McClatchy stock drops to lowest level since 1998

June 22, 2007 5:58 PM ET
Shares of The McClatchy Co. dropped 2.3 percent in heavier-than-average trading Friday, ending a tough week for the newspaper publishing company.

The Sacramento-based company -- publisher of The Sacramento Bee, The Miami Herald and 29 other daily newspapers -- was hard-hit by a 10.4 percent decline in revenue last month, largely attributed to an 11.5 percent drop in advertising sales. Most of the nation's daily newspapers, from The Los Angeles Times to Washington Post, are battling a drop in advertising revenue and circulation.

McClatchy chairman and chief executive officer Gary Pruitt said the company expected the dramatic decline, especially with a 4.7 percent increase in pro forma revenue in May 2006. McClatchy (NYSE: MNI) bought Knight Ridder Inc. -- then the nation's second-largest newspaper -- in June 2006, selling off some assets while keeping other more profitable newspapers.

Pruitt, who was a guest speaker at a media-related investors conference in New York City this week, also said the company would consider selling its stake in CareerBuilder.com, which it also owns with Gannett Co. Inc. (NYSE: GCI) and Tribune Co. (NYSE: TRB). He added that circulation at McClatchy newspapers would likely continue to decline until early 2008.

The comments addressed concerns but hurt McClatchy shares, which fell 87 cents in the final three days of the trading week, much of the drop Friday.

Shares on Friday dropped 58 cents to $25.07, including falling to $24.87 during intraday trading -- its lowest price since October 1998. More than 1.3 million shares were exchanged, about 400,000 more than the average daily volume during the past three months, according to the New York Stock Exchange.

Shares of McClatchy, the largest publicly traded firm in the Sacramento region, have dropped 44.2 percent from its 52-week high of $44.95.