery was about 162,000, down from roughly 173,000 in 2012 and about 183,000 in 2009. Daily home delivery last year was down to about 107,000 from about 114,000 in 2012 and about 121,000 in 2009.

In terms of single-copy sales, Sunday were down to about 42,000 from about 47,000 in 2012 and about 57,000 in 2009. Daily single-copy sales were down to 23,000 from 26,000 in 2012 and 36,000 in 2009.

“Those are some pretty significant losses,” Colville said.

The News finished 2013 with about 3,000 digital-only subscribers, up from about 1,600 in 2012 but nowhere near the previously stated goal of 17,000.

“I don’t know if we’ll ever get to that number,” Colville said. “But we’re not alone, by the way. That is happening pretty much all over.”

The fact that the number of digital subscribers isn’t growing may also indicate that seven-day print subscribers are not changing the type of product they receive, said Carol Horton, vice president of marketing and public relations.

In terms of expenses, 2013 saw a total of $84.4 million in expenses, down from $89.9 million in 2012. That’s down from about $107 million in expenses in 2008.

“Had we not reduced the expenses, we would be losing money and losing a lot of money this year,” Colville said.

Payroll was down last year about $1 million, though pension, benefit and workers compensation costs were all up, he said.

Newsprint costs were down about $1.3 million, due to printing fewer papers as well as increased buying power along with other newspapers through BH Media, Berkshire Hathaway’s Omaha-based newspaper group.

Looking to the year ahead, company officials said they plan to sustain a marketing budget of about $750,000 to $775,000, though a majority of that is achieved through trading with other media outlets.

Improvements are also planned for the subscription page at

A digital sign on the building is also anticipated to be put up, hopefully in the spring, Horton said.

Some new editorial initiatives were also announced during the State of the News meetings, including a move that will make the home of Gusto, as well as the planned spring launch of [BN] Slap Shot, a new smartphone app with Sabres news.

Editor Michael K. Connelly called 2014 “the year of the tablet,” announcing that more apps and websites are in the works.