US newspapers say web will be key revenue driver

Tribune Co said internet revenue could be double earlier forecasts by 2010.

NEW YORK - US newspaper publishers have said growth at their internet divisions will become a key contributor to revenue, helping to fill a profit shortfall at their traditional print operations.

Tribune Co, now in the throes of a boardroom battle over its future, said on Tuesday local time that internet operations could generate 12 to 15 per cent of publishing revenue by 2010. That compared to a forecast US$222 million ($365 million) in 2006, or 6 per cent of revenue.

"We will expand our already significant internet businesses and will invest in additional interactive ventures," Tribune Chief Executive Dennis FitzSimons told analysts at the Newspaper Association of America's (NAA) Mid-Year Media Review.

The publisher of the Los Angeles Times and the Chicago Tribune also seeks to increase its ability to share news, programmes and other content among its websites, newspapers and television stations.

Meanwhile, Media General Inc, which publishes the Tampa Tribune and owns 26 television stations, touted an internet strategy that began over a decade ago and forecast online revenue of US$50 million in 2008, up from an expected US$30 million in 2006.

"Our online audience has grown significantly, and strong double-digit growth rates continue," said CEO Marshall Morton. "We expect the division in the aggregate to become profitable in 2007."

Newspaper publishers have grappled with making their internet business a major profit source. Advertisers have followed readers to the Web, but competition is fierce due to a broad array of internet sites and Web journals, or blogs.

The internet accounts for about 5 per cent of newspaper companies' revenue on average, but it is growing by about 30 per cent annually, according to the NAA. At the same time, print operations have been plagued by declining readership and rising production costs.

The New York Times Co, for example, on Monday said it still faced a challenging advertising market.

But the publisher of the New York Times and the Boston Globe said its online information venture About.com would begin to boost earnings this year, rather than next year as previously expected.

Belo Corp. predicted newspaper revenue growth in the low to mid-single digit percentages this year. The company said it was shifting more resources online to capitalize on a 57 per cent rise in Web advertising for the first quarter alone.

Defining a future strategy has become key for Tribune management as it faced opposition from the company's second-largest shareholder, the Chandler Trusts.

The Chandler family publicly urged Tribune to consider spinoffs of various division or an outright sale, claiming the company had failed to make good on a multimedia strategy. They have opposed a planned US$2 billion buyback of Tribune shares that aims to increase value for investors.

FitzSimons said Tribune plans to increase its stake in online job site Careerbuilder.com after publisher McClatchy Co acquires Knight Ridder Inc. Both are partners in Careerbuilder.

Magazine publisher Meredith Corp. forecast earnings per share for its fiscal fourth quarter of 96 cents compared with 83 cents a year ago, partly on the strength of its Better Homes and Gardens and Ladies' Home Journal titles.

Analysts on average had forecast earnings per share of 96 cents, excluding items, according to Reuters Estimates.

Tribune shares fell 14 cents to US$31.79 on the New York Stock Exchange. Meredith slid 17 cents to US$48.50, Media General rose 46 cents to US$40.39, Belo rose 5 cents to US$17.55 and the New York Times declined 16 cents to US$23.44.

- REUTERS