Gannett, Scripps: Newspaper Stock Winners

NEW YORK ( TheStreet) -- Newspaper stocks are gaining today as investors enter the New Year with a positive outlook on the overall advertising market.

Shares of Gannett ( GCI) are up more than 4.4%, while E.W. Scripps ( SSP) is gaining more than 3%.

Analyst Barry Lucas of Gabelli & Co. said that publishing companies will see long-term benefits from the changes they are making as the ad model shifts from physical to digital.

Publishing companies with broadcast operating segments, such as Scripps and Media General ( MEG), may see declines in revenue in 2011 after seeing gains in 2010 due to the strong political advertising presence. In 2012, however, Lucas forecasts that political revenue will spike.

"Investors are looking at 2012," Lucas said in an interview with TheStreet, "which should be a great year for political revenue."

Lucas said that investors should expect to see a continued moderation in newspaper stocks this year in terms of ad revenue, but he predicts that the core business at most of those companies will be up in the mid-single digits.

"Print ad revenue is probably going to be down, certainly in the first half of the year," Lucas said, but he believes revenues should improve as more and more companies adjust their ad revenue model and distribute their publications digitally.

According to data from Advertising Age, U.S. media revenue rebounded in 2010 after recording its first declines in 2009. The Internet became the second largest U.S. ad medium in 2010, beating newspapers for the first time since Ad Age began collecting media company data in 1981.

McClatchy ( MNI) shares spiked at the end of 2010 after chairman and CEO Gary Pruitt noted the company's improving advertising revenue trends in a presentation at the 38th annual UBS media conference.

Pruitt said that the rate of decline in its advertising revenue has been slowing, indicating a recovery in the ad market. For the first two months of the fourth quarter, McClatchy saw 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.

New York Times ( NYT) president and CEO Janet Robinson also presented at the UBS media conference in December, providing investors with an outlook on its new Web site pay model.

>>NYTimes Preps for Shift to Online Pay Model

Robinson revealed that the company is counting on its projected 10% increase in digital advertising revenue to counter an expected 4% decline in year-over-year print revenue during the fourth quarter.

McClatchy shares are up almost 2% today to $4.76, while the New York Times is up 0.1% to $9.80.

-- Written by Theresa McCabe in Boston.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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