By: Seth Sutel, AP Business Writer
(AP) Knight Ridder’s net income plunged 27% in the third quarter as the Sept. 11 attacks led to a steep drop-off in newspaper advertising and higher costs associated with increasing news coverage.
Knight Ridder, the nation’s second-largest newspaper publisher after Gannett Co., on Tuesday reported net income of $55.7 million for the three-month period ending Sept. 30, compared to $76.1 million in the same period a year ago.
Revenues slumped 10% to $693.1 million from $769.2 million.
Per-share profits were 65 cents, in line with guidance the company issued a month ago and 2 cents above the estimate of analysts surveyed by Thomson Financial/First Call. Year-ago earnings were 87 cents.
Knight Ridder’s chairman and chief executive Tony Ridder said in a statement that the Sept. 11 attacks cost the company a total of $10 million, including $9 million in lost advertising revenue, after accounting for temporary increases from condolence ads, and additional costs of $2 million for extra editions and creating more space for news. Offsetting those costs were added circulation revenues of $1 million.
Other newspaper publishers and media companies have also been affected by the slumping advertising market, which was made far worse by the Sept. 11 attacks on New York and Washington. But so far Knight Ridder has offered the most specific details on the direct financial impact of the attacks on its bottom line.
Ridder said the attacks reversed a slight comeback in retail advertising. That combined with an already soft market for general advertising and help wanted ads turned September into a “memorably bad month,” he said in a statement.
In a separate report also issued Tuesday, Knight Ridder reported that total advertising revenues at its newspapers fell 16% in September compared to the same month a year ago. Year-to-date advertising revenues were off 7%.
Ridder said that while the company’s prospects had started to look up in the weeks after the attacks, they fell back again once the U.S. bombing campaign began in Afghanistan. But he noted that cost savings from a downsizing effort announced in April were paying off, and he also said newsprint costs were heading lower.
He did not specifically lower the outlook for the company’s full-year earnings, which currently stand at $2.91 per share, as measured by Thomson Financial/First Call, but he noted that there still exists a “harsh revenue environment” and that achieving full-year earnings goals would be contingent upon “resumption of more normal business patterns.”
Investors seemed to take the news favorably, sending Knight Ridder’s shares up 90 cents to $58.02 in early afternoon trading on the New York Stock Exchange.
Knight Ridder, which is based in San Jose, Calif., publishes 28 newspapers in major markets across the country, including the San Jose Mercury News, The Miami Herald, and The Philadelphia Inquirer.
For the first nine months of the year, net income fell 67% to $109.8 million compared to $333.2 million in the same period a year ago, while per-share figures fell to $1.28 from $3.71. Revenues were off 7% to $2.17 billion from $2.33 billion.