Question-and-Answer Session
Operator
Thank you, Sir. Today’s question and answer session will be conducted electronically. (Operator Instructions). And we’ll take our first question from John Janedis of Wachovia.
John Janedis – Wachovia
Hi. Thank you. Good morning.
Michael E. Reed
Morning, John.
John Janedis – Wachovia
Morning, Mike. Two questions for you. One, can you just start talking about the Boston market? It’s clearly been weak for more than a year now and as you talk to advertisers heading into ’08 is there any reason to feel more positive given the foreclosure shatter of that market and what kind of ripple effect are you seeing at this point? And then I’ve got a follow up. Thanks.
Michael E. Reed
John, no question Boston has been our weakest market this year and it’s primarily driven by the downturn in the housing environment and the ancillary effects that that’s had. However, I think there’s a couple encouraging signs in Boston. Number one is, real estate revenues have not weakened in the last several months versus where they were in the second quarter and the first quarter where we saw continuing weakening trends. So from that standpoint, real estate revenues, although they’re down, are not continuing to worsen.
I think a second thing that gives us a lot of good thoughts about the future is we have completely right-sized the cost basis in the Boston and Massachusetts cluster in general by merging those businesses all together. We believe the revenue, classified revenue declines, as I mentioned in my remarks, are cyclical in nature and those will return. And when they do return we’re going to have tremendous growth in Boston because the cost basis is so much different there today and so much lower.
So the trends seem to have stabilized. They haven’t worsened in recent months and we have great prospects for cash flow growth when those classified revenues return because of the reduced cost structure of the businesses.
John Janedis – Wachovia
On the cost side, is there more to do now or do you feel as though you’ve done all that you can do given the revenue base you’re expecting.
Michael E. Reed
No, John, I think there is more to do. I think the outsourcing of the projects we just completed in October results in another million dollars of expense savings and that’s yet to be realized because it’s just completed. We also will have, we also have just recently announced the change in some distribution from internal independent contractors to a third party company that will be able to do it cheaper that will result in several hundred thousand dollars of savings.
- To read the full transcript on Seeking Alpha, click here »
