11.5% earnings drop projected across the U.S. newspaper industry

Merrill Lynch analyst Lauren Rich Fine projected an 11.5% drop in per-share earnings across the U.S. newspaper industry in the third quarter, and forecast that six companies would report double-digit declines. She also lowered her newspaper ad revenue forecast from 1.2% growth to flat in 2006, and from 1.1% growth to a 1.5% decline in 2007, Reuters reports

Gannett, the largest newspaper publisher in the U.S., is expected to announce a 11.5% drop in profit while Media General is expected to post a 6.8% and Journal Register is expected to report a 36% drop in profit, according to Reuters Estimates.

U.S. newspaper publishers are expected to report tepid quarterly results this month as a weak housing market, slower economy and the Internet weigh on advertising revenue. 

Local TV stations are primed to see a record-setting $1.6 billion in political advertising in a non-presidential (election) year, according to Prudential analyst Steven Barlow. Pressure on national, retail and real estate advertising may continue for a while, according to Citigroup analyst William Bird. The Internet is attracting more of the help-wanted advertising market, while retail advertising could decrease because of consolidation in that sector, Bird wrote.

Newspaper publishers in general have had years of weak performance as they tried to adapt to readers who increasingly use the Internet, mobile phones and other electronic media for news and entertainment.

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