The Associated Press via Philly.com, July 14

Newspaper chains deliver mixed news

By Seth Sutel
Associated Press

Newspaper publishers reported a mixed bag of results July 13, with McClatchy Co. surprising Wall Street with better-than-expected figures, while Tribune Co.'s earnings fell on lower circulation revenue and the sale of some television stations.

The results at both companies -- McClatchy, the No. 2 player in the newspaper industry, and Tribune, No. 3 -- reflected an overall sluggishness in the advertising environment, which has been weighing down media companies across the board in recent months.

McClatchy's strong results, which came amid tight cost controls, gave the company a shot in the arm as it digests a $6.1 billion purchase of Knight Ridder Inc., a major newspaper publisher that was forced to sell itself under pressure from its largest shareholders.

The deal closed June 27, two days into McClatchy's third quarter and too late to be consolidated into the latest results. McClatchy said it would begin consolidating the 20 Knight Ridder daily newspapers it has added to the 12 daily newspapers it already owned beginning in the third quarter.

McClatchy's profit of $44.1 million, or 94 cents a share, was about even with the $44.2 million in the year-earlier period, also 94 cents a share. But it came in well ahead of the 88 cents a share that analysts polled by Thomson Financial had been expecting.

The Sacramento, Calif., company's shares rose 69 cents, or 1.7 percent, to $41.25 July 13 on the New York Stock Exchange despite an overall decline in the stock market and in the shares of most other newspaper companies.

McClatchy's second-quarter revenue edged up 0.5 percent, to $304.2 million.

Merrill Lynch & Co. Inc. analyst Lauren Rich Fine said in a note to investors that the upside surprise was driven by lower-than-expected costs, especially in compensation and newsprint. She called McClatchy's 2.2 percent gain in June advertising revenue "decent," and said it would likely come in at the top end among newspaper companies.

For the first half of the year, McClatchy said advertising revenue rose 1.3 percent at the papers it already owned, and 1.8 percent on a combined basis.

Tribune, meanwhile, said second-quarter profit slid to $85.7 million, or 28 cents a share, from $231.3 million, or 73 cents a share, during the same period last year. Last year's results included a 13-cents-a-share nonoperating gain.

The lackluster results, including revenue declines of 7 percent in national advertising and 5.3 percent in circulation, could lead to worsening tensions between Tribune and its largest shareholder, the Chandler family, which wants to see the company broken up.

Tribune, whose papers include the Chicago Tribune, Los Angeles Times, and Newsday, had earnings from continuing operations of 53 cents a share, including items that reduced profit by a total of 2 cents a share. Last year's earnings from continuing operations were 72 cents a share.

The results were in line with estimates reported by Thomson Financial, but the company's shares still declined 85 cents, or 2.6 percent, to $31.50 on the New York Stock Exchange.

Tribune said that a weak advertising environment continued to weigh on its results, but that it hoped initiatives now under way would boost revenue, which declined 1.4 percent in the quarter to $1.43 billion. The company recently sold TV stations in Atlanta and Albany, N.Y.

Media General Inc., a regional publisher and broadcaster based in Richmond, Va., earned $20.2 million, or 85 cents a share, down from $38.4 million, or $1.61 a share, a year earlier, when it recorded a gain from an asset sale. Excluding the gain, year-earlier earnings would have been 80 cents a share. Revenue rose 3 percent to $230.1 million, but that was below analysts' estimates of $245.8 million.

Media General's shares fell $2.85, or 6.8 percent, to $39.25 on the New York Stock Exchange.

Journal Register Co., publisher of the New Haven Register and other newspapers, reported a 36.4 percent decline in second-quarter profit on a onetime charge and weaker advertising sales.

The Trenton company's net income fell to $9.8 million, or 25 cents a share, from $15.4 million, or 37 cents a share, a year earlier. Excluding a charge for a separation agreement, earnings came in at $12.3 million, or 31 cents a share, a penny ahead of estimates. Revenue fell 2.5 percent to $142.2 million, including a 2.7 percent decline in advertising revenue.

Journal Register shares fell 8 cents, or 0.9 percent, to $8.70 on the New York Stock Exchange.

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