Newspaper Ad Sales: What Bottom?

NEW YORK (TheStreet) -- Publicly traded newspaper publishers appeared to finish the second-quarter earnings season on a high note.

Most turned in results that surprised Wall Street on the upside, including Gannett(GCI Quote), the New York Times(NYT Quote), EW Scripps(SSP Quote), McClatchy(MNI Quote) and Journal Communications(JRN Quote).

(A notable exception was Rupert Murdochs' News Corp.(NWSA Quote), publisher of the New York Post and The Wall Street Journal among many other titles, which reported a huge second-quarter loss on the writedown of its burgeoning MySpace debacle.)

Further, many media bosses made salutary remarks about the coming recovery: business had reached a bottom, they seemed to be saying. Time to prepare for the recovery.

As a result, newspaper stocks have rallied strongly since the winter. Gannett shares have more than tripled in value since early March, while New York Times shares have more than doubled over roughly the same period.

But second-quarter data on newspaper ad sales industry-wide, released Thursday by a trade group, raises the question: Why should anyone believe those bosses?

According to the Newspaper Association of America, print ad sales plunged by more than 30% in the quarter from a year ago, the worst decline on record. It's also steeper than the 29.7% drop registered in the first quarter -- which had been the worst decline on record.

Yes, the second-quarter sales numbers didn't come as a shock, but a kind of cry-wolf phenomenon seems to have developed. Publishers started calling a bottom to the ad recession in April, when they released their first-quarter results. Then they did it again in July. Presumably, in October, they'll still be looking forward to the recovery.

It's perhaps telling when newspaper-industry representatives need to seek out data other than their own for signs of optimism.