The headquarters of Gannett Co. (NYSE: GCI), the largest U.S. newspaper group by circulation Reuters

Gannett Co. (NYSE: GCI), the largest U.S. newspaper group by circulation, said Monday that earnings fell in the first quarter due to a slump in advertising revenue and restructuring costs.

McClean, Va.-based Gannett had earnings of 28 cents per diluted share, down from 37 cents per share in the prior year and below the Reuters forecast of 31 cents per share. Revenue was $1.22 billion, slightly below the $1.24 billion forecast by analysts polled by Reuters.

Advertising revenue fell 8.4 percent compared to the prior year to and circulation revenue fell 1.8 percent.

Our first quarter results were impacted by spending on strategic investments and advertising softness, particularly during January's industry-wide slowdown. Improving advertising activity in February and March, while encouraging, did not overcome the slow start to the year, said Gracia Martore, president and CEO of Gannett, in a statement Monday.

Gannett's digital revenue rose 6.8 percent and revenue for its broadcasting arm, which includes around 20 local television stations, was up 7.5 percent. The company had a profit of $68.2 million in the first quarter, down from $90.5 million in the prior year.

The company had operating expenses of $20 million in the first quarter, including $6 million related to employee pensions. It plans another $45 million in operating spending this year.

As print revenue declined, Gannett said in February it would implement digital paywalls for all of its over 80 local newspapers, excluding its largest publication, USA Today. The move follows the New York Times Company (NYSE: NYT)'s paywall last year, and is similar to News Corp. (Nasdaq: NWSA)'s Wall Street Journal and the Financial Times.

“News in printed form is in secular decline,” Martore told investors in February. “However, news delivered the way consumers want it is growing and thriving.”

Gannett said the paywalls would add $100 million in profits, but critics said it could cut into the company's advertising revenue by discouraging web traffic. The company plans to return $1.3 billion to investors by 2015 through $300 million in share buybacks and a 150 percent divided increase to 20 cents per share each quarter.

Shares of Gannett were down $1.00, or 6.65 percent, to $14.05 in Monday morning trading.