June 18 (Bloomberg) -- New York Times Co., the third- largest U.S. newspaper publisher, said advertising revenue at its newspapers and their Web sites dropped 13 percent in May, the biggest monthly decline this year.

Ad sales at the News Media Group, including the New York Times and Boston Globe, fell to $130 million, the company said in a statement today. Total sales declined 6.6 percent to $227.5 million as increased circulation revenue couldn't offset drops in national, retail and classified ads.

The deterioration in May advertising mirrors drops at other U.S. newspaper publishers. Gannett Co., the owner of USA Today, reported yesterday that newspaper ad sales fell 14 percent in May. Those declines follow the industry's worst quarter on record in the three months through March, according to the Newspaper Association of America.

``Expectations were that 2008 would be similar to 2007, but clearly things have gotten worse,'' John Morton, an independent newspaper industry analyst in Silver Spring, Maryland, said in an interview. ``Classified is in a tailspin, and there's no hope for newspaper advertising until they win back some of that revenue.''

New York Times fell 36 cents, or 2.2 percent, to $16.16 at 4:03 p.m. in New York Stock Exchange composite trading, and has declined 7.8 percent this year. Gannett, which reported May sales after markets closed yesterday, lost $1.15, or 4.5 percent, to $24.42 and has dropped 37 percent in 2008.

Web Ads

Including About.com and other Web sites separate from the company's newspapers, New York Times' ad sales dropped 12 percent. The company is investing in its Internet operations to increase the percentage of revenue from digital operations. Ad sales rose 14 percent to $8.46 million at the unit that includes About.com and ConsumerSearch.com.

Other revenue, including syndication and rental income, increased 7.8 percent to $20.1 million.

Classified advertising, historically a steady source of revenue for publishers companies, continues to shift to the Internet from newspapers. New York Times' classified sales tumbled 25 percent in May, while national advertising declined 9.5 percent and retail ads shrank 9.2 percent.

Industrywide, newspaper ad sales declined for the eighth consecutive quarter in the first three months of 2008 as advertisers spent $8.43 billion, said the trade association. Real estate and job recruitment ads each fell by 35 percent.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

Last Updated: June 18, 2008 16:12 EDT