Newspaper companies put their money where the clicks are

Wed Dec 7, 2011 3:34pm EST

The facade of the New York Times building is seen in New York, November 29, 2010.   REUTERS/Shannon Stapleton

The facade of the New York Times building is seen in New York, November 29, 2010.

Credit: Reuters/Shannon Stapleton

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(Reuters) - Media companies McClatchy Co and Media General Inc, which are seeing their focus on online content starting to pay off, are speeding up their investments in digital media.

Newspaper publishers in the United States have seen their advertising sales and circulation flounder over the past few years and are turning to the Internet in a bid to stay afloat.

Publishers such as the New York Times Co have pay-walled their online content to diversify revenue sources in a closely watched move.

"The whole industry is looking to digital advertising to recover its fortunes. The future is digital, not print," Benchmark analyst Edward Atorino told Reuters.

Sacramento, California-based McClatchy, publisher of newspapers such as The Miami Herald and The Sacramento Bee, expects digital ad revenue of more than $190 million.

Digital advertising makes up 20 percent of total advertising revenue for McClatchy, which was born at the time of the California gold rush in the mid-nineteenth century.

"As we look ahead to 2012, we have limited visibility but will work hard to maintain our ad revenue momentum. We're adding digital sales staff and expanding our sales training," McClatchy CEO Gary Pruitt said at a UBS Conference in New York.

The company also expects to benefit from its investments in Internet firms such as Classified Ventures -- owner of classified advertisement websites Cars.com and Apartments.com, and jobs site CareerBuilder.

"We are especially pleased with the performance of our Internet investments -- these companies provide important products to our newspaper websites and are strategic partners in our digital success," Pruitt said.

Media General -- which publishes newspapers like The Tampa Tribune and the Winston-Salem Journal and owns TV station WFLA-TV -- expects revenue from local media websites to grow by 15 percent to about $33 million this year.

The company, which derives 6 percent of total revenue from digital media, also expects revenue from Internet partnerships to grow by 12 percent to about $11.6 million.

"As our business continues its shift to digital, we will continue to respond to the ongoing changes in the packaging and delivery of news and information by creating new revenue streams from multiple sources, including increased content revenues," Media General CEO Marshall Morton said at the conference.

Media General, which pegged its 2012 capital expenditures budget at about $23-$25 million, expects events like the Presidential elections, Super Bowl and Summer Olympics to drive revenue growth next year.

The company, which also predates the Civil War, will begin charging for online local content from seven papers by the end of 2011.

It also said it will finalize plans for The Tampa Tribune newspaper -- whose revenue has slumped over the past five years as the local economy in Florida continues to languish -- in a move that could result in job cuts.

Shares of McClatchy rose nearly 50 percent -- their biggest intra-day jump ever -- and were trading at $1.74 in afternoon trade on the New York Stock Exchange. Shares of Media General were up 2 percent at $3.67.

(Reporting by Soham Chatterjee and Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty)

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