Publishers Report Boost From Classifieds

By: Seth Sutel, AP Business Writer (AP) Newspaper publishers told investors Tuesday they were seeing a generally improved advertising climate thanks in part to robust classified advertising, especially help-wanted ads.

Speaking to Wall Street analysts and investors at the annual Mid-Year Media Review in New York, the publishers were mainly upbeat in their presentations, but some cautioned that certain advertising categories remained weak.

Here are highlights from the presentations Tuesday. The conference continues through Wednesday.

Knight Ridder

Knight Ridder, the second-largest newspaper publisher in the country, said it expects second-quarter earnings to be improved by about 6 cents per share thanks to the resolution of several issues related to state taxes last year.

The San Jose, Calif.-based company now expects to earn $1.06 to $1.08 per share, including the benefit of lowering its effective tax rate in the second quarter to just over 35%, compared with its usual rate of just under 38%.

Last week, the company said its second-quarter earnings per share would likely be at the low end of analysts' estimates at the time. Gary Effren, the company's chief financial officer, said the second quarter results were negatively impacted by advertising revenue growth of about 2% in April and May, and June was shaping up to be about the same.

The Washington Post Co.

Donald Graham, chairman and chief executive, said that help-wanted advertising revenue has been a "bright spot" at The Washington Post (Click for QuikCap), where advertising revenues have otherwise varied widely from month to month.

On the whole, however, Graham gave a relatively upbeat assessment of the company's various businesses, including its Kaplan educational unit, Newsweek magazine and cable TV.

"For the past three years, I've had to come up here and say that business was various shades of terrible," Graham said. "I can now give you a different message: business isn't great, but it's not bad at all."

However, he called the Post's circulation performance "disappointing," saying that it wasn't certain that the company would be able to reverse many years of small declines.

Belo Corp.

The publisher of The Dallas Morning News said it expected to earn 37 cents to 38 cents per share in the second quarter, just shy of analysts' expectations of 39 cents, as reported by Thomson First Call.

The Dallas-based company, which also owns 19 television stations, said it expected total operating expenses to increase 6% to 6.5% in the second quarter, driven by costs for new products and bonuses.

Dennis Williamson, Belo's chief financial officer, said classified and general advertising have been strong at its newspapers.

Media General Inc.

The Richmond, Va.-based publisher of The Tampa (Fla.) Tribune and other newspapers in the Southeast reported "solid" growth in year-to-date advertising revenues, but noted that some categories remained soft, including retail.

Reid Ashe, president and chief operating officer, said that classified advertising was a main driver behind the growth, while retail, national and preprint advertising had not been as robust.

"While our year-over-year growth has been solid overall, it has not been as strong as we had hoped," Ashe said. Classified advertising revenues are up 8.7% year-to-date, he said.

Looking ahead, the company expects newspaper advertising as well as total revenues to increase 4% to 5% in 2004, unchanged from the forecast it made in December.

Gannett Co. Inc.

USA Today will raise its cover price from 50 cents to 75 cents on Sept. 7, Publisher Craig Moon said, marking the first price change since 1985. With average daily circulation of 2.3 million, USA Today is the largest-selling newspaper in the country.

Moon said the company had been investing in consumer research about the price increase since last summer. He said the company will invest $10 million in new coin mechanisms to sell the papers.

Douglas McCorkindale, Gannett's president and CEO, said the company was seeing improving trends in advertising, especially in help-wanted and national, throughout the first several months of the year.

However, newspaper division chief Gary Watson noted that while telecommunications and financial advertising were strong, spending from department stores declined and grocery ads were impacted by the strike in California.