McClatchy, owner of The News & Observer, The Charlotte Observer and 28 other daily newspapers, reported a net loss in the first quarter Wednesday as revenues declined 5 percent compared to the same period a year ago.
The company reported a net loss of $2.1 million, or 2 cents per share, equal to the loss it posted in the first quarter of 2011.
Revenues for the quarter were $288.3 million. Advertising revenues totaled $209.8 million, down 6.8 percent from the first quarter of 2011. Digital advertising revenues increased 2.7 percent and represented 22.2 percent of the company's total advertising revenues.
McClatchy CEO Gary Pruitt said in a statement that the company was pleased with the advertising trends in the quarter, saying that advertising revenues were down 7.9 percent in January, 6.8 percent in February and 5.6 percent in March.
"We continue to make progress on our digital initiatives and the strong revenue results in the quarter demonstrate that digital continues to be a high-growth opportunity for the company," he said.
Pruitt announced last month that he was leaving McClatchy to take the top post at the Associated Press. His last day is May 16.
He's being replaced as CEO by Patrick Talamantes, currently the company's chief financial officers.
McClatchy, like other newspaper publishers, has been struggling to recover from a severe decline in advertising revenue in recent years. While the company's digital advertising revenue has been growing, it has not been growing at a fast enough rate to offset the decline in print advertising dollars.
The company is also burdened with heavy debt from its 2006 acquisition of the Knight-Ridder newspaper chain. McClatchy said it reduced its debt by $35.5 million in the quarter to $1.599 billion.
The company's stock, which closed at $2.64 on Tuesday, is up 10 percent this year.