Schibsted hit by ad declines, plans rights issue

* Q1 EBITA 5 mln Norwegian crowns ($763,000)

* Average forecast 77 mln in poll of analysts

* Company sets 1.3 bln crown rights isssue

* Sees advertising markets staying weak in 2009

(Adds details, quotes, share price) OSLO, May 15 (Reuters) - Norwegian media group Schibsted (SBST.OL) reported a bigger than expected drop in core profits for the first quarter on Friday and said it would raise capital with a 1.3 billion crown ($198 million) rights issue.

Earnings before interest, tax and amortisation (EBITA) sank to 5 million crowns in the three months to end-March from 283 million in the same quarter last year, with revenues and profits hit by weak advertising.

The result was towards the low end of the range of analysts' estimates of a loss of 12 million crowns to a profit of 174 million in a Reuters poll. It undershot the average forecast of a profit of 77 million crowns.

"The weak real economic climate has had a considerable negative effect on the advertising markets," Schibsted ASA said in a statement. "A weak advertising revenue development is expected for 2009."

It added, however, that its online activities continued to grow and are expected to improve their relative position in the media market.

Schibsted said the planned rights issue has been fully underwritten by existing shareholders and banks. "Schibsted plans to close the transaction by mid-July 2009."

Schibsted, the publisher of best-selling Norwegian tabloid VG and the Oslo paper Aftenposten, has increased its exposure to online publishing in Norway and abroad, and online activities generated 28 percent of operating revenues in first quarter.

The company, which announced on Thursday that Rolv Erik Ryssdal would succeeded Kjell Aamot as chief executive from June 1, said its 1 billion-crown profit improvement plan for 2009 was on track and had an impact of 150 million in the first quarter.

The programme's impact will increase through the next three quarters, it said.

It said investment in organic growth projects in 2009 would be below 150 million this year in line with earlier announcements that it would cut such spending sharply.

Shares in Schibsted closed at 64.50 crowns on Thursday. Trade on the Oslo bourse resumes at 0700 GMT.