McClatchy Earnings Preview

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McClatchy Co. reports earnings for the first quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

EXPECTATIONS: McClatchy Co., whose flagship paper is Minneapolis Star Tribune, is expected to post quarterly earnings of 67 cents per share on revenue of $285.8 million, according to a Thomson Financial poll of analysts.

ANALYST TAKE: “Given the recent acquisition of Knight Ridder, we expect investors to be more concerned with the progress of the acquisition than with first-quarter results,” Prudential analyst Steven Barlow said in a client note last week. Barlow expects McClatchy to report earnings in line with the consensus estimate, on total revenue growth of 2 percent and newspaper ad revenue growth of 3 percent.

QUARTER DEVELOPMENTS: McClatchy during the quarter agreed to acquire Knight Ridder Inc., the nation’s second-largest newspaper chain, for $4.5 billion. The company also said it would sell 12 Knight Ridder newspapers that it doesn’t want to keep. The Newspaper Guild-CWA, a union that represents workers at most of the affected papers, has already submitted its bid for the newspapers, which include the San Jose Mercury and the Philadelphia Inquirer. Bruce Toll, vice chairman for home builder Toll Brothers Inc., has also confirmed that he is leading a group of investors that bid for the Inquirer and the Philadelphia Daily News.

COMPETITORS: Gannett Co., the nation’s largest newspaper publisher, reported Wednesday an 11.5 percent decline in profit for its first quarter as the company began expensing stock options and recording costs from its new newspaper partnership in Detroit. Despite the slip, Gannett’s results were in line with the Street’s expectations.

STOCK PERFORMANCE: McClatchy shares fell 17 percent in the quarter, and are off 20 percent year-to-date. The stock recently rose 35 cents to $47.83 in afternoon trading on the New York Stock Exchange.

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