Third-quarter earnings reports

Profits dip due to newsprint price hikes
Slowdown in ad spending doesn't help

Newsprint price hikes and the slowdown in advertising spending continue to take a toll on newspaper profits.
The Tribune Co. reported that, for the third quarter, publishing ad revenue, excluding the effects of the Times Mirror Co. acquisition, rose only 2% to $774 million. Newspaper operating profit declined 4% to $164 million due to higher newsprint costs.
Excluding station acquisitions, TV revenue and operating profits both rose 2% amid difficult comparisons with the year-ago quarter.
Overall, earnings were down, but still exceeded Wall Street's expectations. The company also announced it would sell Times Mirror Magazines to Time Inc. for $475 million, continuing its selloff of noncore assets.
Knight Ridder net income was flat, due to slowing ad revenue growth, rising newsprint costs, and expenses related to the acquisition of CareerBuilder, an online recruitment service. Earnings per share rose 11.5% to 87 cents, exceeding a First Call Corp. consensus estimate of 84 cents.
Ad revenue for the third quarter was up 3.4%, with strong results in national partly offset by classified softening and continued retail weakness.
Earnings at the McClatchy Co. rose 6% to $21.5 million, or 48 cents per share, partly offset by higher newsprint prices. The company warned that the higher prices would result in lower than expected earnings for the fourth quarter and all of 2000.
Ad revenue rose 4.7% to $227.1 million, with growth at the California and Carolina papers offsetting weaker results in Minnesota and the Northwest.
New business spending, higher interest expense, and lower magazine earnings contributed to a 35% decline in third-quarter earnings at the Washington Post Co. The company earned $33.5 million, or $3.51 per share, missing analysts' estimate of $4.29.
The Post Co.'s newspaper operating income declined 10% to $35 million on higher newsprint costs and increased Internet spending.

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(copyright: Editor & Publisher October 23, 2000)