Knight Ridder Profits Better Than Expected

By: Lisa Singhania, AP Business Writer (AP) Knight Ridder, the second largest newspaper publisher in the country, reported better-than-expected fourth-quarter results Tuesday, helped by an 8% increase in advertising revenue in December.

The San Jose, Calif.-based company also reaffirmed its 2003 outlook of earnings per share of $3.84, an estimate in line with analysts' forecasts.

Wall Street appeared satisfied with the figures. In trading early Tuesday on the New York Stock Exchange, shares of the company's stock rose 69 cents to $64.70.

Knight Ridder earned $96.63 million, or $1.16 per share, for the three months ending Dec. 29, compared with $74.98 million, or 88 cents per share, a year earlier. Analysts surveyed by Thomson First Call had expected earnings-per-share of $1.14.

Fourth-quarter revenue was $759.29 million, up 3.6% from $733.25 million a year ago.

"We are pleased to report earnings slightly higher than guidance. Among many factors, we can attribute these positive results to a December performance stronger than anything we have seen in more than two years," Chairman and Chief Executive Tony Ridder said. "For the fourth month in a row we showed advertising growth, and for the second month in a row we were up in all three categories. In December, retail and general more than sustained the momentum they have had since September."

Fourth-quarter newspaper revenues grew to $745.33 million from $722.79 million, while online revenue was $13.95 million, up from $10.46 million.

Advertising also picked up in the fourth quarter. Total advertising revenues were $597.99 million, compared with $571.48 million a year ago. The bulk of the gain came in retail and general advertising.

Circulation revenues were lower, however, falling to $119.96 million, from $127.7 million a year ago, despite circulation growth.

The company also benefited from a drop in newsprint and related costs, which fell to $92.89 million, from $103.73 million the year before.

For the year, Knight Ridder earned $257.45 million, or $3.04 a share, including two writedowns related to its interest in CareerBuilder, compared with $2.16 a share, or $184.82 million in 2001. Revenue was $2.84 billion versus $2.9 billion a year ago.

For all of 2002, total ad revenue fell 2.1% to $2.21 billion.

Knight Ridder publishes 32 daily newspapers, many of which had difficult years with regards to advertising.

"Of the eight largest markets (excluding Detroit), only Miami was positive for the year, with overall ad revenue up 3.2%," said Gary Effren, senior vice president and chief financial officer. "Other large markets were all clustered in the negative 1% to 4% range, with the exception of San Jose, down 13.3% for the year."

San Jose, Calif., home to the paper's San Jose Mercury News, is located in Silicon Valley, which is an economic slump.