McClatchy stock now down to $8.52

McClatchy Co. advertising revenues plunged 15 percent on economic weakness and more drainage of ad business to the Internet. Its shares fell 4 percent in the first quarter.

The company, which publishes The Miami Herald, The Sacramento Bee and the Fort Worth Star-Telegram, lost $849,000, or a penny per share, in the three months ended March 30 versus earnings of $9 million, or 11 cents per share, a year ago.

Excluding charges and discontinued operations, McClatchy earned $1.6 million, or 2 cents per share. That was 2 cents below analysts' estimates and compared with $14.5 million or 18 cents per share a year ago.

Revenues fell 13.8 percent to $488.3 million, while advertising revenues fell 15.3 percent to $404 million. Its shares fell 35 cents to $8.52 in morning trading Wednesday.

McClatchy, the No. 3 U.S. newspaper company by circulation, continued to be hard-hit by the sharp economic downturns in California and Florida, where the declines in the housing market have been most severe.

CEO Gary Pruitt said in a statement that while Florida and California made up only a third of the company's revenues, those markets accounted for 56 percent of the decline in the first quarter.

Pruitt said the advertising environment continued to be weak, with the company expecting second quarter revenues to be "somewhat better" than the first quarter, but still down in the low to mid-teen percentage range.
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While the lower results were anticipated because of the weakening economy and growing demand for online advertising, Pruitt said the company was "disappointed" with the double-digit decreases.

Classified advertising, which is particularly sensitive to economic swings as well as competition from online rivals like Craigslist, slumped again, plunging 25.7 percent in the quarter.

McClatchy's online advertising revenues from its own newspaper Web sites continued to grow, but not nearly fast enough to make up for the sharp declines in print.

Online ads grew 10.6 percent in the quarter to $45.6 million, and now make up 11.3 percent of McClatchy's total advertising revenues, compared with 8.6 percent for all of 2007.