Bad News: Gannett, McClatchy and Dow Jones Report 2Q Earnings

Three leading newspaper companies reported their second-quarter results this week, and the news was bad--more or less--across the board.

Although it recorded an anomalous increase in earnings due to the sale of several newspapers, Gannett's newspaper revenues slipped 7.7%, reflecting the general industry trend. Excluding newly acquired properties, McClatchy's ad revenues fell 9.8%. And while revenue grew 16% at Dow Jones, that was mostly due to non-newspaper properties, including its substantial online holdings; revenue at The Wall Street Journal fell 6.8%.

Gannett executives attributed the weak second quarter to continuing declines in classified ad revenue, which fell 7.5%. Of particular concern was the real-estate category, where slowdowns in the California and Florida markets hurt both companies.

Likewise, McClatchy's total classified revenues fell 17.3%, with chairman and CEO Gary Pruitt remarking: "Advertising results worsened across the board in the second quarter of 2007, but particularly in real-estate advertising." McClatchy's real-estate revenue fell 22.5% in the second quarter. Pruitt predicts continued declines in third-quarter real estate advertising, particularly in the California and Florida newspapers. "We expect no substantial improvement in advertising trends before the fourth quarter of 2007, and expect that revenues will likely still be negative in that quarter."

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To turn things around in the job-recruitment category, Pruitt said McClatchy is in talks with Gannett and the Tribune Co. to get a bigger share of business from CareerBuilder, the online job network co-owned by the three companies.

Dow Jones has the most promising news to report, as its online operations continue to grow at a rate far outstripping other newspaper companies. In particular, paid subscriptions to WSJ.com grew 24% to 983,000, helping drive overall 16% revenue growth in the second quarter. But Dow Jones' print operations clearly aren't immune to the general industry trend, with WSJ revenue down 6.8% and local newspapers falling 8.8%.

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