We recently finished the 2nd Quarter and the good news is we are ahead of plan and strongly on track to payout Profit Sharing for the year.
As you can see by the chart below, we finished the Quarter with an EBITDA of $12.6 Million on a goal of $12.0 Million. Combined with our 1st Quarter performance of $8.2 Million we finished the first half of the year with EBITDA of $20.8M on a goal of $18.0 Million or 15.6% ahead of our goal. Our goal is to pay out an extra week’s pay this year to all employees for hitting our annual target of $40 Million.
Our first half performance is a remarkable achievement in this economy and this industry. We have a long way to go to transform Journal Register Company into a modern, multi-platform news and information company from its reliance on print. But with this kind of financial achievement we are buying both the time and resources to make the necessary changes.
And while the numbers track the financials results of our change to date they don’t adequately tell the profound culture change underway at our Company as our employees forge a profitable path to the future. Our employees are experimenting with new tools, new ways of telling stories, new ways of selling solutions to our advertisers and re-connecting with the communities we serve.
Our Ben Franklin Project (http://bit.ly/apHRbA) has put the industry on notice that we will not be held hostage to expensive and inefficient proprietary production systems. Neither will we beholden to a tradition that says we know what’s best for the audience. With each day we are ever more harnessing the new digital tools to include our audience in creating the necessary and compelling journalism to better serve our communities.
All of this effort is necessary for an industry that has slid so deeply. The industry has lost half of its advertising base in the last four years. The new competitors have cost bases a fraction of the print industry. At least two-thirds of all newspaper costs are in infrastructure – areas such as printing, distribution and overhead. Only a third are in what we do – creating content and sales. Our competitors, small as they are now, are growing rapidly with costs mostly focused on the creation of content and sales.
We have tough choices ahead to reduce those infrastructure costs. But reduce them we must. In my 34 years in this business I have seen typewriters turn into closed-system Visual Display Terminals. VDTs turn into desktop computers and those into laptops and laptops into iPhones more powerful than the first computer I ever used. Each development brought gut-wrenching change but we adapted and thrived. We and the industry must do so again. But this time the change has to be different. Yes, we will have to reduce the infrastructure costs and that will be tough for those affected and their families. Not recognizing how tough and how necessary these changes will be is foolish.
We must also radically re-think about how we do business. The idea that we are dominant in the news business is gone. Moving forward we will have to be open to more partnerships and recognize that while we may be the core of any local news network in our communities we will no longer be the sole source.
The folks we used to call the audience are now our customers and competitors both. So we must continue to open our doors to them as we have with our Community Media Labs for bloggers if we want to remain relevant. We have to create more partnerships like our recently announced deal with GrowthSpur to help those community bloggers make money and survive. We need to welcome the start-ups in our communities like SeeClickFix who we now work with in 18 markets. And encourage the innovators like the folks at TBD.com who are looking for different ways to cover communities. No one can do it alone anymore. We must, as Jeff Jarvis has shouted from the rooftops: “Do what we do best and link to the rest.” To do so is to ensure a future of better quality products; lower costs and higher profits for us all.
Like our approach to Profit Sharing, if the Company wins the Employees win and by recognizing that we must partner with the innovators we will ensure the communities we serve will win.
Until next time, John.