Newspaper publishers McClatchy ( MNI - Get Report) and Journal Communications ( JRN) got mixed reviews from Wall Street with their third-quarter results, as both companies continued to struggle with a rough advertising climate.

McClatchy attracted investors Tuesday after reporting that its earnings rose 34% for the quarter, thanks to the added revenue from 20 newspapers it bought and retained in its acquisition of Knight-Ridder in June.

The publisher, which owns dailies including The Sacramento Bee and The Star Tribune in Minneapolis, recorded net income of $51.8 million, or 64 cents a share, for the quarter, compared with the $38.6 million, or 82 cents a share, it logged in the same quarter last year. EPS dropped because the company's number of shares outstanding rose to about 81 million from about 46.6 million in the same quarter a year ago.

Excluding a $9 million pretax gain from the sale of land in the recent quarter, McClatchy reported income from continuing operations of $55.2 million, or 68 cents a share, compared with earnings of $38.6 million, or 82 cents a share, in the third quarter of 2005.

Analysts, on average, expected earnings of 50 cents a share, according to Thomson First Call.

The company's top line totaled $680.9 million, with advertising revenue of $575.9 million and circulation revenue of $86.0 million. The results fell short of analysts' forecast of $701.9 million.

On a pro forma basis, including last year's results from the 20 former Knight Ridder newspapers, McClatchy's revenue would have been down $9.3 million or 1.4%, with advertising revenue down $4.6 million, or 0.8%, and circulation revenue down $3.8 million, or 4.2%.

"The overall advertising environment was difficult in the third quarter," said McClatchy in a press release. "Although we were pleased with the continued rebound in retail advertising revenues, we generally saw worsening trends in the classified and national categories.

"Within classified, employment and automotive advertising declined, although real estate was strong despite difficult comparisons. National advertising declined compared to a strong third quarter 2005 pro forma growth rate of 6.7%. Online and direct marketing revenues continued to show strength and their growth helped offset some of the weakness in classified and national advertising."

McClatchy noted that it's now the largest local media company in 30 high-growth markets throughout the country. The company's CEO, Gary Pruitt, made a contrarian call when he opted to buy Knight-Ridder earlier this year at a time when newspapers are facing a dearth of advertising and mounting competitive threats from new-media giants such as Google ( GOOG - Get Report) and Yahoo! ( YHOO) dominating the Internet.

McClatchy promptly sold off 12 of the former Knight Ridder newspapers because they didn't fit with its strategy of operating in growth markets. Pruitt has said the other 20 publications will yield high returns for investors as the newspaper publishing business improves.

"We are working hard to integrate these newspapers into McClatchy and are focused on operating the company to meet the challenges and opportunities facing the industry today," the company said in the release.

Shares of McClatchy recently were up 29 cents, or 0.7%, to $43.73.

For its part, Journal Communications, which owns the Milwaukee Journal Sentinel and a slew of other media properties in the Midwest, received a cooler reception. The company said its third-quarter earnings dropped 4% to $13.5 million, or 19 cents a share. That compares with earnings of $14 million, or 19 cents a share a year earlier.

Those results include results operations of three television stations purchased last year, along with a $1 million loss related to the sale of NorthStar Print Group.

Earnings from continuing operations rose to $14.5 million, or 20 cents a share, from $14 million, or 19 cents a share, last year. By that measure, the company beat Wall Street's estimate by a penny.

Revenue rose 4% to $194.3 million for the quarter, up from last year's $187.4 million. That figure was below Wall Street's expectation for revenue of $195.2 million.

Publishing revenue decreased 5% to $80.4 million, while broadcasting revenue climbed 44% to $58.3 million. Revenue from telecommunications and printing services was down.

Shares of Journal Communications were recently down 22 cents, or 1.8%, to $11.68.

Elsewhere, media conglomerate Scripps ( SSP - Get Report) posted better-than-expected earnings on growth at its TV stations, though profits at its newspaper segment fell.

Scripps shares were up 91 cents, or 1.9%, to $50.02.