McClatchy's ad revenues take a major beating

In a signal the the newspaper industry's years-long downturn is now accelerating due to the recent meltdown in the financial markets, McClatchy reported today that revenue for print and online ads dropped 19.9 percent in September compared with last year. Anick Jesdanun reports:

Newspaper publisher McClatchy Co. said Tuesday that declines in its advertising revenue picked up pace in September as the ad market took a beating from the ongoing credit crunch and other economic woes.

McClatchy (nyse: MNI - news - people ) had its worst advertising month all year as combined revenue for print and online ads dropped 19.9 percent in September compared with last year. It fell 18 percent in August, a slight reprieve from June and July, when year-over-year declines exceeded 19 percent, including 19.5 percent in June.

McClatchy has seen double-digit declines all year on weak classified and national advertising.

In September, classified advertising revenue fell 31 percent, while national advertising declined 19 percent and local retail advertising declined nearly 13 percent.

A gain of 6.6 percent in online advertising revenue could not offset a nearly 23 percent drop in print ads because Internet ads made up only 12 percent of overall advertising revenue.

McClatchy, based in Sacramento, Calif., is the owner of The Miami Herald, The Sacramento Bee and 28 other daily newspapers.

Analysts are closely watching the monthly reports from leading publishers after they started reporting revenue dipping even faster than anticipated this summer. Before, the declines mostly resulted from the shift to the Internet, particularly for once-lucrative classified ads. The worsening economy caused advertisers to pull back across the board.

The sharper declines in September suggest bad news for the normally lucrative holiday season as the financial meltdown appears to have caused consumers and advertisers alike to cut back on spending.

Last week, Media General (nyse: MEG - news - people ) Inc. also reported that September revenue declines worse than the drops earlier in the year. Advertising sales in its publishing unit plunged 23 percent that month after falling only 20 percent in August compared with last year. The August total was better than the nearly 22 percent decline in July but worse than the three months before that.

CEO Gary Pruitt tries to put on a happy face:

”Our online business continues to be a bright spot for the company; online audiences and revenues are growing strongly. In the third quarter, average monthly unique visitors to our websites were up 43.8 percent and were up 37.1 percent through the first nine months of 2008… More than half of our online advertising came from ads placed only online; they were not tied to a print up-sell.”

But online ads makes up less than 12 percent of ad revenue, so the gains in online revenues can't make up for the massive drop in print ads.

The company will go over the results with analysts in a conference call at 12 EST. I'll have more info for you later.