• by Erik Sass , July 15, 2009

The nation's largest newspaper publisher reported a 32% drop in advertising revenue in its publishing division in the second quarter of 2009 compared to the same period in 2008 -- from $1.1 billion to $753 million. The weak results from Gannett Co.'s newspapers contributed to an overall revenue decline of 18%, from $1.7 to $1.4 billion. Gannett also owns TV stations.

Gannett swung back to profitability in the second quarter, probably attributable, in part, to savings from numerous furloughs and layoffs nationwide. Still, the plunging ad revenues suggest there is scant hope of a near-term recovery for Gannett -- or the newspaper business in general.

This is the 10th straight quarter in which Gannett's overall revenues have declined. Last week, analysts from JP Morgan opined: "We believe the anticipated weakness at Gannett will set the tone for another depressing reporting season in the newspaper universe."

Classified revenues, traditionally the mainstay of newspaper advertising, fell 38.5% in the second quarter for Gannett's U.S. newspapers, with automotive down 36%, real estate down 39%, and employment down a whopping 60%.

Retail and national advertising, traditionally the other pillars of the newspaper business, both fell 22% for U.S. newspapers; thus all three main revenue categories are still in freefall.

In fairness to newspapers, Gannett's broadcast division didn't fare much better, with total second-quarter revenues falling 21% from $193 million to $153 million. Looking ahead, the company expects third-quarter broadcast revenues to be down about 25%, due to the lack of political and Olympic advertising.

As with other big publishers, digital revenues -- previously a bright spot for Gannett -- are currently just another problem area. Total digital revenues fell 18.5%, mostly due to the steep downturn in online employment classifieds at CareerBuilder.com.

Over the last couple years, Gannett's management has been swinging the ax in an effort to contain costs, laying off thousands of employees from the newspaper division in 2007-2008 and instituting two unpaid weeklong furloughs this year.

Two weeks ago, the company announced yet another round of layoffs. In 2000, the newspaper division employed 41,000 people; after the newest round of cuts, it will probably have 27,000-28,000 -- meaning that it has shrunk about one-third. However, the vast majority of these were cut in the last two years, including almost 5,000 in 2007 and 4,000 or more in 2008.