McClatchy profit drops over 40 percent

NEW YORK, (Reuters) - Newspaper publisher McClatchy Co reported a more than 40 percent drop in quarterly profit on Thursday as advertising revenue plunged, but shares shot up 5 percent after the company said it still will be able to pay its debt.

The results, along with EW Scripps Co and Lee Enterprises Inc) which also reported financial results on Thursday, are the latest sign that a weak economy and fundamental changes in how people get their news continue to hammer U.S. newspaper publishers.

McClatchy, publisher of The Miami Herald and The Sacramento Bee, said it expected advertising and revenue to remain weak in the near future.

"We are committed to doing more if revenues decline further in the second half," Chief Executive Gary Pruitt said. "Our board will meet during the third quarter to consider dividend policies and we will look at additional cost-saving measures as necessary."

McClatchy expects to continue meeting its debt obligations, however, an issue that has been a growing concern on investors' and employees' minds as revenue falls. McClatchy had about $2.1 billion in debt on its books at the end of the quarter, much of that related to its purchase of newspaper chain Knight Ridder.

Second-quarter net income fell to $19.7 million, or 24 cents per share, from $34.5 million, or 43 cents, in the same quarter a year ago.