Journal Register to use 'significant' free cash flow to increase shareholder value

By Jennifer Lanning Drey

Portland, Ore., June 19 - Journal Register Co. expects to continue to produce significant free cash flow that "will be put to good use to enhance shareholder value," Julie Beck, the company's chief financial officer, said Tuesday at the 2007 Newspaper Association of America Mid-Year Media Review in New York.

"Our consistent free cash flow continues to drive our growth and is a cornerstone of our success at Journal Register Co.," Beck said.

Additionally, she highlighted the fact that the company's net debt has dropped by $124 million since its acquisition of 21st Century Newspapers, Inc. in 2004.

"Debt reduction remains a priority for the company," she said.

Beck also discussed the major cost-savings initiative currently underway at Journal Register, which is expected to save the company $9.5 million in 2007 and $11 million annually after that.

Cost savings initiatives under the plan include building a new Macomb, Mich., production facility, plant consolidations in Ohio and headcount reductions.

The cost-savings initiatives were implemented as the company began to suffer from decreased advertising revenues, which it attributes in part to the weakness in the automotive industry, especially in its Michigan cluster.

However, the company's online revenue growth is increasing, and the first stage of a consortium partnership between Journal Register and Yahoo! has been fully implemented, Daryl Hively, vice president of interactive media at Journal Register, said Tuesday.

Overall, on a continuing, same-store basis, Journal Register advertising revenues are expected to be down 4% to 5% for the year, while online revenues are expected to increase by 30%, she said.

The company expects to show improvements in the second half of the year as the economy improves in Michigan and elsewhere.

"We are off to a slower start on the advertising front than we anticipated, yet we are expecting that trend to improve over the remainder of the year, led by continued online revenue strength and stabilization in the Michigan and Ohio economies," Beck said.

Capital expenditures for 2007 are projected at $30 million, including $11 million related to the Macomb facility and press expansion and $6 million in investments in online initiatives, Beck said.

Yardley, Penn.-based Journal Register is a media company that owns 22 daily newspapers and 345 non-daily publications.

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