This summary is based on the third quarter fiscal 2007 earnings call conducted by The McClatchy Company (MNI: chart) on October 16, 2007.

Management:

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

Key Investors Issues

- EPS were 29 cents per share compared to 64 cents per share last year.
- Net income was $23.5 million, down from $51.8 million a year ago.
- Revenues from continuing operations were $540.3 million, down 9.2% from revenues from continuing operations of $595.1 million in 2006.

Third Quarter Highlights

Earnings from continuing operations were $23.5 million, or 29 cents per share, subject to an anticipated, non-cash charge to GAAP earnings for impairment of good will and long-lived assets.

Results reflect the continued tough revenue environment. They reflect continued response of strong cost controls to help offset the revenue decline. The company reduced cash operating expenses by 8.6% and will continue to seek ways to reduce them.

Revenues from continuing operations were $540.3 million, compared to revenues from continuing operations of $595.1 million in 2006.

- Advertising revenues were down by the same percentage as the second quarter, 9.8%, and circulation revenues were down 3.7%.
- Advertising revenues have continued to be hurt by the downturn of the real estate market, particularly in California and Florida newspapers. Together, these two regions represent 33% of revenues but account for 68% of ad revenue decline.
- Real estate is the significant factor in the economies of markets in these two states and the downturn has had a spillover effect in other advertising categories. Meanwhile, advertising revenues at other regions combined were down 5%.

Retail advertising was down 3.1% compared to growth of 2.2% in the 2006 quarter.

- The declines in print products were partially offset by strong growth in online retail advertising.
- Online retail advertising was up 41%, driven by banner and display advertisements.
- Classified advertising revenue declined 16%.

- Employment advertising declined 15.3%.
- Print employment revenues were down 22.4%, while online revenues grew 1.7%.
- The company had struck a new affiliate agreement with CareerBuilder and expects to begin to see better results from it, particularly at the former Knight Ridder newspapers, in 2008.
- The company is in the midst of cycling over the positive impact of using CareerBuilder at legacy newspapers.

Automotive advertising continued to struggle, with advertising down 14.9%.

- Print advertising was down 19.2%, while online auto advertising was up 20%.
- Real estate advertising was down 26.1%, with 72% of this decline coming from California and Florida.

- Print advertising was down 27.4% and online real estate advertising declined 5.8%.
- National advertising declined 12.3%.
- Performance continued to be hurt, mainly by losses in telecommunications.

Online advertising increased 1.4% compared to the third quarter of 2006.

The company had inconsistent data in the second half of 2006 due to differences in what Knight Ridder considered online advertising and also differences in the way they accounted for the Real Cities ad network revenue sold on behalf of third parties, and differences related to purchase price accounting adjustments for some CareerBuilder revenues.

The company has attempted to factor out the impact of these differences and believes online revenues were up in the mid single digit range when it was done.

Those online categories that are less reliant on up-sells for print advertising are doing well. For instance, online retail advertising is up 59.7% through the first nine months and auto advertising online is up 16.7%, evidence of the strength of cars.com products. Online advertising continues to remain the fastest growing segment of business and the company remains among the top of industry in terms of online revenues as a percentage of advertising at 9%.