3Q Earnings: Scripps Down, McClatchy Up

E.W. Scripps Co. and McClatchy Co., two of the nation's largest newspaper publishers, both announced their third-quarter revenues and profits on Tuesday--delivering double-barreled declines and blaming the weak ad market for the disappointing results. McClatchy also cited its purchase of Knight Ridder in June for a big rise in costs.

Third-quarter profits were down 11 percent at E.W. Scripps, compared to the same quarter in 2005. Profits were squeezed by declining net income, which fell from $82.2 million to $73.1 million, even as revenue rose 13 percent from $515.3 million in third-quarter 2005 to $583.4 million this year. Scripps was also hurt by costs associated with the sale of some of its TV stations, which racked up a $5.4 million charge for discontinued operations. The company sold its Shop At Home television network in June, and will divest itself of the remaining 5 Shop at Home stations in early 2007.

The remaining Scripps Network is proving to be a strong presence in the cable TV industry, according to Kenneth Lowe, Scripps' CEO. Revenue rose 19 percent from last year to $249 million. This performance was markedly better than the company's exclusive newspaper holdings, in which sales rose just 1 percent to $168 million.



McClatchy turned in a somewhat stronger third-quarter performance, with earnings rising from $38.6 million to $51.8 million, although much of this increase was due to its purchase of Knight Ridder in June, and the subsequent absorption of 20 newspapers in the Knight Ridder portfolio. McClatchy incurred an $8.9 million loss from the sale of 12 Knight Ridder papers. McClatchy's pre-tax income also got a boost from a $9 million land sale.

Although earnings are up, if McClatchy had already owned the 20 Knight Ridder newspapers in 2005, on a year-over-year basis, revenues would actually be down 1.4 percent, with ad revenues slipping .8 percent.

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