Weak ad sales hurt newspapers

Newspaper publishers including McClatchy Co. and Media General Inc. reported Thursday that second-quarter profit declined on slumping automotive and real estate advertising.

McClatchy, publisher of the Sacramento Bee, said net income fell 9.5% to $39.9 million, or 49 cents a share, from $44.1 million, or 94 cents, a year earlier. Profit slid 75% at Media General.

The slumping U.S. housing market is crimping real estate advertising, especially in the Southwest and Southeast. Sacramento-based McClatchy's 11% drop in June ad sales was paced by declines in California and Florida.

U.S. newspapers suffered a 4.7% drop in first-quarter ad sales, according to TNS Media Intelligence, a New York-based researcher.

"The air has come out of the home bubble and it's taking a lot of advertising along with it," said Ed Atorino, an analyst at Benchmark Co. in New York. "There may be some months before we see recovery in those markets." He has a "hold" rating on McClatchy and Media General.

McClatchy's profit excluding a one-time gain was 48 cents, beating the 43-cent average estimate of seven analysts surveyed by Bloomberg News.

Sales more than doubled to $580 million after the purchase of Knight Ridder Inc. for $4.1 billion last year, the company said.

Nearly three-quarters of McClatchy's advertising declines are coming from California and Florida, Chief Executive Gary Pruitt said. Ad sales in those areas fell 18%.

Media General, based in Richmond, Va., said second- quarter net income decreased to $5.1 million, or 22 cents a share, from $20.2 million, or 85 cents, a year earlier. Earnings were in line with a forecast that Media General gave last month.

Sales rose 4.8% to $241.2 million after the company acquired four NBC television stations in June 2006.

[Source: Los Angeles Times business section]