Overall, Ad Revenues Up for 1Q

By: E&P Staff An early Easter may have accounted for a spike in newspaper advertising for March, according to Merrill Lynch report. Advertising revenues for the month were up 6-8%. Overall, ad revenues for 1Q increased an average 4.6%.

The Dow Jones Ottaway properties, Gannett and Lee posted the best quarterly gains in advertising, 7.4%, 6.7% and 5.9%, respectively. McClatchy increased 5.6%.

Retail was up 2% for the quarter, however, those gains might have more to do with an early Easter. National advertising was robust with an increase of 7%.

Classified revenue rose 5.5% for the quarter, with gains in help-wanted revenue, up over 8%. Real estate also increased, about 5.5% as did auto, up 2.5%.

Circulation revenues were down; the report said that the Do Not Call registry impacted that category.

First quarter earnings also increased for newspapers (11 of which the investment firm covers), up 17%. "On average, 1Q EPS came in 4% higher than consensus and 5% higher than our estimates," the report said.

In response to the Newspaper Association of America's conference last week, the report cautions that newspapers that have launched independent Spanish papers and free metro versions limit near-term margins: "This lack of operating leverage was evident in newspaper companies' 1Q results, to the dismay of investors." However, these investments are considered essential to long-term health.

Most newspapers will be announcing earnings this week and Merrill Lynch expects the results to vary "quite a bit" from newspaper to newspaper.