UPDATE 2-McClatchy profit slides on ad declines
(Recasts, adds analysts' estimates, outlook)
NEW YORK, July 24 (Reuters) - Newspaper publisher McClatchy Co (MNI.N) reported a more than 40 percent drop in quarterly profit on Thursday as advertising revenue plunged, but shares shot up 5 percent after the company said it still will be able to pay its debt.
The results, along with EW Scripps Co (SSP.N) and Lee Enterprises Inc (LEE.N) which also reported financial results on Thursday, are the latest sign that a weak economy and fundamental changes in how people get their news continue to hammer U.S. newspaper publishers.
McClatchy, publisher of The Miami Herald and The Sacramento Bee, said it expected advertising and revenue to remain weak in the near future.
"We are committed to doing more if revenues decline further in the second half," Chief Executive Gary Pruitt said. "Our board will meet during the third quarter to consider dividend policies and we will look at additional cost-saving measures as necessary."
McClatchy expects to continue meeting its debt obligations, however, an issue that has been a growing concern on investors' and employees' minds as revenue falls. McClatchy had about $2.1 billion in debt on its books at the end of the quarter, much of that related to its purchase of newspaper chain Knight Ridder.
"The debt covenant comment must have eased concern about a possible financial crisis," Benchmark Co analyst Edward Atorino said.
Second-quarter net income fell to $19.7 million, or 24 cents per share, from $34.5 million, or 43 cents, in the same quarter a year ago.
Excluding a gain from the sale of a one-third interest in a newsprint company and charges from a restructuring plan, profit from continuing operations of $17.3 million, or 21 cents per share, met Wall Street expectations, according to Reuters Estimates.
Revenue fell 15.6 percent to $489.7 million.
Online advertising revenue grew 12.5 percent during the quarter, though total ad revenue fell 16.8 percent to $406.3 million.
The company also has been trying to cut its expenses, which led it earlier this year to say that it would trim its work force by about 1,400 positions, or 10 percent.
McClatchy shares rose 26 cents, or 5.22 percent, to $5.24 on the New York Stock Exchange. The company's shares have slid from a year-high of $26.77 last July. (Reporting by Kenneth Li and Robert MacMillan, editing by Gerald E. McCormick, Ted Kerr, Dave Zimmerman)