McClatchy Ad Revenue Down 9.8% in 3Q

The McClatchy Company, the third-largest newspaper owner in the country, reported Tuesday that ad revenues dipped 9.8% in the third quarter of 2007 to $457 million. Net income fell from $52.6 million to $23.5 million over the same period a year ago, a 44.6% drop.

The losses were mostly due to continued declines in the main print classified ad categories: housing, down 27.4%, automotive, down 19.2%, and employment, down 22.4%.

Increases in online classifieds revenue were not sufficient to offset these drops, with combined print and online revenues still falling by double digits. The downturn in real-estate markets in Florida and California hit McClatchy particularly hard, accounting for 68% of the lost ad revenue, according to CEO Gary Pruitt.

Yahoo has been using stories from McClatchy's newspapers in April; it began an expanded effort two weeks ago, but has yet to impact revenue, said McClatchy's Vice President for Interactive Media Christian Hendricks. McClatchy's online ad sales rose 1.4 percent to $41.6 million in the quarter, the company said.

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Like other newspaper companies, McClatchy is enduring losses on multiple fronts as retail and national revenues also drop. Combined print and online retail advertising fell 3.1% to $204.3 million in the third quarter, while national fell 12.3% to $41.7 million.

Overall, Pruitt offered a bleak forecast for the rest of year, predicting continuing declines into the fourth quarter. Even more ominous, he admitted: "We do not know when this downturn will end, and do not have visibility beyond the fourth quarter."

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