Q2 2021 Dallasnews Corp Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Dallas News Corp's second quarter 2021 investor call. At this time your telephone lines are in a listen only mode. Later, there will be and opportunity for questions and answers with instructions given.
And at that time.
If you should require assistance during the call. Please press Star, then zero and and AT&T specialist will assist you offline.
I'll now turn the conference call over to your first Speaker Chief Financial Officer of Dallas News Corporation, and Katie Murray go ahead. Please.
Good morning, everyone and welcome to our second.
For 2021 Investor call.
I'm joined by Robert Decker, Chairman, President and Chief Executive Officer of Dallas News Corporation, and Grant Moise publisher and President of the Dallas morning News.
Who are available for Q&A.
Yesterday afternoon, we issued a press release announcing second quarter 2021 results.
And we filed our second quarter 10-Q.
We have posted both of these on our new website, Dallas News Corporation Dot Com under the Investor Relations section.
Unless otherwise specified comparisons used on todays call measure of second quarter 2021 performance against second quarter, 2000, and 'twenty performance.
The court our discussion today will include forward looking statements forward looking statements are subject to risks uncertainties and other factors that could cause actual results to differ materially from those statements the cause.
And that assumes no obligation to update the information of miscommunication, except as otherwise required by law.
Information about the factory.
Format, which is detailed in the company's press releases and publicly available filings with the SEC.
Today's discussion will include non-GAAP financial measures, we believe that non-GAAP financial measures provide useful supplemental information to assist investors in determining performance comparisons to our peers.
A reconciliation.
Conciliation of the GAAP to non-GAAP financial measures is included with our press release.
As a reminder, the company's board of directors approved a 1 for for reverse stock split and issued outstanding and Treasury shares of the company's common stock par value 1 penny per share.
Which became.
Effective June 8.2021.
The per share amounts and yesterday's release reflect the reverse stock split. In addition, effective June 29, 2021, the company changed its name the Dallas News Corporation and transfer to NASDAQ under the ticker symbol D. A L and.
Dallas News reported a second quarter 2021, net loss of $1.5 million of 28 cents per share.
And and operating loss of $3 million and the second quarter of 2020 of the company reported a net loss of $3.4 million or <unk> 64 per share and an operating loss of $4.4 million.
The 2020.
Our net loss we reported in the second quarter includes severance expense of $1.4 million related to the previously announced voluntary severance offer.
Adjusted operating loss, which adjust GAAP operating loss to exclude severance expense depreciation amortization and asset disposals and impairments.
<unk> was 600000 for the quarter and improvement of $1.9 million when compared to an adjusted operating loss of $2.5 million reported and the second quarter of last year.
For the second quarter. This year total GAAP revenue was $38.7 million and improvement of $3.3 million of 9.2%.
'twenty, 1 and compared to the $35.4 million reported for the second quarter of last year. This improvement is primarily due to a $3.4 million increase and print advertising revenue.
Digital advertising and marketing services revenue of $6.3 million reflects the.
The decrease of 400000, when compared to last year.
Excluding the decline and sales of Belo <unk> company's brokering of personal protective equipment associated with the pandemic force customers'.
Digital advertising increased $1 million or 21, 7%.
Total circulation revenue of $16.1 million reflects the 2.4 per.
Both over Q2 of last year.
And this is the first quarter to show year over year growth since Q1 of 2015 the.
The growth and total circulation revenue as a result of a number of initiatives focused on subscription pricing lowering attrition and print subscribers and growing digital subscription.
<unk>. The news currently has approximately 143000 print and digital subscribers.
Digital circulation revenue was $2.3 million and the second quarter of this year and increase of 800000 or 52, 3% compared to last year.
The news ended the second quarter of 2021 was 50.
All of the 930 paid digital only memberships, an increase of 9340 or 21, 4% when compared to the second quarter of 2020.
Print circulation revenue for the second quarter was $13.8 million a decrease of 400000 or 2.9% compared.
And to the prior year.
The news has experienced relative stability and its print member base is home delivery revenue only declined 2.4%.
Single copy sales have been impacted by the by the pandemic and revenue declined 7.6%.
Other revenue reported in the second quarter.
2 there was $4 million compared to $4.1 million reported in the second quarter of last year.
The decline of due to a $100000 decrease and commercial printing revenue.
Second quarter 2021, total GAAP operating expense was $41.7 million and increase of $1.9 million.
Of this year for 7% compared to the second quarter of last year.
[laughter].
This change is due to expense increases of $1.1 million and employee compensation and benefits primarily driven by the voluntary severance offer.
$1.1 million and advertising and promotion $900000 and dish.
