NEW YORK ( TheStreet) -- As the earnings reports of this quarter have shown, newspaper companies are struggling to produce revenue in their publishing divisions and are seeing their most significant gains in digital media revenue. Meanwhile, although many companies in the printing and publishing media sector have seen a major dropoff in their publishing and advertising revenue, they're finding that the rate of decline is slowing down.

McClatchy ( MNI) released its earnings report on Thursday, showing that advertising revenue was down 8.2% in the second quarter, compared with declines of 11.2% in the first quarter, and 20.5% in the fourth quarter last year.

Journal Communications ( JRN) advertising revenue was down 8.5% in the second quarter versus a drop of 13.0% in the first quarter compared to the prior year.

Advertising revenue for Gannett's ( GCI) publishing unit, the company's largest business segment, declined 5.7% to $692.2 million from $734.2 million, compared with a decline of 7.9% in the first quarter and 17.9% in the fourth quarter of 2009.

Meanwhile, as companies struggle to produce ad revenue, most are seeing the biggest revenue growth among their digital media divisions.

While print advertising revenues decreased by 6.1% for The New York Times ( NYT), digital advertising was up 21.2% to $82.4 million from $68.0 million.

"Online advertising revenues have become a larger part of our mix and made up 26 percent of the company's total advertising revenues in the 2010 second quarter, up from 22 percent in the same prior-year period," said Janet Robinson, president and CEO of The New York Times.

Internet revenue from the company's websites, including, and, was up 20.5% to $94.3 million from $78.2.

Media General ( MEG) reported that its digital revenue was up 7.9%, while Gannett increased its digital revenue by 8.3% to $154.1 million from $142.4 million.

Still, as the news industry shifts from print to digital, the increase in digital revenue that most companies are seeing isn't enough to offset their losses in publishing revenue.

News companies are turning to their digital sector to stay afloat. Many have produced mobile applications or are urging their journalists to be more active on social networking sites to reach a wider audience.

Media General and Gannett both have partnership plans with Yahoo! ( YHOO), in the hopes of increasing their digital revenue growth.

Looking ahead, News Corporation ( NWSA) releases its second quarter earnings on August 4 and The Washington Post ( WPO) releases its second quarter earnings report on August 6.

-- Written by Theresa McCabe in Boston


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