Weak economy hits results at Gannett, Lee Enterprises

A.H. Belo Corp., spun off two months ago from broadcaster Belo Corp., also disappointed investors Monday with a warning that its earnings would be "substantially below" the company's expectations amid "steep revenue declines" at The Press-Enterprise, its paper in Riverside, Calif.

Gannett said the economy weakened further during the quarter, especially the latter half of March. Advertising revenues for that month dropped 12.8 percent, an even greater year-over-year decline than the 8.3 percent in February that was partly due to Easter coming early this year and allowing less time for related advertising.

Overall earnings at Gannett, often seen as a bellwether for the industry, came in line with analysts' expectations, declining 9 percent to $191.8 million, or 84 cents a share. Excluding a gain on the sale of land, earnings were 77 cents per share.

Revenue performance at Gannett reflected the broad pressure on the industry as it copes with the economy's weaknesses led by the housing sector. Gannett owns 85 U.S. daily newspapers including USA Today.

Gannett's total revenues fell 8.4 percent to $1.68 billion, while newspaper advertising, the bulk of the McLean, Va.-based company's revenue, fell 10.2 percent. Classified advertising fell the most, at 16 percent.

CEO Craig Dubow told analysts on a conference call that the weakness was especially acute at Gannett's 11 newspapers in Arizona, California, Florida and Nevada, where real estate markets have suffered the most in the nation.

Investors punished A.H. Belo's shares after the newly minted company delivered its profit warning in a letter to shareholders and said 2008 was shaping up as a "very difficult year vis-a-vis financial performance."

CEO Robert Decherd said in the letter that the company was looking at "every sensible expense reduction" while also trying to find new sources of revenues.

A.H. Belo's stock plunged $1.02, or 8.5 percent, in afternoon trading to $10.95. Gannett shares edged up 37 cents, or 1.3 percent, to $28.35, while Lee's fell 99 cents, or 10.8 percent, to $8.15.