McClatchy profit rises as it absorbs Knight Ridder papers

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NEW YORK -- McClatchy Co., the second-largest U.S. newspaper publisher, reported higher earnings for its third quarter Tuesday as it absorbed 20 newspapers from Knight Ridder Inc., which it acquired in June.

McClatchy, which is based in Sacramento, Calif., reported earnings of $51.8 million for the three months ending Sept. 24 from $38.6 million a year ago.

The per-share earnings declined to 64 cents from 82 cents a year ago because the company issued new shares as part of its payment for Knight Ridder.

The latest results included $8.9 million, or 11 cents per share, in losses from discontinued operations from eight Knight Ridder newspapers that it later sold. Four other Knight Ridder newspapers were sold at the same time McClatchy closed its acquisition of Knight Ridder.

Also included in the results was a pre-tax gain of $9 million related to the sale of land. Without that gain, McClatchy's earnings from continuing operations were $55.2 million or 68 cents per share.

Revenues for the combined company were $680.9 million, compared with $292.6 million in the same period a year ago, before it acquired Knight Ridder.

Assuming the company had also owned the 20 Knight Ridder newspapers it kept during the same period a year ago, revenues would have slipped 1.4% with advertising revenues down 0.8% and circulation revenues down 4.2%.

McClatchy shares rose 5 cents to $43.47 in midday trading on the New York Stock Exchange.

McClatchy sold part of its stake in CareerBuilder, a help-wanted advertising venture that is also part-owned by Gannett Co. and Tribune Co., for $310 million and used the proceeds to pay down debt.

McClatchy's chief financial officer Pat Talamantes said in a statement that the company would use its excess cash and draw on its revolving credit line to pay income taxes in December related to the gains on the land and asset sales.

As a result of that payment, as well as a delay into next year of the sale of land in Miami that McClatchy had hoped to receive in the fourth quarter, Talamantes said the company would have debt of about $3.3 billion at the end of the year, compared with $2.5 billion at the end of the third quarter. "Our focus is to continue to reduce debt," Talamantes said.
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