We're fortunate and partially offset by expenses by expense decreases of 800000, and depreciation and 300000 and outside services.
The company recorded tax expense of approximately 100000 this quarter related to the Texas margin tax.
As of June 32021, the company had 720 for employees.
Distribute a decrease of 45% or 5.9% when compared to the prior year period.
Current head count is 688, reflecting and additional decrease of 36 relating to the voluntary severance offer.
Cash and cash equivalents were $37.8 million and the company has no debt.
As.
As of July 23, the company had approximately $40 million and cash and cash equivalents.
As a reminder, we do not have any mandatory pension payments and the next 10 years and the pension plans are currently funded at 94%.
Effective June 32021, the company signed a second amendment with charter holdings.
<unk> extending to June 32022, the original promissory note of $22.4 million related to charters purchase of the Companys former headquarter campus in downtown Dallas All other amounts due from charter were paid in full and the second quarter the.
And the $22.4 million promissory note will continue to bear interest at the rate of.
For 5% generating 1 million of interest income over the next 12 months the.
The promissory note continues to be secured by a first priority lien and the property.
I will now provide some additional operating updates and Q2, we completed the voluntary severance offering with 40 back office and production employees electing to take the offer.
We expect to realize approximately $3 million and annualized compensation and benefit expense savings.
In June and June the news 1 more than 20 associated press managing editor of awards, including 6 first places.
Our Spanish language paper, Aldea 110, or so of 10, Texas associated.
The press managing editor of awards, including 5 first place finishes.
The news also won 11 National Headliner awards, including 2 first place honors.
Faith on research and analysis of the new subscribers. The business days Department was recently extended by 2 reporters and we've seen immediate result.
In terms of content and new subscriptions.
Hello, and company continues to see recovery and print and digital advertising.
<unk> spending is not completely back to pre pandemic levels, we have seen increases primarily driven by the grocery restaurant and telecommunication verticals.
Every year, the Dallas morning, news charities, where and the kids summer.
And we're feeding campaign we.
We would like to thank everyone, who donated to this very important campaign. This year, we raised more than $150000 to support 9 regional nonprofit organizations that offer summer feeding programs to provide hungry children with and us due to get through the summer months.
Overall, our financial.
Results and the progress, we're making and growing total digital base revenue are very encouraging.
I will now turn the call over to Robert.
Katy Thank you and good morning, everyone.
When we met as the board almost 2 years ago and September of 2020, we realized that the transformation.
The Dallas morning News and all of its distribution channels would take time and we describe that to you and our other investors and people who follow the company.
And of course without any idea of that 2020 would turn out to be what I call. The GAAP year.
So as we reported and our last call.
And of the board revisited those plans for those long range plans earlier, this year and our regular meeting and.
Concluded that we're going and the right direction, we need to see measurable progress.
But as we can contrasted with for many other newspapers work through the smartly and patiently.
We still think that the possibility of a sustainably profitable digital newspaper.
Real the.
And the progress of Katie just described as evidence of this and I wanted to touch on just 2 or 3 things before we go to Q&A for.
First of all we are extremely excited to welcome.
Patrice Hardie as the executive editor of the Dallas morning News Grant has personally conducted a search that went on for almost 8 months.
And as he looked at the candidates and the finalists who we interviewed.
She stood out and almost every way of imaginable and and importance.
He and she.
Our connected very strongly as to what needs to happen with our products, both print and digital the.
At which change needs to occur and the quality standards that are and absolute requirement of being successful over the long term.
He can comment further about.
Patrice if you'd like to I'd like to hear more later in this call.
As Katie noted, we've made substantial progress and growing our digital footprint and the revenues associated with it the circulation.
Revenues and subscriber of member numbers that she reported are encouraging to us.
And the advertising that will fall of that we believe is likely to come about based on what we're seeing through the first half of the year and looking forward to the second half.
The 6 month performance I Hope you agree is impressive given the circumstances of 2020 and.
The.
The opportunities that presented themselves earlier this year those opportunities continue to exist.
When I look at Q2 revenue up 9 plus percent that obviously is the aberrational in the sense that it's a comparison to the first quarter or the full impact of Covid occurred.
But that was an aberrational down quarter. So we are optimistic that we're leveling out here and in Q3 and Q4, while still going up against the comparatively easy comparisons will give evidence that the trends, we've seen and we reported today.
Can continue and on.
<unk> of 'twenty 'twenty 2.
There are a number of opportunities ahead as I noted.
Grant and Katie can comment on those they all relate to the basic long range view that the board has that we have to achieve certain milestones on the digital side think about the transition to digital.
