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Could Journal Register (JRC) Miss Its Debt Service?

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By Douglas A. McIntyre Published
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Journal Register (JRC) announced its Q2 earnings today. They were ugly and Wall St. punished the company by pushing it to a 52-week low of $3.68. The company missed consensus earnings estimates by three pennies.

JRC had revenue of $120.7 million. Net income was $5.5 million and interest payments on the company’s $646 million debt were $10 million.

JRC now has a market cap of $140 million, well under the value of its debt and only 25% of its revenue run rate. Gannett (GCI) has a market cap to revenue multiple of 1.5x. Clearly its does not have JRC’s debt problem.

Journal Register also announced that June advertising revenue dropped almost11%. Total revenue for the month fell to $36.6 million. That would be a quarterly run rate of about $111 million.

Last year in the third quarter JRC had revenue of $132 million. The company’s current quarterly operating expenses are about $100 million.

Could JRC’s revenue be as low at $110 million in Q3 07. If revenue loss accelerates at all, it could.

At $110 million, all of JRC’s operating income goes to interest expense. Any slip from there put the company in a world of hurt.

Douglas A. McIntyre can be reached at [email protected].

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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