McClatchy ad slump continues, shares fall

By Robert MacMillan

NEW YORK (Reuters) - McClatchy Co (MNI.N: Quote, Profile, Research, Stock Buzz) posted a net loss on Wednesday because of plunging advertising sales hurting newspapers in some of its key markets, and said the ad slump will continue in the second quarter.

The company also said it will buy back millions of dollars of its public debt, much of which it took on in its ill-timed purchase of the Knight Ridder newspaper chain in 2006.

Its shares fell more than 9 percent to $8 in morning trading on the New York Stock Exchange, hitting a new 52-week low. McClatchy shares have fallen 73 percent in the past year.

The results add McClatchy to the list of U.S. newspaper publishers, from The New York Times Co (NYT.N: Quote, Profile, Research, Stock Buzz) to Gannett Co Inc (GCI.N: Quote, Profile, Research, Stock Buzz), that are suffering from a loss of ad dollars to the Internet and the lingering effects of trouble in the housing market.

McClatchy publishes the Bee newspapers in Sacramento, Fresno and Modesto, California, as well as the Miami Herald in Florida. Both states have been hard hit by the real estate crisis and are proving toxic for newspaper publishers like McClatchy, Media General Inc (MEG.N: Quote, Profile, Research, Stock Buzz) and Tribune Co.

Those states account for a third of McClatchy's ad revenue, but were responsible for 56 percent of its decline in the quarter, Chief Executive Gary Pruitt said in a statement.

"The advertising environment continues to be weak," Pruitt said. Second-quarter ad results should be down in the low- to mid-teen range, he said, somewhat better than the first quarter.

The newspaper publisher posted a first-quarter net loss of $849,000 or 1 cent a share, compared with a year-ago net profit of $9 million or 11 cents a share.