• by Erik Sass  @eriksass1, June 21, 2007

It's official: the newspaper industry is facing yet another quarter of year-over-year losses, as confirmed Wednesday by weak May results for the McClatchy Company, the third-largest newspaper group in the U.S. Tribune saw drops in both its newspaper and broadcast divisions.

McClatchy cited weak real estate ad sales for a 10.4% decline in total revenues for May, versus the same month last year. It saw an 11.5% drop in ad revenue to $153 million.

As with other big newspaper companies, McClatchy is taking the biggest hits in classifieds, which are now suffering double-digit declines across the board. Real estate classifieds led the way with a 19.3% drop in May, compared to last year. Demand dropped sharply due to a general downturn in the real estate market in California and Florida. Automotive classifieds are down 15.1% compared to last year, and help wanted is down 18.4%.

Mirroring the performance of the New York Times Co., Gannett, and Lee, McClatchy also saw national and retail ad sales slump 8.4% and 9.3%, respectively.

CEO Gary Pruitt warned: "As we look to June, we see a continued decline in advertising revenues, although not to the same degree as we saw in May."

However, Pruitt was able to point to some successes, including an improved cash flow, due to stringent cost-cutting measures. "We will remain focused on reducing operating expenses and mitigating the impact of the advertising trends on our cash flow." McClatchy has also rid itself of $2 billion in debt from its acquisition of the Knight Ridder properties in 2006.

Also on Wednesday, the Tribune company reported total revenues fell 11.1% in May, compared to last year, with ad revenues in particular falling 11.8% to $457 million. Like McClatchy's, the Tribune results were due in large part to weakness in classifieds, which fell 20%, compared to May 2006. Real estate classifieds tumbled 30%, again because of downturns in California and Florida; recruitment fell 20%, and automotive fell 7%.

Broadcasting revenues--traditionally a strong suit for Tribune--weren't much help, experiencing a 13% decline to $114 million. Television revenues fell 11%, in part because of a cyclical downturn in political advertising. The revenue dip in Tribune's entertainment business is attributed to fewer Cubs home games.