Investor says future not so bleak for newspapers

John Rogers, CEO of Ariel Investments in Chicago made his comments to Bloomberg after Miami Herald publisher McClatchy and Gannett recently posted better than expected results.

He said he expects Gannett and McClatchy, in which his firm is the second largest shareholder, and other news groups to beat analysts' expectations for the next five to six quarters as declines in advertising revenues level off and the heavy cost cutting made by the newspaper industry begins to show results.

Rogers said: "With all the cost cutting, you just have to have some reasonable growth in revenue and you'll have spectacular earnings growth. This economy is going to recover and people are going to advertise again."

McClatchy reported its quarter net income rose to $42.2m compared to $19.7m last year, a rise of 43%. It had been expected to make a loss. Likewise, Gannet also moved into a second-quarter profit of $70.5m compared to a $2.29bn loss after asset write-downs last time.

Rogers, who said his firm was in the print business for the long run, expects that over the next couple of years people will be surprised by the earnings power of newspaper companies.

Rogers told Bloomberg: "They don't even have to get anything near the revenue of three or four years ago."

Ariel recently increased its stake in Gannett, which owns Newsquest in the UK, to 28.5m, shares. It holds 15% of McClatchy and is also the largest shareholder in St Louis Post-Dispatch publisher Lee Enterprises with an 11% stake.