CENTRAL BUZZ DOMINATES MEDIA CONFERENCE

By: Lucia Moses Newspaper Execs Talk To Wall St. In Mid-year Review



Newspaper executives converged on New York City Monday to pump up their
companies to financial investors and analysts. But the buzz at this
year's mid-year media review centered not on the attendees, but on who
wasn't there.



Central Newspapers Inc., publisher of the Arizona Republic and
Indianapolis Star, cancelled its scheduled appearance on the
advice of its lawyers as it considers selling the company. Gannett Co.
Inc. and Tribune Co. were said to be the leading suitors, with a deal
expected to be announced as early as this week.



During its presentation, Gannett wouldn't comment directly on Central,
but said it has 'plenty of money left' to explore acquisitions, even
after its completes purchases of 21 Thomson Corp. newspapers and
British publisher Newscom, and other capital spending.



Separately, Gannett also announced it planned to file for clearance
under U.K. antitrust laws to explore a possible purchase of Regional
Independent Media, publisher of 101 titles, seven of which are daily
newspapers.



Priced out of the bidding over Central was E.W. Scripps Co. 'We took a
hard look at it,' Chairman and CEO William R. Burleigh said. 'We could
have afforded it, but then we wouldn't have money to deploy elsewhere.'



At this mid-year mark, publishers reported mixed financial results for
the first six months, and said they were comfortable with analysts'
earnings estimates. They expressed confidence in their businesses while
sounding the familiar complaint that their companies' values aren't
reflected in their share prices.



'It's darn frustrating, to see a smaller cap company that really knows
what it's doing in the newspaper business not get its due rewards,'
said Richard D. Gottlieb, chairman and CEO of Midwest publisher Lee
Enterprises, speaking for many of his peers. 'When people open their
eyes and see the Internet is not going to take over the world ... I
think we'll go back up.'



Lee's results reflected the uncertainty facing the industry following a
generally strong first quarter. Ad revenue gain in the first half of
the year was led by revenue from Internet and other non-newspaper
sources, while retail was admittedly tough. EBITDA (earnings before
interest, taxes, depreciation, and amortization) grew a reported 5.1%
on 3.2% higher operating revenue in the first six months of the year,
although circulation revenue was down 1.8% due partly to a switch to
all-office pay.



Lee said it expected local advertising revenue to be reasonably strong
for the rest of the year, while national advertising faces challenges.
The company hoped to overcome past difficulty in increasing ad rates
with a renewed ad sales push.



Gannett also reported trouble spots in retail, stemming from
consolidations, closings, and switches from ROP to preprints, and
softness in employment and real estate classifieds. Ad pages at its
flagship USA Today dropped 10% in June from the year-ago period,
although the company expects the rest of the year to be 'firm' after a
period of aggressive spending. While readership at the company overall
is rising, paid daily circulation was off slightly, due largely to
declining afternoon circulation.



Even Dow Jones & Co.'s Wall Street Journal, riding a wave of
record financial success, began to face some tough comparisons this
month, although the company expects June linage to show a decent
increase. Asked about the possibility of its mainstay, financial
advertising, drying up, CEO Peter Kann said even in the event of a
recession, the financial newspaper would remain a choice media buy.
Additionally, he said, the company has broadened its base to lessen its
dependence on that category.



For now, however, the Journal's problem remains full ad
capacity. The paper plans to trim some statistical data to free up ad
space until more page capacity becomes available in 2002. Overall, the
company looks to grow earnings per share a robust 40% this year, up
from 27% last year, and hit the high end of the current range of
analysts' estimates.



In other trends, publishers said while the cost of newsprint is
expected to rise $50 a ton in September, they expected to offset the
increase through converting to narrower paper widths and other cost-

saving measures.



And the cooling of Internet stocks has put the breaks on some
publishers' plans to explore tracking stocks for their Internet
divisions. Dow Jones proclaimed the issue 'moot for now,' while Gannett
President and CEO Douglas H. McCorkindale said the company is backing
off spinoffs. 'Maybe [Rupert] Murdoch buys it as an ego trip,' he
joked. 'That's not the way to buy a company in the long term.'