Gannett Posts 8% Profit Drop

From Bloomberg News

Gannett Co., the largest U.S. newspaper publisher, said Wednesday that second-quarter profit fell 8.3% as newsprint costs jumped and advertising growth stalled.

Net income dropped to $310.5 million, or $1.31 a share, from $338.6 million, or $1.37, a year earlier, McLean, Va.-based Gannett said.

Stock option costs cut earnings by 3 cents a share. Sales gained 6.1% to $2.03 billion, buoyed by the purchase of the Detroit Free Press.

Gannett, owner of USA Today, said its expansion led to a 12% increase in newsprint expenses. Excluding acquisitions, newspaper ad sales were little changed, a sign that the publisher struggled to stem customer defections to the Internet. The company's earnings may portend similar results at McClatchy Co. and Tribune Co., scheduled to report today.

With acquisitions, Gannett's newspaper ad revenue grew 6.4%, to $1.38 billion in the second quarter. Broadcasting revenue rose 3.8% from a year earlier to $205.4 million.

Gannett shares fell $1.29, or 2.3%, to $55.62.

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