Newspaper Publishers Guardedly Optimistic

By: Seth Sutel, AP Business Writer (AP) Newspaper publishers told investors Tuesday they are guardedly optimistic about the advertising environment in 2002, but some warned of lower results in the fourth quarter of this year.

Speaking at a conference sponsored by the investment bank Credit Suisse First Boston, publishers from small and mid-sized newspaper companies said they expected some improvement in advertising spending next year as the economy improves.

But two companies, Belo and Lee Enterprises Inc., warned of lower results for the three-month period ending this month, due in part to the poor advertising climate.

The McClatchy Co., however, said it would post fourth-quarter earnings that were higher than previously expected because of improving revenues.

Journal Register Co.

Robert Jelenic, chief executive of the Trenton, N.J.-based company, said he was "feeling a little better about advertising," with a report due out next week showing that ad revenues in November would be "much improved" from October.

Noting that year-to-date advertising revenues were down 6.3% through October, Jelenic cautioned that "it still continues to be a difficult advertising environment."

But with November's improvement and more of the same in December, he expected the company to post earnings in the middle of the range of analysts' estimates of 21 cents to 25 cents a share.

Jean Clifton, the chief financial officer, said the company had just begun using its new $35 million printing facility in Chester County, Pa. She said the new plant would result in annual cost savings of $1.3 million, due largely to lower labor and newsprint costs.

Clifton said the company expected advertising revenues to grow by 1% in 2002.

Journal Register owns 23 daily newspapers, including Connecticut's second-largest, the New Haven Register.

Lee Enterprises Inc.

Having sold off its television stations a year ago, Davenport, Iowa-based Lee Enterprises is looking to add to its newspaper holdings, which currently include 23 daily papers and joint interest in five others, chief executive Mary Junck said.

"We're pushing pretty hard and we've identified a handful" of potential targets, Junck said. She said Lee was looking at papers between 30,000 and 125,000 circulation to add to the group's holdings, located mainly in midsize markets in the Midwest and the Northwest.

Carl Schmidt, chief financial officer, said Lee's earnings for its quarter ending in December were likely to be 8 cents to 10 cents below the 48 cents reported in the same period a year ago. He cited weaker advertising, lower interest income, and the fact that there is one less Sunday in the period this year than the comparable period a year ago.

Schmidt also said he expected newsprint prices to continue to decline in 2002. "We haven't seen an upward trend to date. We're also keeping our costs down by entering some joint buying agreements," he said.

Pulitzer Inc.

Pulitzer executives detailed plans for building up operations in St. Louis, where the company is based. Last year, it purchased Suburban Journals of Greater St. Louis, a group that includes 36 weekly newspapers and other niche publications.

Pulitzer plans to use the group, plus a city site called STLtoday.com, to complement its flagship newspaper, the St. Louis Post-Dispatch.

Alan Silverglat, senior vice president of finance, declined to give a specific forecast for next year, saying budgets are still being compiled. He did say the company expected newsprint costs to be down slightly in 2002.

Silverglat said the company was comfortable with the range of 70 cents per share to 75 cents per share that analysts are forecasting for the full year in 2001.

In addition to the Post-Dispatch, the company also operates the Arizona Daily Star in Tucson and 12 other dailies.

McClatchy Co.

Gary Pruitt, chairman and chief executive of the Sacramento, Calif.-based publisher, said advertising revenues were down 4.5% in the year-to-date through October.

But due to improving revenues, he said the company now expects to earn between 40 cents and 42 cents per share in the fourth quarter. Analysts surveyed by Thomson Financial/First Call had estimated 36 cents.

Chief financial officer Pat Talamantes said nine of the company's 11 dailies have moved to narrower web widths, meaning an annual savings of $7.5 million, and the other two are set to change over.

Talamantes said McClatchy is "cautiously optimistic" about a recovery starting in the second half of next year. He said he expected advertising revenues to grow in the low single-digit range.

Belo

Dunia Shive, the chief financial officer, said Dallas-based Belo instituted a companywide wage freeze in October and planned to hold employment levels steady next year. She also said there would be no increase in cash dividends until at least 2003.

In the fourth quarter, the company expects declines in the midteens in revenues from spot television advertising, and "severe" declines in classified employment advertising in newspapers.

Belo expects newspaper revenue declines in the midteens in the fourth quarter, compared with the same period a year ago, and operating cash flow to decline 35% to 40%.

In addition, the company said its tax rate would be above 100% for the quarter and the full year because of accounting factors relating to goodwill amortization.

As a result, the company is likely to post a loss of about 3 cents to 4 cents a share in the third quarter. Analysts surveyed by Thomson Financial/First Call had expected 4 cents per share in the fourth quarter.

Belo said it expects to earn 15 cents to 16 cents a share for the full year, down from 82 cents a share last year.

Shive said the company expected the advertising environment to improve, but "the timing and rate of improvement is unknown. Because of this, it is very difficult to predict advertising revenues in 2002."

Media General

Chief financial officer Marshall Morton said the company expects print advertising revenues to increase between 1% and 1.5% in 2002 from this year. He also said newsprint costs should decline by 9%.

He said the company remained comfortable with its previously issued guidance of fourth quarter earnings in the mid-20 cents per share range and full-year earnings in the low-70 cents range.

J. Stewart Bryan III, Media General's chairman and chief executive, said the company was actively participating in the Federal Communications Commission's review of media cross-ownership rules, which currently bar companies from owning a television station and newspaper in the same market.

Bryan said a full relaxation of the rule would allow Media General to make several "strategic trades" in the Southeast, where its broadcasting and newspaper properties are concentrated.

The Richmond, Va.-based company's newspapers include The Tampa Tribune, the Richmond Times-Dispatch, the Winston-Salem (N.C.) Journal, and 22 other dailies. It also has 26 network-affiliated television stations.