And on a day to day basis, not occasionally and take actions that are anticipatory rather than reactive.
So there's good news ahead, if we can just count on the economy and pre pandemic spending levels, becoming typical again.
Reluctant to use the word nor.
<unk> and our industry.
But if we can get back into that environment.
There's plenty of upside.
I'm sure you've done the math on the net loss for the quarter, we almost broke even.
Whether you look at net.
Loss or operating adjusted operating loss were not saying we've turned the corner.
Norm for the ability, but again against the backdrop of what's occurred over the last 15 to 18 months with the pandemic for we're very pleased with that performance the <unk>.
Last thing I'll say until we go to before we get to Q&A, Katie mentioned and the pension plan.
We are 94% funded with debt.
That plan and as we both plans they roll up together.
1 is the legacy Dallas morning News <unk> plan and the other is the Providence Journal plan.
But they are very similar in size and they're managed by the same team at Fidelity and my point is the.
We made the decision earlier this year.
To be even more conservative with that portfolio and as we've seen the volatility of the markets. Both in the U S and the around the world.
We are very confident thats, the right place to be and.
When we say we don't have any required contributions for a prolonged period of time part of that is.
And the conservative.
Posture of the portfolio. So we're planning to stick with that approach.
I assure you of where not all cash.
But we are heavily weighted to the fixed income side that we can manage through any.
I will say tip.
Because the volatility let.
Let me pause there Katie and let's see if we've got Q and a.
Alright, Allen will open it up for questions.
Thank you ladies and gentlemen, if you do have questions press, 1 and then zero on your Touchtone phone.
And indications that you've been placed into the queue and you can remove yourself from.
Typical of by repeating the 1 and zero come out.
And we're on the speaker phone, we ask you to please pick up your handset before pressing antibodies.
Again for questions Press, 1 and then zero at this time.
Yeah.
Okay.
The first go to the line of Chris Mooney with Wedbush Securities Go ahead. Please.
Good morning.
And 1 thing Craig.
Yes, yes.
And so if.
I look at the the employee compensation and <unk>.
$18 million 100.
The <unk> thousand to normalize that for the June quarter, I should back out $1.4 million and severance is that.
That is correctly, we get of creative for all of the Fab range, which included severance Cobra and outplacement services per day that elected the.
And the DSM.
And so you would of had lower employee comp costs.
A couple of hundred thousand.
And the quarter that is correct without okay.
And you said something about $3 million and savings going forward.
Can you.
When the great when you.
So it will actually start and the third quarter of this year now obviously the annualized debt over the 12 month period.
But the majority of the 40 people who elected the DSO the last day with on July 1.
And so if you think of that over the next 12 months, we're going to be realized and compensation.
Patient savings now what I will say is.
And as part of our plan and we had talked about this earlier in the year, we are making investments and the.
The development resources resources around building our product platforms for those will continue.
Those are a handful of compare to again 40 people, taking the DSO and.
And moving on.
Okay. So the the.
The number.
So.
I heard numbers and employee head count of 724 with 45.
Departing and then I heard another 36.
Subsequent.
So we're all for equity.
We would be at.
600 and.
The 50 or so employees at the moment for us that about no no. Chris. The 688 includes the impact of the VSO, so that head count as of today.
Okay.
And will there be of.
Additional.
Severance expenses and this quarter and subsequent quarters is that plans are expected.
Chris I mean, we offered the VSO that was really.
From an April perspective, our way of looking and offering the opportunity for employees to self.
And make that decision now you know going forward.
There could be there's nothing planned.
But obviously grant and I are continuing to look at the organization and as we continue to move forward you are making decisions, but right now theres not anything planned.
Chris Let me tag onto that and we don't want to spend of alarm signals.
And.
We have no plans for another voluntary severance offer people will depart the company and the normal course, and when we're running of transition as we are a REIT.
Resources needed to move around so from time to time.
Katy and grant will be.
The reallocating resources internally and as you would expect income, which may or may not fit and a different department or within the different assignment. So we'll see some movement up and down and head count.
But in terms of.
And the initiatives like of voluntary.
And Terry severance offer.
That's just not in the near term future, meaning the rest of this year.
There may be some reductions that debt.
Look like that in terms of the benefits of people receive if they depart, but even that's going to be almost of case.
The case situation.
Okay.
That's great Katy you gave us a lot of numbers and it may be in the Q, which I haven't looked at yet.
On digital advertising.
And subscribers et cetera could you go over those again.
As of right.
And I suspect the other people weren't either.
Okay, not a problem. So I think you know, let's start with subscriber revenue.
1 of them.
