Sinking revenue cuts into McClatchy profit

SACRAMENTO, Calif. —The McClatchy Co. on Tuesday reported a drop in fourth-quarter profits, reflecting a continued slump in advertising and the write-down of some land in Florida after a deal fell through to sell it.

Sacramento-based McClatchy, which owns The Eagle, said quarterly net income dropped to $14.9 million, down from year-ago earnings of $25.8 million.

McClatchy said its ad slump, which had eased in recent quarters, grew slightly worse in the fourth quarter. Ad revenue dropped 6.9 percent from a year earlier. In the third quarter, the decline was 6.4 percent.

In addition, chairman and CEO Gary Pruitt said 2011 started off poorly; ad revenue fell 10 percent in January compared with a year earlier.

"In response to this year's weak start, we have increased our ad sales efforts companywide and have initiated expense cuts at those newspapers that have seen the more significant ad revenue declines in December and January," Pruitt said in a conference call.

McClatchy and other traditional media owners are struggling with a weak economy and competition from the Internet and other sources. Gannett, the largest U.S. newspaper publisher, said newspaper ad sales fell 5.9 percent in the fourth quarter. The New York Times Co. reported a 3.1 percent decline in ad sales.

McClatchy owns 30 newspapers and is the nation's third-largest newspaper chain.

Total revenue was $369.9 million, down 5.9 percent from a year ago.

Although total ad revenue continued to slip, online ad sales rose 5.1 percent in the quarter. Internet advertising accounts for 17.8 percent of the total ad picture at McClatchy, up from 15.8 percent a year earlier.

Pruitt said fourth quarter results were hurt by a weak December, when ad sales fell 9.2 percent. A key reason was a huge drop-off in ads by national cell-phone companies, he said.

He said that despite the poor January results, he believes the ad slump will ease throughout 2011. "We have limited visibility in the short run, but we think overall trends will improve," he said.