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April 22 (Reuters) - Journal Communications Inc JRN.N, publisher of the Milwaukee Journal Sentinel, posted first-quarter profit in line with market estimates, but forecast a fall in second-quarter publishing revenue as it sees a weak economy hurting advertising sales, sending its shares down sharply.
Newspaper publishers have been struggling with declining advertising sales as readers increasingly turn to the Internet for news, and the slowdown in the U.S. economy has made the advertising slump even more pronounced.
Journal, which also owns several radio and television stations, posted first-quarter net earnings of $6.7 million, or 11 cents a share.
Earnings from continuing operations stood at 10 cents per share, in line with analysts' expectations.
Revenue fell 6 percent to $134.3 million. Revenue from publishing, the company's biggest segment, fell about 9 percent to $60.7 million.
Analysts were looking for revenue of $136.9 million, according to Reuters Estimates.
The company's shares, which had touched a 52-week low of $5.70 earlier, were down more than 10 percent at $5.76 in afternoon trade. The stock was one of the top percentage losers on the New York Stock Exchange.
For the second quarter, Journal Communications said revenue from both radio and television is expected to be down modestly.
The fall in advertising revenue would partially be offset by strength in its interactive and commercial printing segments, the company said.
Interactive advertising revenue at the Milwaukee Journal Sentinel, its flagship daily newspaper, rose 17 percent to $3.6 million in the first quarter.
"As revenue remains challenged, we are maintaining strict cost control and seeking operating efficiencies wherever possible," Chief Executive Steven Smith said in a statement.
Revenue in the second half of 2008 will benefit from strong advertising demand for the Summer Olympics, as well as substantial political and issue advertising, the company said.
In the first quarter, the weak economy continued to hurt the company's business, which is dependent on advertising revenue, especially in the real estate and employment classified categories, the company said.
Publishers have been trying to stem the defection to the Internet by investing heavily in their websites, though online advertising revenue is still small compared with that of print.
The company is "aggressively pursuing digital and new media initiatives," Journal CEO Smith said in a conference call with analysts.
JobNoggin.com, Journal's co-branded employment site with Monster Worldwide Inc (MNST.O), has been registering more than 1 million page views a month.
In January, Journal launched sportsbubbler.com, a sports portal targeting audiences in Wisconsin. (Reporting by John Tilak in Bangalore; Editing by Anil D'Silva and Deepak Kannan)