Publishers Optimistic On Rest Of the Year

By: Seth Sutel, AP Business Writer (AP) Newspaper companies gave cautiously optimistic outlooks for the rest of the year at an investor conference Tuesday, saying there were hopeful signs that a long-standing advertising downturn was showing signs of easing.

Speaking at the Mid-Year Media Review in New York, executives said that better conditions in the advertising market would likely lead to better results this year. The annual meeting is sponsored by Gannett Co. Inc., the largest newspaper company in the country and publisher of USA Today.

Lee Enterprises Inc.

Mary Junck, the chief executive of Davenport, Iowa-based Lee Enterprises, said May was the company's best month since December 2000, as total publishing revenues rose 3.5% and advertising revenues rose 4.7%. However, Junck struck a cautious note.

"We continue to have a wait-and-see attitude about a rebound, but we like what we saw in May," Junck said.

Junck also said the company would substantially exceed analysts' estimates of 42 cents per share in the quarter ending June 30 due to a favorable ruling on a tax claim. The ruling will result in about $10 million, or 22 cents per share, being added to results from continuing operations in the form of a reduction of income tax expense. The company declined to give more specific guidance on earnings.

Journal Register Co.

Robert Jelenic, chief executive of Journal Register, said that the company expected to report results in the second quarter that will be at the upper end of analysts' current range of estimates, which are between 28 cents and 33 cents per share.

In the same period a year ago the company reported comparable earnings of 30 cents per share.

Jelenic also said the company expected to book improved advertising revenue results for June, which would mark the fifth consecutive month of better performance. He also said he expected second quarter classified results to be "much better."

The Trenton, N.J.-based company publishes 23 daily newspapers including the New Haven (Conn.) Register.

Jean Clifton, the company's chief financial officer said she expected improvement in each quarter for the rest of the year. "We expect momentum to increase over the balance of the year," she said.

Knight Ridder

Like other newspaper executives appearing Tuesday, Knight Ridder chief executive Tony Ridder expressed cautious optimism about the outlook for the newspaper business over the remainder of the year.

"The rebound is occurring, but slowly ... today it's fitful but it's directionally right," Ridder said.

Ridder said the company was concerned about its performance in San Jose, Calif., where overall ad revenues declined 22% in the year-to-date through May at the San Jose Mercury News. Employment classified advertising was down 62.1%.

Steven Rossi, the president of the company's newspaper division, said he anticipated seeing positive comparisons by August.

Hilary Schneider, head of the company's online division, said revenues at Knight Ridder Digital were up 24% in the first quarter year over year, while expenses fell 22%. She said she expected the division to break even by the end of this year.

Gary Effren, Knight Ridder's chief financial officer, said the company was comfortable with analysts' estimates of 87 cents per share in the second quarter.

The Washington Post Co.

CEO Donald Graham said that the company's flagship newspaper was still suffering from the "recession blues." Advertising revenues at the newspaper were down 7.9% in the year to date through May compared to the same period a year ago. Graham said that advertising revenues edged up 1% in the month of May, "but it's far too early to conclude that we've hit bottom or bounced off it."

Turning to the company's magazine business, Graham said that Newsweek's circulation remains "exceptionally strong" following a sales surge after the events of Sept. 11. But he said that advertising results in the year to date through May were about the same as the corresponding period a year ago.

Keeping with the company's usual practice, he declined to make any forecasts regarding the company's financial results.