This summary is based on the second quarter fiscal 2007 earnings call conducted by The McClatchy Company (MNI: chart) on July 19, 2007.

Management:

Chairman of the Board, President, Chief Executive Officer: Gary B. Pruitt
Vice President – Operations: Frank Whittaker
Chief Financial Officer, Vice President – Finance: Patrick J. Talamantes
Vice President – Operations: G. Lynn Dickerson
Vice President – Operations: Robert J. Weil
Vice President - Interactive Media: Christian A. Hendricks
Treasurer: Elaine Lintecum

Key Investors Issues

- EPS were 49 cents a share compared to 94 cents a share last year.
- Net income was $39.95 million from $44.1 million in the year-ago period.
- Revenue climbed to $580 million from $212 million a year ago.

Second Quarter Highlights

Earnings from continuing operations of $39.2 million, or 48 cents per share, subject to final resolution of the accounting treatment of the Seattle Times first settlement payment.

Earnings from continuing operations in the second quarter of 2006 were $32.2 million, or 69 cents per share.

The company reduced cash operating expenses by 12.2% on a pro forma basis.

Operating cash flow grew 4.4% on a pro forma basis, despite the decline in revenue and operating cash flow margin was 26.9%.

Revenues from continuing operations were $580 million, compared to pro forma revenues from continuing operations of $632.4 million in 2006.

That is including all the newspapers as if they had been owned since the beginning of 2006.

Advertising revenues were down 9.8% from pro forma advertising in 2006 and circulation revenues were down 4.6% on a pro forma basis.

Advertising revenues have been hurt by the downturn of the real estate market, particularly in California and Florida. Together, these two regions represent 35% of advertising revenues but account for 72% of ad revenue decline.

Real estate is a significant factor in the economies of these two states and the downturn has had a spillover effect into other sectors, so in those regions the company is seeing large declines in auto and employment advertising as well.

Retail advertising was down 6.2% on a pro forma basis with declines in print products partially offset by strong growth in online retail advertising, which was up 59.8% driven by banner advertising.

- Classified advertising was down in each major category. Overall, classified advertising revenues declined 14.9% compared to growth of 4.5% in the 2006 quarter on a pro forma basis.
- Employment advertising declined 15.5% of newspapers compared to growth of 7.3% from pro forma 2006 second quarter revenues. The declines were recorded in both print and online.

- Employment was affected by the current affiliate agreement with CareerBuilder for online employment advertising. This agreement is helping to grow online employment revenues at the legacy McClatchy papers, up 15.7% in this category, and is an attractive agreement for these papers. However, under the current affiliate agreement, selected products are no longer available to be sold by the 20 acquired Knight Ridder papers, which have depressed their Internet revenues.
- The company is in discussions with Gannett and Tribune to change the affiliate agreement to be more equitable for papers and is hopeful that a resolution will be reached shortly.

Automotive advertising declined 15.4% compared to a 9.6% decline in the second quarter of 2006 pro forma advertising, as domestic car dealers continue to struggle and consolidate.

- Still, online automotive adverting was up 12.9%, reflecting the success of cars.com products.
- Real estate advertising was down 19% compared to a 17.2% increase in the 2006 quarter. Of the total $12.8 million second quarter decline, $11.1 million was in California and Florida, where real estate advertising was strong in 2006. The company expects declines in this revenue category to continue because of the difficult comparisons in those states.
- National advertising declined 9.4% on a pro forma basis. Performance continued to be hurt by losses in telecommunications, national automotive and financial advertising, trends the company is seeing industry-wide.

On a pro forma basis, online advertising decreased 2.2% compared to the second quarter of 2006.