And we've been getting the always get questions around our total subscription revenue and membership revenue as we call it internally and our total number of subscribers. So we wanted to give a view of that.
And we currently have approximately 143000 print and digital subscribers.
[laughter].
Excuse me the.
Other thing that was really important this quarter is that this is the first quarter, we've actually seen year over year growth and subscriber revenue now it's too.
And the last time, we had that was in Q1 of 2015.
Chris and what I will say is obviously last year, the comps are going to get harder and harder each quarter to continue to beat the prior year revenue because of the initiatives that we've had but we really wanted to call. This out because I think to what Robert was saying this really does show.
For for progress that the teams have been making around not only digital growth and our digital subscribers, but really focusing on improving the the attrition numbers from our print side and we're seeing both of those coming. So this was our first time to see growth again.
Did.
So the total circulation revenue was up 800000 for 52, 3% compared to last year and our membership grew 9340 or 21, 4% compared to last year.
Print circulation revenue was $13.8 million this was of 2.9%.
Percent decrease compared to last year of $400000.
And then single copy single copy is an area of last year that we saw a lot.
<unk>.
Diminished capacity of where people were able to sell.
And the Dallas morning News and single copy fashion, we are seeing some of that come back but.
And when you compare it to last year, we are down 7.6%.
Whether all of the single copy comes back or not.
We're working on that and hopefully we will see some improved numbers, but right now single copy sales are still impacted by the pandemic and that's really related to where we have the opportunity to sell them.
Going into of go ahead.
Okay.
The anyway go ahead.
Okay.
On print and digital advertising and marketing services.
And our 10-Q youre going to see the rollout separately, we have print and then obviously, we have digital advertising and marketing services what.
What we wanted to call out is the digital advertising and marketing service performance around our digital advertising and this would be for our non owned and operated sites. So if you think about other websites and then also Dallas.
And he is dot com and the advertising there so last year as a result of the pandemic a number of customers came to us.
Because Belo <unk> company has the capacity to actually assist customers with ordering last year, the personal protective equipment through our distributor and the platform.
Dallas and were able to do that through digital.
The website and then also and.
The infrastructure and so when you back that out I mean, obviously, we're not selling PPE like we were at the level of last year digital advertising increased $1 million year over year or 21, 7%.
For them, we wanted to call out because you're not going to see that spin.
The specific line item in the 10-Q because of the way the revenues roll up to print advertising and and digital advertising.
Okay.
That's good news.
It is good news.
All day and number of other questions, but I didn't want to just.
Should I just want to put me back in the queue and see if there are other people what we did last lost time.
Yeah of course that would be great, let's do that.
Alan is there anybody else and the queue for questions. Yes, we do have another line and to Mr. Moody.
That's what we'll have to re queue went through the release you by pressing 1 and then zero again.
And we will go to the line of Bill NASCAR events, 1 moment. Please.
Your line is open go ahead.
Good morning.
Good morning, Bill for now.
Just to see the revenue increase even with the pandemic.
<unk> is the low but.
And congratulations on seeing that the first time, you said since 2015.
And I correct that is correct Bill we were again pleased to see that but I do want to restate that the comps to grow revenue continue they will get harder and harder with the.
The increase and the digital subscription revenue that we have seen them. Obviously our goal is the can you continue to drive growth.
Okay, whether we will be able to show year over year growth.
Not able to commit to that right now, okay, and just as a reference 0.1 year ago, what was print and digital in terms of you said 100.
The 43000 total subscribers today, what was it a year ago.
And you're seeing some deflation.
We are seeing some stabilization and.
I'm going to give you an estimate right now Bill and then I can actually true that up last year, we had at the end of the second.
43590, digital only subscriptions and I would say at the time, if I estimated arc print subscribers of probably around 100000, maybe a little higher than 100000, we were probably pretty close in line.
With where we are and the shifted and between the decline in print.
About a wash right and then the increase of the digitally.
So are you seeing subscriber this 2.4% subscriber.
Subscriber growth year over year are you continuing to see that the the.
And the trend.
Of the trend.
Oh of grant answer this and he can talk about the initiatives that we have bill.
A couple of things I would say is we.
We are not only saw a really nice lift, especially and digital subscriptions of.
And with the beginning of the pandemic, but we've also applied quite of bit of aggressive pricing strategies and support of that.
And so even when the volume, which it did begin to taper off.
Say, probably more and the.
The mid to late summer of last year from the highs we have the pricing initiatives that help keep the lift and so of the total consumer revenue number and that.
Mid 2%.
Percent range.
And we feel like the pricing can keep us.
