McClatchy Beats Expectations on Q3 Ad Revenue, Sees Circ Growth

By: Jennifer Saba The McClatchy Co. announced today that Q3 advertising revenue was up 6.4%, or $239.7 million, beating Merrill Lynch estimates by $500,000. For the Q4 outlook, advertising is expected to grow in the "mid-single digit range."

National and retail advertising grew only 2.1% and 1.7% respectively for Q3. Gary Pruitt, CEO of McClatchy, told a group of analysts during an earnings call that the retail category is still touch and go despite what other players in the industry are reporting. "I don't want to throw a wet blanket on this," he said. "But it's too early to say that retail is in a reversal."

Classified advertising revenue was up 4.8% for print, or 8.4% when combined with online. In print, auto declined 2.7%, real estate grew 9.5%, and employment increased 10.2%.

McClatchy also showed gains in its direct mail category, up 12.7%, or $13.2 million. Pruitt told analysts that he still considers direct mail company Advo a "fierce competitor." Advo just snagged former Newspaper Services of America's Scott Harding as its CEO. McClatchy's North Carolina properties recently lost one of their grocery contracts, which decided to go with a three-month trial run with Advo instead.

Daily circulation for Q3 is down 0.5% and Sunday declined 1.0%. Year-to-date daily circulation is up 2%. Pruitt confirmed that 2004 will mark McClatchy's 20th consecutive year of daily circulation growth.

When pressed by analysts on whether the circulation scandals have had any effects on McClatchy, especially with advertisers, Pruitt said that they have not found the misstatements to be "detrimental to our business" nor has there been any fall out from advertisers."

Pruitt added that he was "not surprised" by the Security and Exchange Commission's request for information from about eight newspaper companies including McClatchy. "My take on this is that the SEC is doing more and more of this kind of work to learn about possible problems," Pruitt said, stressing that he has confidence in all his paper's numbers.