KNIGHT RIDDER INCOME UP SLIGHTLY

Classified Ad Decline Keeps Revenues Down

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NEW YORK (AdAge.com) -- Knight Ridder posted a slight improvement in net income for the third quarter, in spite of lower advertising revenues. Net income rose 1.4% to $56.5 million on revenue of $689 million, down 0.6%.

Total advertising revenue

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was down 0.1% to $532.5 million, mainly due to continued weakness in the classified category, particularly in help-wanted advertising. Retail advertising rose 4.2% to $257.7 million, and classified was down 6.5% to $207.2 million. Among classified categories, a 4.1% increase in auto ads could not offset a 3.8% drop in real estate and a 24% drop in recruitment advertising.

The help-wanted category will see better results going forward due to better year-over-year comparisons, said Steve Rossi, president of newspaper division. But he warned the category is not likely to see growth this year.

One encouraging sign for the quarter was improvement in ad revenues through the period, with each month posting better results than the previous, said Chairman Tony Ridder. Mr. Rossi noted that while real estate was down 2.2% for the quarter, it was up 3.2% in September -- not enough to offset 2.2% decreases in July and August, but a sign of an upturn.

Ad revenue for the fourth quarter is likely to be up in the single-digit rate, Mr. Rossi said. October "looks a little better ... [but] it's still early," he warned.

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