• by Erik Sass  @eriksass1, July 25, 2008

As expected, the McClatchy Co. and Lee Enterprises announced poor second-quarter results, as newspaper publishers are buffeted by a long-term secular decline in their business, aggravated by a slowing economy.

At McClatchy, second-quarter revenues fell 15.6% compared to the same period in 2007 to $489.7 million, due largely to a 16.8% decrease in ad revenues to $406.3 million. As in previous quarters, classified ad revenues were responsible for a large part of the losses, with total automotive revenues down 17.8%, real estate down 37.1% and employment down 39%. For the year-to-date, total revenues are down 14.7%, to $978 million, and ad revenues are down 16.1% to $810.4 million.

Commenting on the results, CEO Gary Pruitt pointed to McClatchy's recent announcement that it would restructure the company, reducing its workforce by 10%.

"The continuing decline in print advertising means we have accelerated plans to become a smaller, more efficient company well-positioned for future success in an increasingly competitive environment," said Pruitt.

Lee Enterprises said total operating revenue declined 8.3% to $256.4 million, largely due to a 10.1% decrease in print advertising revenue. Total classified revenues fell 17.2%, with employment tumbling 26.5%, automotive 12.2% and real estate 24.2%.

Looking to the future, Chairman and CEO Mary Junck painted a picture similar to McClatchy's. "Because we cannot foresee the length of the economic downturn, we are focusing on rigorous cost reductions through staff reorganizations, narrower page widths, newsprint conservation programs and other efficiencies, as well as reduced capital spending," she said.

Online advertising revenues were nothing to cheer about at either company.

Lee's online revenues fell 10%, an alarming development when newspaper publishers are looking to the Web to rebuild their businesses. McClatchy's Internet ad revenues grew 11.5% in the first half of the year to about $93.7 million, constituting about 9.6% of a total $977 million. That's up from 7.3% of the total in 2007, but the apparent increase is partly due to the shrinkage in total revenues. Had total revenues remained stable at $1.146 billion (the figure for the first six months of last year), online would now constitute about 8% of the total.