• by Gavin O'Malley  @mp_gavin, July 19, 2007

Blaming a weak ad market, Gannett Co. reported lower second-quarter earnings Wednesday. Excluding a $73.8 million gain from the sale of several newspapers and earnings from discontinued operations, the largest U.S. newspaper publisher earned $289.9 million during the quarter--down 4.8% from $304.5 million in the same period year-over-year. Revenues fell 3.4% to $1.93 billion. Newspaper ad revenues fell 5.3%.

But, as is now customary for newspaper publishers, Gannett cited online operations as a bright spot in all the darkness.

"The performance of our online initiatives and Internet investments and partnerships also were positives," Craig Dubow, chairman, president and chief executive officer of Gannett, said. "There are a significant number of efforts going on at Gannett as we execute our strategic plan, continue our transformation and focus on potential opportunities."

In June, Gannett-owned Web properties attracted 21.8 million unique visitors, or 13.6% of all U.S. Web surfers, according to Nielsen//NetRatings.

As of the second quarter, Gannett owned 100 domestic publishing Web sites, including USAToday.com and sites in all of the company's 19 television markets.

Within Gannett's broadcasting segment, online revenue grew 33.5%. If nothing else, Gannett is clearly benefiting from a booming local online ad market--which will climb 31.6% this year to $7.5 billion, according to a report released last month by media consultants Borrell Associates. By contrast, national online ad sales are expected to grow just 20%.

By Borrell's estimates, Gannett will see about $480 million in online revenue this year generated through Web sites operated by 85 daily newspapers, 23 TV stations and more than 1,000 non-daily publications.

Gannett and other newspaper publishers, however, face new competition for local Web advertising. While newspapers--with 35.9% of the market--still control the bulk of the market, Web companies like Google and Monster.com are approaching fast, with 33.2% percent. And Yellow Pages operators have 11.7%, according to Borrell.

Newsquest, Gannett's U.K. publishing subsidiary, attracted 76.9 million page impressions in June from approximately 5.1 million unique users.

There was no word Wednesday regarding the national ad network being jointly developed by Tribune Co. and Gannett. The two publishers are also the largest owners of CareerBuilder, along with McClatchy, which owns a minority stake in the job site.