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Decline at Newspaper Chains is Systemic

NY Times reports that the newspaper industry continues to flag financially, with three companies � The New York Times, Tribune and McClatchy � reporting sharply lower first-quarter earnings.

Executives of all of the newspaper companies said they were hurt by stagnant advertising, particularly in the automotive and entertainment categories, and a continuing rise in the cost of newsprint. The Times Company and Tribune also cited the cost of severance packages after cutting hundreds of jobs.

At the same time, the companies said that their Internet activities were thriving. Those activities still account for only a small share of total revenue and are not big enough to offset the losses from traditional advertisers. But revenue from the Internet is clearly a growth area where the newspapers are shifting their focus. So far this year, shares in the newspaper industry over all are down about 6 percent.

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