Maybe not that high but we do believe that debt. We can continue to see the growth mode for a little while but obviously it just depends on what happens with volumes and.
And the future because obviously, we need the volumes in April.
In order to be able to price them and so.
We're just keeping a close eye on that.
So going forward what might the average selling price be for digital how are you.
And just the average number.
Bill I think that our average rate right now of a digital subs.
Scriber is in the high $14 range I'd say, probably around $14.80 is about our average for us.
Monthly rate for a digital subscriber.
And we're going to just.
Trying to push that as high as we can but at the same time, we begin with introductory prices.
And we are testing those all the time, we're testing and kind of what is the right introductory price versus the kind of the ability to get price overtime. So if memory serves me correct I think a year ago. It was <unk>.
Somewhat less than $14.80.
Is that correct.
That's correct, that's correct and we were probably.
Believe about this time, we were about a dollar of less I would say, maybe a little bit more on average.
Okay.
And that's good to see what might it take.
Break digitally even.
How many subs do you need to break debt.
And even.
Great.
And so there are you talking about.
Yeah.
On a on breaking even against print declines are you talking about.
Our P&L like the bottom line for breaking even by the bottom line.
So we don't we don't disclose that right now.
And our add on expense allocation to digital and obviously there are a lot of things within the company that we are not allocating including newsroom and back office and the likes of that is not something we currently provide okay and.
And then.
With a fair amount of cash on the balance sheet.
And past.
You were buying back stock is there still and authorization and if so what's our intent with the.
Stock essentially selling price of the business being priced below.
Working capital.
And Bill you are correct.
Our buying stock back on and previous.
And this year's we currently are not buying any stock back. If we were to do that that would be of decision from the board of directors on the capital allocation.
There is not a plan right now and to do that but that's not to say that something couldn't change and the future, but we do not have an active plan right now.
Let me amplify on that.
The board and <unk>.
Think of and affecting you and I've discussed before discusses capital allocation all the time from of pacing standpoint.
The.
I'll say the second amendment to the charter holdings contract because of very positive sign to us.
Everything was brought current which was 1 of our.
<unk> for agreeing to the extension that was 600000, plus and cash that came our way to take care of.
Items that had been deferred or not fully paid so what we're thinking about at this point of course is 2022.
And I mentioned the.
And the economic conditions that affect our operations will they also affect this set of decisions.
And if everything holds up and the people who.
Essentially fund charter holdings are still doing well financially and our confidence about their ability.
Ability to pay is going to continue to rise we're very confident today.
Based on existing economic conditions, but as.
Everyone on this call knows the variances of wildcard and Theyre all sorts of other factors that <unk>.
Change the economic outlook and the U S markets.
So when the board.
Thinks about it there are 3 things in terms of cash.
And in that we've discussed previously.
1 is distributing some of the cash to shareholders.
The second is the pension plan, which is not the highest priority, but it's important always dimension that the.
Because we could substantially closed.
The out debt plan with additional voluntary contributions, which by the way of tax deductible or certain benefits to that that are just pure.
Pure financial engineering.
And then of course, there is the <unk>.
Possibility of buying back stock.
We have not recently talked about stock buyback.
We suspended as you know and 1 reason, we did and in the established plan. It is very hard to get volume. So then you get into the question of blocks being available and the.
And the response time to acquire them things were very familiar with.
It is certainly not off the radar.
Of our screen because of the.
The volume.
Challenges, but all of these things, we will discuss and September at our annual long range outlook meeting.
And continue to do so.
And then of course, but the last piece relates more to operating question what kind of a.
Cushion or support.
Pool of cash and we want to get us to the end of this 3 to 5 year March.
Okay. Thank you so I might've missed it any comments here in terms of.
Labor negotiations and.
Compensation.
<unk> costs going forward.
What is the.
What is the status with the with the Union.
And so they'll the that the conversations with the Union are ongoing there's nothing really to report on that.
We don't have a contract in place at this time, we don't have any estimate of any increased compensation expense.
But if that were to come we would disclose that but right now and.
Things are just moving forward.
And again, I want and amplified Kt is on point and she's being low.
And I'll say low key about this we have spent a tremendous amount of time.
Preparing for and the.
The meetings with the new skilled and articulating to the best of our ability through Katy.
What's important about working together to achieve the long term success for the Dallas morning News and all of our.
Related products that debt conversation has been very constructive and I want to compliment the bargain.
Bargaining unit the bargaining committee of the Guild, and Im not saying that our situation is completely different from other newspapers, but our belief is that there is an understanding on the part of our newsroom.
Leaders.
Meaning the Guild leaders.
This really is the Sichuan.
Situations, where we have to look at each other as priorities with an open mind and.
