Media the Bearers of Bad News

Top media companies said Monday they saw no end in sight to the worst advertising downturn the newspaper industry has seen in more than a decade.

Several media executives, lined up before Wall Street analysts, painted a gloomy picture of their industry and said that though they probably will hit their estimates for the year, they won’t do it without a good degree of pain.

Draconian cost-cutting, layoffs and rethinking of capital spending seemed to be the order of the day.

Dow Jones & Co. Chief Executive Peter Kann told analysts that the financial publisher, which publishes the Wall Street Journal, sees no quick let-up in a yearlong advertising retreat, but he said cost cuts should help the company meet second-quarter profit forecasts.

“Advertising has not picked up at all, nor do we yet see it picking up at all during the balance of the year,” he said.

The company is forecast to earn 50 cents a share, the mean estimate of nine analysts surveyed by First Call/Thomson Financial. The company was projected to earn 77 cents before cutting its forecast in April. Dow Jones had profit from operations of $93.7 million, or $1.06, in the year-ago period.

Advertising spending in the U.S. fell 5.2% in the first quarter, market-research company Competitive Media Reporting said, as the economy slowed.

Washington Post Co. said a soft advertising market has cut ad-based revenues by 8.4% in the first five months of 2001 for several media units. Ad revenue fell 8.9% at its flagship newspaper and 5.9% at its Post-Newsweek Stations television unit.

The media executives did little to assuage immediate industry concerns, but at least one analyst expected their gloom.

“There are no surprises,” said Lauren Fine, an analyst for Merrill Lynch & Co. “People can’t figure out where we are going. Most companies are just hoping things don’t get worse.”

One of these, San Jose, Calif.-based Knight Ridder Inc., the publisher of the Miami Herald and San Jose Mercury News, said total ad revenue fell 8.6% for the month and 5.1% year-to-date.

The publisher also said it will eliminate 1,700 jobs, about 10% of its work force.

Chairman Tony Ridder said the company is comfortable with Wall Street’s profit forecasts for th current quarter and the full year.

Analysts surveyed by First Call/Thomson Financial are expecting 71 cents per share for the second quarter and $3.28 per share for the year.

He said advertising in June is expected to be “about the same” as it was in April and May.

After markets closed, New York Times Co. said pro forma newspaper ad revenue fell 17.1% in May from a year ago and 19.5% at its flagship New York Times. The company also said it will cut its work force by 8% to 9% this year and predicted second-quarter earnings will meet estimates.

Some media companies’ willingness to meet expectations seemed to boost investors’ spirits. Dow Jones shares closed Monday on the New York Stock Exchange up 99 cents at $55.32; Knight Ridder rose 29 cents to close at $56.49, and Washington Post surged $4.56 to close at $546.56.