IRAQ WAR CONTINUES TO HURT NEWSPAPER AD REVENUES Gannett, Media General, N.J. paper all cite war-related declines.

Two more public companies and one private one have cited the Gulf War as the culprit in their lowering of their fiscal expectations.

Gannett Co. Inc. and Media General Inc. both announced last week that they were backing off their previous estimates for earnings for the first quarter.

The Press of Atlantic City, the 77,795-circulation paper in Pleasantville, N.J., announced late last month that it would cut some jobs, freeze wages and asked workers to take an unpaid five-day furlough before the end of the year.

Gannett had told analysts in mid-March that the company anticipated being able to at least hit the low end of its earnings estimate of 94 to 96 per undiluted share. But last week the largest newspaper company in the country said that since the war started, its newspapers -- "particularly USA Today" -- have seen the cancellation or postponement of ad spending plans because of the war.

Gannett said that TV advertisers have re-evaluated their short-term buying plans and, in many cases, canceled ads that were scheduled for the second part of March. "In the short term, financial results have been hampered by the war," Douglas McCorkindale, the McLean, Va.-based multimedia company's chairman, president and chief executive said.

"But when all is said and done," said McCorkindale, "our newspapers, television stations and Web sites are doing the work they were meant to do. They are reporting on the war, its affect on the nation and all the other important news during these difficult times. We are always proud of our businesses, but never more so than at times like these."

And though the proposed $50-a-ton price increase in newsprint that were to take effect March 1 (see NewsInc., March 3, 2003) have been taken off the table by papermakers -- which would normally be good news for newspaper publishers, but was bad news for Richmond, Va.-based Media General.

The company has a 33 percent interest in SP Newsprint Co., which operates newsprint mills in Dublin, Ga., and Newberg, Ore.

The postponed increase in paper price, said J. Stewart Bryan III, the company's chairman and chief executive, "reflects softness in consumption, driven by lower ad linage, which is related to advertiser concerns about the war."

MEG also cited "an unusually long, harsh winter, particularly in Virginia and North Carolina," where the company has newspapers.

The company said that it expects first-quarter earnings per share to be around 26 cents, which includes 16 cents per share from its sale of its stock in Hoover's, which was completed last month. MEG earned 26 cents per share in the first quarter of 2002.

Bryan said that "during this difficult time of uncontrollable external events and their impact on our business, Media General is focusing on what we can control." He said that the company was implementing cost control measures including "a hiring freeze and aggressive management of discretionary spending and we will defer some of our planned capital expenditures. At the same time, we continue to emphasize new revenue generating initiatives."

The chief executive attempted to reassure investors. "Our underlying businesses are sound. We believe that once the situation in Iraq stabilizes and advertisers return to their accustomed spending levels, our results will rebound significantly," Bryan said.

The Atlantic City paper said late last month that it had cut four full-time positions and two part-time positions. It told the Associated Press that none of the cuts would affect its newsgathering  or sales operations.

"Our operating plan for 2003 was built on reasonable -- but aggressive -- assumptions," Press Publisher Keith Dawn told the wire service. "We couldn't calculate the impact of the war, the employment slump or the relatively flat national economy on our market."

As this is being written U.S. and British forces stand outside Baghdad, poised to enter and topple the regime of dictator Saddam Hussein. But even if that happens within days, the impact of the uncertainties that come with war will not dissipate for weeks, if not months. Recently Starwood Hotels & Resorts Worldwide Inc. -- if anybody has been hurt worse by the war than media companies, it's travel companies -- just plain told Wall Street that the war was causing it such pain that it until further notice it would not be providing earnings guidance. Perhaps a tactic that newspaper companies should adopt, as there's no reason to get anyone's hopes up.