Harte-Hanks reduces Shoppers circulation by 593,000

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Harte-Hanks Inc. plans this month to reduce circulation of its weekly PennySaver Shoppers publication in California by about 593,000.

The circulation reduction affects three areas: Fresno/Visalia (circulation, 379,000, with last date of publication June 27), Oakland (circulation, 181,500, with last date of publication June 13) and Davis (circulation, 32,500, with last date of publication June 13). With the reduction, Harte-Hanks said its PennySaver will still reach about 10 million addresses weekly, covering about 75 percent of California's households.

"Continuing deterioration in the advertising environment in our Shoppers markets led to our decision to pull back from this new circulation, the vast majority of which was launched in 2006," Richard Hochhauser, president/CEO of Harte-Hanks, said in a statement. "In the past we have made similar business decisions to reduce unprofitable circulation, evaluating re-entry to these markets as conditions warranted. We continually assess circulation plans - part of our normal process - both in terms of expansion and contraction.

"As we firmly believe our business model for Shoppers is successful and sustainable, we remain committed to growth over time in our core print circulation areas in other parts of California and Florida and to continue to leverage our growing presence in digital media," he said.

Harte-Hanks is North America's largest publisher of local shopping publications, with the PennySaver published throughout most of California, and The Flyer published in Southern and West-Central Florida. Altogether, the company posts a weekly Shopper circulation of about 13 million, in more than 1,000 zoned local editions. In addition, the company operates PennySaverUSA.com and TheFlyer.com, its national network of local advertising content online.

Mr. Hochhauser added: "We expect this circulation curtailment to have an impact on both revenue and profitability for Shoppers, beginning with the second quarter and for the remainder of the year. For the first half of this year, this circulation will have generated approximately $3 million of revenue, with an associated operating loss of approximately $2 million.

"We anticipate shutdown costs will be approximately $1 million, which will be expensed in our quarter ending June 30," he said.

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