And come to conclusions that benefit the newspaper 1.
And then whatever impact there is in terms of financial or operating.
The protocols.
The handle to get and I'm very encouraged.
<unk> about.
That is what I'm, saying this is.
And this has not been contentious and.
And it is moving along albeit at a pace that reflects their and our needs too.
Run the business and report the news.
Well thank you.
Thank you Dan.
And if the if there are any additional questions. Please take this opportunity now to perhaps 1 day zero on your Touchtone phone.
We'll go next to the line of Joel Marcus with network..1 go ahead. Please.
Yes, hi.
Yes, I'll follow this closely and I've got a small possession of that for all of my first.
First of all the looking out of my customers.
The question writ large.
You're currently counting the note.
Which 1 would assume that the securitized by the property worth a lot more and the node is going to be paid and you can retrieve that do you currently.
We have over $60 million.
Cash cash equivalents et cetera, and.
And which comes to about $12 of share.
We are currently trading.
For radically and under $7, which would sort of indicate.
Decay that you.
You have a huge negative enterprise value and basically.
Anybody could make the move on this.
And acquire it.
And.
Basically of that acquisition would be at a price that would be highly of.
As the whole 2 shareholder interests are.
And what you need to.
And much more you know expedited basis, the need to focus on the price of your stock.
All of which is trading at about.
You know and a market that the at all time highs and trading at about half of cash.
And don't you think that you really need the focus on doing something needs to be the price of the stock to protect your shareholders.
Detriment of Joel This is Robert the.
The answer to the last point is absolutely, yes, and we have.
As we manage through the.
And I'll say dramatic decline and the fortunes of the newspaper industry.
The board has kept the top of mind.
Without going back to forest.
Directly when we split the company and 2008, we intentionally.
Spun off the newspaper with no debt.
And because of the circumstances that were then and ever since affecting the industry as a whole and to us.
And during those first.
First few years, we through dispositions of assets and other activities.
The took the pension plan from being funded at around 68%.
To this level and we view that the board views that as our as the equivalent of debt frankly, we're gonna make good on our pension obligations not every newspaper.
Per company did.
Has that is not an option around here, we will come through on the pension plan and I think in very good shape to realize that over time.
Because of the the volatility of the industry and the local markets.
We the board again very cash conscious.
You are correct and the mathematics are exactly right, we do that math all the time.
And the timing of the pace.
Said to Bill and response to his question.
Is probably predicated somewhat on being.
Being sure we do indeed.
And I get the final 22 plus million dollars from charter holdings, and and so far as stock price. We are not pleased with the way the market is.
Regarding our efforts.
Our enterprise value is real.
The theme here.
Here is the build it into a sustainable business that the.
And can achieve even greater value over time.
And we think now that we're seeing the kind of trends that we described earlier and this and this call, which really is the first time, we have seen them and combination.
And that there is a better opportunity to describe the <unk>.
Stocks attractiveness and our future than there has been and quite a long time, so if economic conditions.
Hold where they are.
Katy and I and grant will be undertaking that beginning the small.
We're obviously not going to be the Darling of the NASDAQ.
But we can certainly get more attention and begin to work on the enterprise value.
And part of the equation as to.
Timing and.
The potential of someone getting interested and our cash too.
<unk> thoughts 1 is.
We're beginning to see investors now who are interested more in our enterprise value plus cash as opposed to just cash.
The first 5 or 6 or 7 years after we split the company.
Of these calls we're all about the value of our real estate and what we're going to dispose.
As of next and it was frankly pretty challenging for the management team at the time.
2.
Keep focus with all of the net going on.
So now it's a lot easier story to first to appreciate and understand and frankly, managing the company as a.
Most of the small company mindset.
We feel like we're making really substantial progress but.
The interest and the cash is certainly.
Possibility, it's important to keep in mind that I had 51% of the votes as a result of our differential voting stock structure.
And 2 years ago.
Go this fall.
Coming up on 2 years and purchased the shares of another family member of my predecessor as CEO.
To get us and that position, where we can.
Work this very smartly.
With the right.
Right pace.
As a follow up for that.
And you realize you are on or where are you on.
And all of the publish maybe about 2 or 3 months ago.
<unk> Gabelli and you were a number of 6 and his list of the top then dividend stocks.
And the United States are you know certainly.
And your yields right now taking the dividend on an annualized basis is 10 per cent, which is somewhat ridiculous and the interest rate.
Our environment.
Have you considered increasing the dividend further.
So basically suggests make value so compelling without watching the stock buyback, but just increasing the dividend to a point where this would.
Go for a reasonable value.
