Knight Ridder Profits Up As Revenues Drop

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(AP) Media companies reported first quarter results Tuesday showing that they still struggled with a weak advertising market and the effects of the war in Iraq.

Gannett Co. Inc. of McLean, Va., said Tuesday that first-quarter earnings ticked up 2.6% in the first three months of 2003 after an initially strong quarter for advertising slowed down as the war approached.

Knight Ridder of San Jose, Calif., meanwhile, said its recent financial lethargy continued as high unemployment and the war diminished advertising.

Knight Ridder earned $50.7 million, or 62 cents per share, for the three months ended March 30. That was an 84% improvement from net income of $27.5 million, or 32 cents per share, last year.

If not for a 2002 accounting adjustment that depressed its 2002 results, Knight Ridder said this year’s first-quarter profit would have fallen 2% below last year.

This year’s first-quarter earnings matched the consensus estimate among analysts surveyed by Thomson First Call.

Management projected its earnings per share for the current quarter will be in the low to mid-90 cent range. The average second-quarter estimate among analysts had been 96 cents per share.

Knight Ridder’s shares rose 55 cents to $62.86 in midday trading on the New York Stock Exchange.

The company’s revenue totaled $677 million in the quarter compared with $678 million in the previous year.

Lower prices on some of Knight Ridder’s 31 daily papers caused much of the erosion. The company’s circulation revenue totaled $120 million in the first quarter, down 5% from $126.4 million last year.

Management discounted prices in some markets last spring to attract more readers. The effort paid a modest dividend in the first quarter, with circulation inching up 0.5% from last year.

Knight Ridder attributed some of the readership gains to the public’s interest in news about the Iraqi war.

But the war jitters hurt Knight Ridder late in the quarter as anxious advertisers bought less space in newspapers.

The company’s total advertising revenue fell 2% in March after improving by 2% and 1% in January and February, respectively. For the whole quarter, Knight Ridder’s ad revenue totaled $521.4 million, up slightly from $520 million last year.

The weak job market undercut Knight Ridder’s help wanted advertising, an important source of newspaper revenue. Help wanted volume plunged 16.6% companywide during the first quarter.

Much of the decay occurred at three of Knight Ridder’s biggest newspapers — the San Jose Mercury News, The Philadelphia Inquirer, and Philadelphia Daily News. Help wanted advertising plummeted 44% at the Mercury News, located in the heart of Silicon Valley. In Philadelphia, help wanted advertising fell 15%.

Like many other newspaper publishers, Knight Ridder has been struggling to recover from an advertising slump that has lasted more than two years.

To offset its revenue losses, Knight Ridder has shed about 4,000 jobs, paring its work force by about 18%, since the end of 2000.

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