McClatchy Co. reports higher operating profits

The McClatchy Co., which owns the Merced Sun-Star, reported higher operating profits today and said its slump in advertising revenue is continuing to ease.

Sacramento-based McClatchy said operating income grew 27 percent in the second quarter, but bottom line net income fell to $7.3 million from $42.2 million after various one-time adjustments. Per-share profits fell to 9 cents from 50 cents.

McClatchy said ad sales -- its main source of revenue -- are still dropping but at a much slower rate than before, a critical sign that the downturn that's bedeviled the newspaper industry and other media is tapering off. Total revenue fell 6.4 percent to $342 million, in line with Wall Street's expectations; ad revenue was down 8.2 percent and circulation sales fell 2.4 percent.

A year ago, the company reported ad revenue declines of 30 percent.

"Advertising revenue trends continued to improve as we anticipated," said Chairman and Chief Executive Gary Pruitt in a press release. Among other things, help-wanted ad revenue grew 1.5 percent in May and 0.8 percent in June.

Pruitt said ad revenue in the third quarter will "be down in the mid-single digits."

McClatchy stock rose 18 cents to $3.90 in early New York Stock Exchange trading.