<unk> at this point and time, which is get out of <unk>.
Probably around 15% to $20, a share which is 250% of 300% above where the stock is trading. So I mean, obviously there is other ways to achieve and.
Equitable valuation to protect.
And your holdings and your shareholders.
Interest and this without necessarily.
Doing the stock buyback. So have you considered the dividend side of this as a way to increase.
The valuation of this to get this the where is that of rational valuation because all of us.
And.
And you both.
Sounds like it.
Tremendously right tremendously confident.
But yes certainly.
1 could almost say that with the price of the stock at current.
The levels.
Certainly.
Not and I don't think this is deliberate but yes, the facts would lead 1 to the conclusion that you are really not at all.
I guess fulfilling and 1 of your get all the fundamental Garo duty.
Euro 2 euro of shareholders, which is you know basically.
For managing this company and a way that you know for sure is that you don't know your shareholders.
So can you.
You know have accessed the fair.
<unk> you for their holding so I mean.
That is a fiduciary responsibility that with the stock at current levels is not being fulfilled by management of this company.
But Joel I appreciate the.
Your comment and that perspective of just.
The 2 or 3 things 1 is.
The board views its fiduciary responsibility.
And all regards obviously as our primary duty.
The reason, we did not even consider changing the dividend rate when we did the reverse stock split is basically the point you're making.
And.
The value the board's view of the dividend at these higher levels relative to price previously and now is it is the de facto a distribution of capital obviously no 1.
Just looking at this from a purely financial standpoint would be paying a dividend at that rate.
And.
And yet your point about.
And putting cash into the accounts of shareholders is 1 of the themes. We discussed when we talk about dividend rate and weather.
It's 7%, 8%, 10% payout depending on.
The current share price.
We have for several years now.
And I'll describe for us as a distribution of capital and the absence of a much larger special dividend, which we have done twice.
And as always of consideration tying back to Bill's question.
All of those things will be discussed in depth again in September of your.
And.
Comments are appreciated your suggestion about.
Higher dividend is not something frankly, we have looked at specifically.
Because of the GAAP year and.
Other factors.
But it is a.
Point, well made and we.
And we'll take that and into considerations of oil.
Okay. Thank you and then I do look forward I mean.
And you know this.
And obviously I bought this and.
Yeah.
Sure.
Basically recommended that for my clients as of long term investment book forward to management.
The board of directors and the company.
So taking the necessary steps to it.
She is a fundamentally fair valuation for this company and the marketplace and I think.
I have every reason to expect that you.
Company is going to be cognizant of that I mean, certainly.
And so perhaps engaging.
And the IR firm.
No to introduce this to you know.
The other institutional investors et cetera, you know has the company.
No. The consider you know given you know the true.
Tremendous euro undervaluation of the stock and the marketplace as the company consider engaging.
A you know really you know white shoe Investor relations.
The cause for alarm.
To take the story and then and bring this to the investment community I mean, if you look at the stock even today with.
And with the earnings being released and with this call going on I mean volume is pretty much next and I think I mean, the last time I book It was.
<unk> hundred 3000 shares on the day, which.
Would indicate that there is nobody out there with this on their radar screen and there's nobody out there with an active interest and investing in this company.
The.
Again, we.
And of the same mind and put it that way.
We have not been actively out in front of investors for.
For reasons of.
I think in retrospect purely apparent the not just the volatility of the markets and Covid.
But even before that the transition of transformation, we've been talking about on the call today was very early stage and.
And at least for them.
And many years of experience I'm sure. This is true for you and bill and and others on the call.
And again in front of the prospect of delivering.
But we feel much better about the outlook.
And I referenced earlier that this is something that the KD and grant and I are going to be much more attentive to in terms of allocation of our own time and effort.
That's the point I really.
Touching upon.
And should reorganize and Investor day or tried to get in front of folks and to.
Of the mostly in New York community still we know that the third party can give us a big lift we've used third parties.
On and off over the because of their engineers.
I've been in this role.
And we are always always benefited from that so to your point and this respect as well is very well taken.
Okay I look forward to develop the next quarter and go forward for being on the next conference call.
And obviously.
You know if nothing changes I will bring this up again, but and IR firm and increase in dividend the share buyback I mean, you know currently your investors are not being very well served.
And so with being able to access liquidity and there.
The investment.
60 per cent of cash you know with this having zero enterprise value and you know you've got the story to tell and the here and now and.
And I mean, I think you know this company does need to make the greater effort to get that story.
In front of.
The investment community.
All well said thank you.
And is there any further questions. Please take this opportunity now and the press 1 and then zero on your Touchtone phone.
