Knight Ridder Inc., the newspaper publisher being sold to McClatchy Co., posted sharply lower first-quarter earnings Monday on weaker advertising, particularly at three of the 12 newspapers that McClatchy is not keeping, and other factors.
Knight Ridder earned $28.4 million, or 42 cents per share, down from $60.5 million, or 79 cents per share, a year ago, although those figures were affected by several one-time factors, including costs associated with finding a buyer for the company in the most recent quarter and profits in the year-ago period from newspapers that have since been sold.
The earnings also were lowered by new accounting rules requiring companies to record costs for stock-based compensation. Knight Ridder said the 42 cents per share figure included costs of 5 cents per share in stock-based compensation, and 6 cents per share in costs associated with finding a buyer.
In the year-ago period, the results included 4 cents per share in profits from papers in Detroit and Tallahassee, Fla., that have since been sold.
Revenue rose 3.9 percent to $739.9 million, although those results included three newspapers in Washington and Ohio that the company didn’t own in the same period a year ago.
Assuming Knight Ridder owned the same set of newspapers in both periods, total revenues rose 0.5 percent, while advertising revenues rose 1 percent.
On the same basis, operating profit was down 20.4 percent, or 10.5 percent excluding the costs of finding a buyer and stock-based compensation.
In a statement, Knight Ridder Chairman Tony Ridder called the first quarter “challenging,” and said the downturn in operating profits was largely due to “particularly weak” results at the Akron Beacon Journal and at The Philadelphia Inquirer and the Philadelphia Daily News.
Ad revenues fell 10.8 percent in Akron and 5.5 percent at the Philadelphia papers, Ridder said, accounting for more than half of the decline in adjusted operating profit, he said. Those three papers are among the 12 that McClatchy intends to sell as part of its acquisition of Knight Ridder. McClatchy plans to keep the other 20 papers.