, the nation's largest newspaper company, reported an 18% jump in second-quarter profits Wednesday, but the gain was entirely due to the sale of several newspapers.
Excluding those sales, Gannett's financial results weakened amid a slump in advertising that was worsened by a national malaise in the residential real estate market. Shares of the
publisher recently were down $1.27, or 2.3%, to $53.58.
The company posted net income of $365.7 million, or $1.56 a share, for the quarter, up from $310.5 million, or $1.31 a share, a year earlier.
Excluding a one-time gain of $73.8 million that came mostly from newspaper sales, Gannett's earnings fell to $289.9 million, or $1.24 a share, from last year's $304.5 million, or $1.28 a share.
Analysts, on average, had expected Gannett to post earnings on that basis of $1.22 a share.
On its top line, Gannett's second-quarter revenue fell 3.4% to $1.93 billion from the $2 billion it posted in the second quarter last year.
The company said in a press release that its chain of local newspapers "faced softening ad demand in part due to the real estate slowdown that has affected a number of our markets."
Gannett's second-quarter revenue from newspaper advertising fell 5.3%. Its U.S. newspapers posted a 7.7% drop, while its newspapers in the United Kingdom recorded a 2.5% decrease.
Gannett's performance largely fell prey to a worsening market for newspapers as consumers increasingly turn to the Internet for information and macroeconomic conditions for key print advertisers, like homebuilders, retailers and automakers, deteriorate.
Total print and online ad revenue fell 4.8% to $10.6 billion in the first quarter of this year compared to the same quarter last year, according to the Newspaper Association of America. For all of 2006, that measure showed a 0.3% decline, suggesting that the pain is accelerating.
In one glimmer of good news for the newspaper sector as the Internet takes hold, search giant
said Wednesday that it is expanding a program that allows its online advertisers to buy print ads in newspapers. The effort is aimed at attracting smaller companies who don't typically advertise in print, and it includes "hundreds of thousands" of potential advertisers, Google said.
Publishers such as Gannett,
New York Times
have signed on to the program.