McClatchy Co., publisher of The Sacramento (Calif.) Bee, The Miami Herald and other newspapers, said Tuesday that it had a net loss in the first quarter as advertising revenue declined faster.
McClatchy had warned that advertising spending was weak in January. That trend held through the quarter: Ad revenue fell 11 percent from a year ago, compared with a 7 percent decline in the fourth quarter.
The newspaper industry is reeling from a decline in advertising that doesn't seem to be slowing as the overall economy recovers. Gannett Co., the largest U.S. newspaper publisher, and The New York Times Co. both reported first-quarter declines in newspaper advertising revenue that were steeper than in previous quarters.
McClatchy shares fell 36 cents, or more than 10 percent, to close Tuesday at $3.19.
McClatchy has been among the hardest-hit publishers, partly because The Miami Herald and The Sacramento Bee are in markets where the downturn in housing prices has been sharp.
Print ad revenue accounts for about 60 percent of the company's total revenue and fell 14 percent in the quarter to $180 million. Online advertising failed to make up for it, growing only 2.2 percent to $45 million.
McClatchy CEO Gary Pruitt told analysts during a conference call Tuesday that he expects advertisers to continue to spend less on newspapers as they shift more of their marketing to the Internet and mobile devices.
"We are not deluding ourselves or counting on a rebound that will be enormous" in print advertising, Pruitt said. "We do think we will see growth, but we are not projecting when."
As its revenue declines, McClatchy has been shedding staff, combining computer systems and hiring more contractors to lower its expenses. In the latest round of cost-cutting, McClatchy said it eliminated nearly 540 full-time jobs in the first quarter, a nearly 9 percent reduction from the same time last year. That left the company with about 7,240 full-time positions at the end of March, about half as many as McClatchy had three years ago.
Pruitt said McClatchy would evaluate the need for additional cuts in the second quarter based on how each newspaper fares. Through the first four weeks of April, McClatchy's ad revenue had dropped by 9 percent from last year.
McClatchy said it lost $2 million, or 2 cents per share, in the quarter that ended March 27. That compares with net income of $2.2 million, or 3 cents per share, in the same quarter a year ago.
Several one-time items, including severance charges, a tax settlement and the sale of real estate, reduced the latest loss by a net $1.4 million.
Excluding those items, the loss would have amounted to 4 cents per share. The average estimate of three analysts polled by FactSet was for a loss of 10 cents per share.
Last year's results were boosted by the reduction of a reserve for potential obligations related to the sale of some newspapers sold in years past. Without them, it would have posted a loss of $2 million, or 2 cents per share.
Revenue fell 9.5 percent to $304 million, from $336 million.