Newspapers Report Online Ad Sales Rise in Q3

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A number of newspaper publishers report their online divisions are selling more ads and, in some cases, turning profits.

In the third quarter, publishers of newspapers large and small said their online divisions are benefiting from a gathering recovery in the online advertising industry. The results follow Yahoo's strong earnings report earlier this month.

At New York Times Digital, for example, strong demand for ad space at and drove quarterly revenue up 19 percent to $21.8 million. The Internet arm's profit more than doubled to $5.7 million compared with the year-ago quarter.

Knight-Ridder Digital, which publishes the Web sites for papers like The Philadelphia Inquirer and San Jose Mercury News, reported its best results ever. Online ad sales rose more than 50 percent from a year before, bringing in $21.5 million. The unit also had $5.4 million in net income versus a $2.8 million operating loss in last year's third quarter.

Tribune Co. followed suit, posting $25 million in interactive revenue, a 24 percent gain from a year earlier. The publisher of the Los Angeles Times and Chicago Tribune said strong demand for classifieds and display ads drove growth. Tribune does not report interactive income separately.

Media General, publisher of The Tampa Tribune and Richmond Times-Dispatch, said its online division continued to lose money in the third quarter, posting a $1.7 million loss. But the unit continued to grow, with sales rising 59 percent from last year.

Growth is not confined to the sites of big papers. Lee Enterprises, Davenport, IA, publisher of smaller papers like the Quad-City Times (IA) and Lincoln Journal Star (NE), reported its August Internet revenue grew 35 percent from the year before to $924,000. Lee does not break out operating income for its online business.

"I think adoption by local advertisers is starting to drive the market," said Dave Morgan, chief executive of Tacoda Systems, which sells ad-targeting software to news sites. "Local advertisers are not just creatures of habit like a lot of the big agencies. They put their money in the most effective channels."

News publishers have reported for the past few quarters that their online arms, once a cash drain, have grown briskly despite sluggishness in the overall ad market. In May, the Online Publishers Association said its members recorded average revenue growth exceeding 40 percent in the first quarter.


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