McClatchy Gains on Projected Ad Recovery

McClatchy shares are surging today after chairman and CEO Gary Pruitt noted the improving advertising revenue trends in his presentation at the 38th annual UBS media conference.
By Theresa McCabe ,

(McClatchy article updated with today's stock price and volume information.)

NEW YORK (

TheStreet

) --

McClatchy

(MNI) - Get Report

shares are up about 6.5% today to around $4.25 after chairman and CEO Gary Pruitt noted the company's improving advertising revenue trends in his presentation at the 38th annual UBS media conference yesterday.

Around 2 million shares have traded hands today, compared with the company's 3-month average volume of less than 795,000 shares, surpassing yesterday's volume of 1.6 million shares when the stock price surged 15%.

In his presentation, Pruitt said that the rate of decline in its advertising revenue is slowing, indicating a recovery in the ad market. For the first two months of the fourth quarter, McClatchy has seen a 5.8% decline in advertising revenue, which is better than its 6.4% decline in the third quarter. It's also an improvement from its 8.2% drop in the second quarter and an 11.2% decline in the first quarter of 2010.

Management said that 2010 advertising revenue has been led by classified, while employment advertising has grown 2.1% over the last seven months.

"We have seen improvement in revenues in every quarter of 2010 and that has continued into the fourth quarter," Pruitt said in his presentation. "Looking forward to 2011, we expect advertising revenues to continue to improve."

The company expects to see about $190 million in digital advertising revenue in 2010. Digital advertising revenue from its newspaper websites currently accounts for 18.2% of the company's total advertising revenue.

McClatchy, which publishes a number of newspapers including

The Miami Herald

and

The Sacramento Bee

, expects cash expenses to be down in the 9% to 10% range in 2010 and projects that its operating cash flow will see slight gains from last year.

-- Written by Theresa McCabe in Boston.

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