Newspaper Stocks Surge As Their Own News Improves

MICHAEL LIEDTKE

SAN FRANCISCO (AP) — Newspapers may have finally stopped — or at least slowed — their harrowing descent into a financial abyss after three years of plunging revenues, crumbling stock prices and shrinking staffs.

The latest glimmer of hope came Tuesday when Gannett Co., the largest U.S. newspaper publisher, announced that its third-quarter earnings will be substantially above analysts' forecasts.

Although Gannett's revenue for the period, which ended Sunday, fell slightly below analysts' projections, executives said newspaper advertising sales didn't fall as badly as they did in the first and second quarters.

That's not saying much. Gannett's ad revenue from USA Today and its other print publications dived 33 percent during the first half of the year.

And newspapers have yet to come up with a cure for the perilous problem they faced before the recession even struck — what to do about the massive shift of readers and advertisers to the Internet.

But Gannett's modest progress suggests newspapers might at least be able to recover some of the revenue lost since 2006. Analysts suspect a rebound could begin soon and accelerate next year, particularly if advertising for homes, cars and jobs picks up.