Investors chose to celebrate Gannett's ( GCI) second-quarter earnings report Wednesday, in which it exceeded Wall Street expectations, despite further steep declines in advertising revenue.

The company's beleaguered shares, which have fallen from a year high of about $21 last August on concerns that the troubled newspaper chain, publisher of the USA Today, may soon find itself insolvent, shot higher by as much as 20% Wednesday. The stock was trading recently at $4.33, up 84 cents, or 24%, from the previous close. Volume was heavy at 7.5 million shares.

Gannett posted earnings -- excluding a slew of charges, including a $28 million write down in the value of itself -- of 46 cents a share, well ahead of analysts' estimates of a 36-cent per-share profit. In the year-ago second quarter, the company earned $1.04, also excluding items.

But the song remained the same when it came to the advertising recession that has laid the media industry low.
Newspapers in Peril

Gannett said ad revenue continued to slump, down 32% in the quarter. The drop was in line with declines that Gannett and the newspaper industry as a whole saw in the first period, which would seem to indicate that the market's widely sought bottom has not yet been reached.

Indeed, just days ago, Gannett announced another round of 1,400 layoffs at its community newspapers around the country (which doesn't include the flagship USA Today) in a further effort to curtail costs and save cash as readers and ad sales continue to fall away from the print medium.

Total revenue in the second-quarter, Gannett said, slid to $1.4 billion from $1.7 billion a year ago

Concerns have crept up in recent weeks regarding Gannett's ability to meet interest payments on some of its debt, and the company attempted to address those concerns in its earnings release, saying that it has recently restructured some of its debt load.

Gracia Martore, Gannett's finance chief, said in a statement, "We continue to opportunistically manage our capital structure." She added that the company "extended the maturities of over 25% of our outstanding bonds to 2015 and 2016 through a debt exchange offer," which served to reduce its total debt by $223 million to $3.5 billion as of the end of the second quarter.

Other newspaper stocks gained ground Wednesday. The New York Times ( NYT) was up 5% to $5.30; the Washington Post ( WPO) rose 4.8% to $367.20; News Corp. ( NWS) added 3% to $10.31; E.W. Scripps ( SSP) jumped 4.7% to $2.43; and Media General ( MEG) gained 7.5% to $2.01.

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