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NEW YORK (AFX) - Newspaper publishers reported a mixed bag of results Thursday, as McClatchy Co. surprised Wall Street with better-than-expected figures while Tribune Co.'s earnings fell on lower circulation revenues and the sale of some television stations. The results at both companies -- which are the No. 2 and No. 3 players in the newspaper industry, respectively -- reflected an overall sluggishness in the advertising environment which has been weighing down media companies across the board in recent months. McClatchy's strong results, which came amid tight cost controls, gave the company a shot in the arm as it digests a $6.1 billion purchase of Knight Ridder Inc., a major newspaper publisher that was forced to sell itself under pressure from its largest shareholders.
The deal closed on June 27, two days into McClatchy's third fiscal quarter and too late to be consolidated into the latest results. McClatchy said it would begin consolidating the 20 Knight Ridder newspapers it is adding to the 12 it already owns beginning in the third quarter.
McClatchy's profits of $44.1 million, or 94 cents per share, were about even with the $44.2 million in the year ago period, also 94 cents per share, but came in well ahead of the 88 cents per share that analysts polled by Thomson Financial had been expecting.
The Sacramento, Calif.-based company's shares jumped $1.91, or 4.7 percent, to $42.47 in afternoon trading on the New York Stock Exchange, despite an overall decline in the stock market and in the shares of most other newspaper companies.
McClatchy's second-quarter revenues edged up just 0.5 percent, to $304.2 million.
Merrill Lynch analst Lauren Rich Fine said in a note to investors that the upside surprise was driven by lower-than-expected costs, especially in compensation and newsprint. She called McClatchy's 2.2 percent gain in June advertising revenues "decent" and said they would likely come in at the top end of the newspaper companies.
For the first half of the year, McClatchy said advertising revenues rose 1.3 percent at the papers it already owns, and 1.8 percent on a combined basis. CEO Gary Pruitt says he expects to see similar trends in the third quarter, and held out hope for improvement in the fourth quarter as comparisons to year-ago figures get easier.
Tribune, meanwhile, said second-quarter profit slid to $85.7 million, or 28 cents per share, from $231.3 million, or 73 cents per share, during the same period last year. Last year's results include a 13 cents per share non-operating gain.
The lackluster results, including revenue declines of 7 percent in national advertising and 5.3 percent in circulation, could lead to worsening tensions between Tribune and its largest shareholder, the Chandler family, which wants to see the company broken up.
Tribune, whose papers include the Chicago Tribune, Los Angeles Times and Newsday, had earnings from continuing operations of 53 cents per share, including items that reduced profit by a total of 2 cents per share. Last year's earnings from continuing operations were 72 cents per share.
The results were in line with estimates reported by Thomson Financial, but the company's shares still declined 84 cents, or 2.6 percent, to $31.51 on the NYSE.
Tribune said a weak advertising environment continues to weigh on its results, but the company said it is hopeful that initiatives now under way will boost revenues, which declined 1.4 percent in the quarter to $1.43 billion. The company recently sold TV stations in Atlanta and Albany, N.Y.
Tribune has been locking horns with its largest shareholder, the Chandler family, which wants to see drastic action to revive the company's share price, including a possible breakup of the company. The Chandlers opposed a recently completed plan to buy back a large chunk of Tribune stock, but were outvoted eight to three on Tribune's board. The Chandlers became significant Tribune shareholders following the sale of Times Mirror Co. to Tribune in 2000.
Tribune's CEO Dennis FitzSimons said the company's strategy of selling non-core assets and carrying out initiatives to improve operating results at its newspapers and TV stations is on track.
Media General Inc., a regional publisher and broadcaster based in the Southeast, earned $20.2 million, or 85 cents a share, down from $38.4 million, or $1.61 a share, a year ago, when it recorded a gain from an asset sale. Excluding the gain, year-ago earnings would have been 80 cents per share. Revenues rose 3 percent to $230.1 million, but that was below analysts' estimates of $245.8 million.
Journal Register Co., publisher of the New Haven Register and other newspapers, reported a 36.4 percent decline in second quarter profits on a one-time charge and weaker advertising sales.
The Trenton, N.J.-based company's results fell to $9.8 million, or 25 cents per share, from $15.4 million, or 37 cents per share, a year ago. Excluding a charge for a separation agreement, earnings came in at $12.3 million or 31 cents per share, a penny ahead of estimates. Revenues fell 2.5 percent to $142.2 million, including a 2.7 percent decline in advertising revenues.
AP Business Writers Dave Carpenter in Chicago and Zinie Chen Sampson in Richmond, Va. contributed to this story. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