So the line of Chris Mooney for a follow up question go ahead. Please.
And Mr. Moody, who seem to have taken yourself out of Q, let's get you back up here okay.
Your line is open go ahead.
Yeah.
Okay and good morning, again, just no.
Looking at the and.
To go back for you.
The funding of the pension plan and you own real estate.
<unk> from the note on the downtown building, the Collin County thinks it's worth considerably more.
And then your pension plan liability.
You know and I know, you're not going to sell the building anytime soon.
But your pension plan.
And does that require any payments for 10 years either.
And for serious note can you give us a quick update on the status of below company and Google and Facebook potential payments and then just for interest how have you handled the return to office phenomenon.
Chris It's grant and I'll handle.
Handle that.
First of all overall with Belo <unk> company I've been very pleased I think the type of the <unk>.
And 38% print advertising growth, we saw and this quarter as we know is largely.
Just a matter of.
The comps.
And doesn't read of depth of the pandemic last year, but I'm seeing some of the fundamentals of that business that I look at and I'm always looking at which is what is the number of clients that we have we've grown our client base year over year of 13%, which means you know look if we can get our existing clients to increase spending it's great but at the same.
And from time, just as I was talking about with our membership earlier with bill we need to be growing the foundation of our advertising and marketing services clients. The Belo <unk> company and I'm very pleased I'm very pleased that theyre doing that we're seeing.
A lot of our kind of key growth and the areas that provide us the most margin which.
And just important to me.
And the you all as well I know, so let me shift over to Google and Facebook because.
They are I am personally involved and those conversations I have been involved in those directly I have known folks from both of those companies for well over a decade.
And what I can say at this point as we are in active conversation.
And with Google, we have and existing deal in place.
With Facebook and <unk>.
Terms of when we're talking about content and being paid for content, which is the primary.
And I know that you're asking we have had deals in place for those companies and smaller waves in the past, but obviously.
The J C. P. A which is the biggest journalism content and preservation Act that you will read about and Washington D. C is really kind of part.
Associated with this payment for content.
Nothing is imminent at this point, Chris, but I am very pleased with the progress of the conversations and the fact that they remain active and engaged with us.
And then last you had talked about a return to office plan and Chris.
And we're in a voluntary phase right now.
Obviously, our 300 plus employees up and our north plant have never been able to take the deepening off Thats just kind of part of the way our business works being of 24, 7 news operation, but in terms of here in our corporate offices.
And voluntary phase.
Phase, we probably have the I'd say about 10% to 15% of our staff is in on a voluntary basis and right. Now we are looking at the week after labor day of trying to bring back our full staff back to the offices.
But obviously, we're keeping a very close eye on.
And COVID-19 levels as Robert had alluded to earlier this delta variant is real.
We are reporting on that daily and so we're going to be very mindful of and be prioritizing the health of our employees.
Because frankly the team is doing a great job being productive remotely right now and so we're going to bring them back as quickly as we can.
Can.
When when health.
Basically the pandemic allows us to do so safely credit.
And Chris could quick.
Point of clarification of the Facebook agreement goes back.
A couple of years. This is not something that was recently.
Put in place so the negotiations or discussions grant referred to are on this larger scale opportunity side that I think your question got it yes, just so everyone's clear we're talking about the Google News showcase is what the.
And the.
Current negotiation is that.
Is happening I believe or I know throughout the country with domestic publishers.
Okay. Thank you for that.
And.
Let's see.
No.
And the prior questioner was.
And I look to see and the last time I.
I can see the do with any insider activity and the shares.
<unk> was in June of last year.
And.
If you really think.
You have the capital that you do and the progress being made and.
And a dividend level of just under 10%.
It seems a bit surprising the other inside the company wouldn't have interest drop and I know you paid a lot higher price for.
And for which the stock some time ago and.
Need to respond to that and I.
And we want to complement Cheryl Hall, and a very good writeup this weekend on Jacobs.
And that was very well done.
We think so as well.
Thanks, Chris.
The email and back and forth with Sheryl just how pleased I was I thought that was extremely well written and so I appreciate you saying that.
And I know the company reasonably well and she did a very good job and side.
And have communicated.
With the company about it as well.
Great. Thank you.
And finished thank you.
Thank you Chris.
We have no further questions in queue at this time.
Alright Allen Thank you.
For moderating and everyone. Thank you for joining our second quarter for.
And we look forward to.
Talking with everybody on our third quarter call enjoy the rest of your summer. Thank you.
Ladies and gentlemen that will conclude your conference call for today. Thank you for your participation and for using AT&T event Teleconferencing you may now disconnect.
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