Merrill Lynch's Q1 Winners and Losers

By: E&P Staff As first quarter data begins to emerge, a few likely winners and losers, relatively speaking, stand out among major public newspaper companies.

According to a report released by Merrill Lynch late last week, The Washington Post Co. "should post one of the best newspaper ad revenue performances of the group during Q1, up 6%" vs. the industry's 3.5% growth. Gannett Co. Inc. also could experience a good quarter, up 5.2%.

But Journal Communications received a downgraded estimate, due to lower than expected ad revenue growth for its publishing division. Q1 earnings per share (EPS) was lowered by $.02 to $.17 (Merrill Lynch points out that their original estimates were much higher than consensus).

Circulation revenues for the Tribune Co. are expected to decline 3% in the quarter -- "the largest of its peer group." The culprits are bulk sales, discounting and do-not-call legislation.

The Journal Register Co., on the other hand, can thank classified growth, which has pushed the company's overall advertising revenue performance up. The company saw gains in help wanted and real estate categories.

Knight Ridder received an upgrade even though its January and February ad numbers were lackluster. Merrill Lynch raised its estimated Q1 EPS by $.02 to $.66 "to reflect better cost containment." The investment firm still unfurled some cautionary flags regarding the company. February gains in help wanted did little to boost overall ad revenue because retail and auto categories have taken a hit.

Lee Enterprises is slightly ahead of the curve, with February ad revenues up 4-5%. But those numbers are skewed by an extra Sunday. The McClatchy Co. is also up, gaining 3.6% (January) and 4.3% (February) in ad revenue (excluding the recent Merced, Calif., acquisition).

As for The New York Times Co., the investment firm is waiting for the Q1 conference call to "learn more about the very slow recovery in ad revenues" there.

E.W. Scripps Co. is up 12% and the firm projects a Q1 EPS of $.73. Excluding The Washington Post Co. and Dow Jones, it's the largest EPS gain of the group.