Knight Ridder Profit Falls 22% on Ad Sales

Knight Ridder Inc., publisher of the San Jose Mercury News and the Miami Herald, Tuesday said its fourth-quarter profit fell 22%, dragged down by a sluggish advertising market and a decline in national ad sales.

The media sector in general and the publishing industry in particular have struggled as younger readers defect to other news sources, particularly the Internet, hurting newspapers’ circulation revenue. On the ad side, online companies such as Yahoo Inc., Google Inc. and others are investing more in local search sites that pose a threat to classified advertising -- the lifeblood for many newspapers.

San Jose-based Knight Ridder, which put itself up for sale in November under pressure from shareholders, earned $83.3 million, or $1.24 a share, down from $107.2 million, or $1.39, a year earlier.

Excluding the results of newspapers that were sold earlier in 2005, Knight Ridder’s earnings in the 2004 fourth quarter were $1.25 a share.

The profit beat the average forecast of $1.22 a share among analysts polled by Reuters.

The company swapped several newspapers in August, acquiring three smaller-market newspapers in Idaho and Washington and selling two papers in Detroit and Florida.

Sales rose 3.1% to $819.9 million, with advertising also up 3%.

Classified advertising revenue rose 4.8% in the quarter, its best performance of the year, despite softness in automobile classifieds, Chief Executive Tony Ridder said. National and retail advertising also were weak.

Digital revenue from the company’s website rose 55% to $45.5 million.

Looking ahead, the company expects profit growth in the mid-to-high single-digit percentage range in 2006.

Full-year ad revenue growth is expected to be 3% to 4%, with growth in the second half of the year better than in the first.

Knight Ridder shares fell $1.20, or 1.9%, to $62.25.