Jan. 30 (Bloomberg) -- Gannett Co., the largest U.S. newspaper publisher, said fourth-quarter profit fell 36 percent on faltering advertising sales and expenses to cut jobs. The stock dropped as much as 8.1 percent in New York trading.

Net income declined to $158 million, or 69 cents a share, from $245.3 million, or $1.06, a year earlier, Gannett said today in a statement. Revenue fell 8.5 percent to $1.74 billion, compared with the $1.79 billion average of five analysts’ estimates compiled by Bloomberg.

The preliminary results don’t include a writedown on the value of assets, expected to be as much as $5.2 billion after tax, the McLean, Virginia-based company said. Gannett cut jobs at USA Today, the largest U.S. newspaper by circulation, as well as its community newspapers, and trimmed printing as the recession led marketers to reduce spending on classified and display ads.

The earnings reflect “the unprecedented turmoil” in the economies of the U.S. and the U.K. and in the financial markets, Chief Executive Officer Craig Dubow said on a conference call.

Gannett fell 50 cents, or 7.3 percent, to $6.40, a two-month low, at 10:13 a.m. in New York Stock Exchange composite trading. The shares had plunged 82 percent in the past year before today.

Excluding some items, profit was 85 cents a share, compared with the 84-cent average of five analysts’ estimates. The total impairment charge will be disclosed in a regulatory filing by Feb. 26, Gannett said. In the year-ago period, Gannett took an impairment charge of $50.8 million.

“This is not as bad as it could have been,” Edward Atorino, an analyst at Benchmark Co. in New York said in an interview. “There’s isn’t good news here from Gannett, but things could have been worse in this environment.”

USA Today

Ad sales slumped 23 percent in Gannett’s publishing unit, driven by an 18 percent decline in the U.S. and a 29 percent drop at Newsquest in the U.K. Ad revenue at USA Today fell 19 percent.

New York Times Co., the third-largest U.S. newspaper publisher, this week reported a 48 percent decline in fourth- quarter profit as ad revenue fell 18 percent.

Gannett said it will close its Tucson Citizen newspaper in Arizona unless it finds a buyer by March 21. Gannett said Oct. 28 it planned to eliminate 10 percent of jobs at its community newspapers. The company also limited home delivery of its Detroit paper to three days per week.

Expenses related to job cuts and restructuring efforts rose to $36.1 million after tax from $24.4 million a year ago.

Revenue at Gannett’s broadcasting division was little changed at $212.8 million. Cuts in ad spending by automakers and retailers were offset by $58.1 million in political advertising ahead of the U.S. presidential election on Nov. 4.

Moody’s Investors Service on Nov. 10 cut Gannett’s rating on $2.9 billion in debt by two levels to Baa2 and said it may reduce its rating further.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

Last Updated: January 30, 2009 10:38 EST