April 19 (Bloomberg) -- U.S. newspaper advertising slumped in the first quarter, slashing profits at Gannett Co. and the New York Times Co. and causing the first loss at Tribune Co. in five years.

Gannett, the largest U.S. newspaper publisher and owner of USA Today, reported a 10 percent drop in net income to $210.6 million today. New York Times said profit dropped 26 percent to $23.9 million and Tribune, publisher of the Los Angeles Times, posted a $15.6 million loss.

Advertising revenue fell an average 4.5 percent across the industry during the quarter, the results show. A shift by advertisers to the Internet and a slowing real estate market reduced demand for classified ads. Media General Inc., owner of the Tampa Tribune, posted a loss of $6.5 million, citing a ``steep'' decline in classifieds.

``The pressure is coming from the national advertising segment and classifieds, which is having a disproportionably larger impact on profit margins,'' said Mike Simonton, a Chicago- based credit analyst at Fitch Ratings.

The Standard & Poor's 500 Publishing & Printing Index fell 2.72, or 0.9 percent, to 298.75. New York Times shares fell 66 cents, or 2.7 percent, to $23.90 at 4 p.m. in New York Stock Exchange composite trading.

McLean, Virginia-based Gannett fell 71 cents to $57.60. Tribune, which agreed to be taken private earlier this month by Sam Zell, declined 21 cents to $32.48. Richmond, Virginia-based Media General fell 57 cents to $38.52.

Classified Ads

Newspapers extended a decline from 2006, when ad revenue at 145 dailies fell 3.3 percent, according to TNS Media Intelligence.

Classified advertising fell 9.2 percent on average in the first quarter for companies reporting so far. Real estate ads slumped 12 percent on average for the five companies reporting today. Car ads dropped by 19 percent on average.

Gannett said sales fell less than 1 percent to $1.87 billion. Profit of 90 cents a share beat the 89 cent average of 13 estimates compiled by Bloomberg. First-quarter ad revenue at Gannett newspapers declined 1.9 percent; classified-ad sales fell 3 percent. At USA Today, the biggest U.S. newspaper by circulation, revenue dropped 7.9 percent.

Revenue at the company's broadcasting unit, which operates 23 TV stations, also failed to match last year's results, which benefited from the winter Olympic games.

Last month, the company forecast first-quarter profit would decline to 88 cents to 90 cents, saying bad weather led some newspaper advertisers to reduce their spending.

New York Times

New York Times, the New York-based publisher of the namesake newspaper and Boston Globe, said net income fell to $23.9 million, or 17 cents a share. Sales fell 1.6 percent to $786 million.

Classified ad revenue slumped 12 percent in a period that Chief Executive Officer Janet Robinson described as ``difficult.''

``New York Times and the regional properties, especially the Boston Globe, are still seeing some pretty weak numbers,'' said Alexia Quadrani, a New York-based analyst at Bear Stearns Cos. She rates the stock ``peer perform.''

The results included costs of 8 cents a share from closing of a plant in Edison, New Jersey and eliminating jobs.

The company lowered its 2007 forecast for Internet-related sales, saying online revenue will increase at less than the 30 percent forecast in January.

Tribune, Media General

Tribune Chief Executive Officer Dennis FitzSimons characterized the quarter as ``challenging.''

Tribune, which also publishes the Chicago Tribune and Newsday, recorded a 4.3 percent revenue decline to $1.21 billion as ad sales fell 6 percent. The loss was the company's first since the same quarter in 2002.

Classified ads slumped 14 percent, including a 15 percent slide in real estate items, a 16 percent drop in auto ads and a 14 percent decline in help-wanted postings.

The Chicago-based company agreed April 2 to be taken private by Zell in an $8.2 billion transaction. Tribune put itself up for sale under pressure from its largest shareholder.

Media General's loss came in part because of costs to cut 115 jobs at the Tampa Tribune in Florida. Acquisitions drove a 5.9 percent rise in sales to $230.4 million. Ad revenue at the newspaper division, which includes Virginia's Richmond Times- Dispatch, fell 5.7 percent.

`All Markets'

``Profits were hampered by revenue weakness in virtually all categories and across all markets,'' Media General Chief Executive Officer Marshall N. Morton said today in a statement. The quarter was ``much weaker than anticipated,'' Morton said.

Journal Register Co., publisher of Connecticut's New Haven Register, reported a 5.1 percent slide in sales to $114.1 million.

Net income increased to $29.1 million from $1.77 million a year earlier, when the Yardley, Pennsylvania-based company had costs to refinance debt. Advertising sales fell 6.9 percent, led by a drop in automobile ads at the company's Michigan newspapers.

Dow Jones & Co. reported a 1.8 percent drop in ad revenue this week at its flagship newspaper, the Wall Street Journal.

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

Last Updated: April 19, 2007 16:29 EDT