• by Erik Sass , July 24, 2007

The newspaper business is not improving. Following closely on the heels of weak print ad revenue results from Gannett, McClatchy and Dow Jones last week, Journal Communications and Lee Enterprises both announced declines in overall revenue and earnings.

After a number of one-time expenses and gains were factored in, Journal Communications saw revenue from continued operations fall 7.3% to $147.5 million in the first quarter, compared to the same period last year. The decline was due largely to a 7.4% dip in publishing revenues, which ended at $67.6 million. Meanwhile, net earnings fell 17% to $14.2 million. Journal foresees overall publishing revenues for the year ending lower than 2006.

Lee Enterprises emerged from the quarter relatively unscathed--recording only a 3.2% decline in revenues compared to 2006, to $281.4 million. As with Journal Communications, this was due largely to a 3.1% slip in total ad revenue, as well as a 13.6% drop in circulation revenue.

Both companies were quick to point to interactive revenues as a bright spot in their otherwise gloomy balance sheets: the Milwaukee Journal Sentinel, flagship paper of Journal Communications, enjoyed an online revenue boom of 46.9%, ending the quarter at $3.4 million. And Mary Junck, chairman and CEO of Lee, noted that "our rapid online growth has accelerated to a rate of more than 60% in the last quarter and now accounts for almost 8% of our advertising revenue, surpassing national."

While print classifieds are tanking, online classifieds are proving to be a key area of revenue growth for both companies. The Milwaukee Journal Sentinel recently inked a deal with Monster.com, and this past spring, Lee Enterprises rolled out Yahoo's HotJobs platform on its network of newspaper Web sites.