NEW YORK (CNNfn) - They've been called "obsolete." But judging from the first quarter earnings of New York Times Co. and USA Today publisher Gannett Co., "profitable" might be a better label for newspapers.
New York Times earnings jumped 25 percent in the first quarter to $65 million, beating analysts' expectations. The news came on the heels of a report that Gannett's earnings leaped 18 percent to $160 million.
Analysts say the strong economy is bringing an advertising bonanza to what is now an improved, more efficient newspaper industry.
"We're talking about help wanted, real estate and automobile advertising," said A.G. Edwards media analyst Michael Kupinski. "They've developed zoned advertising, the addition of color so they can retain their retail advertisers, as well as the addition of special sections. All of these factors have been very advantageous to them to develop advertising and also to retain advertisers and charge higher prices."
Analysts say better promotion also has helped slow a decades-long decline in newspaper readership, as has newspapers' move onto the Internet.
"A lot of the best new media or Internet sites are the local daily newspapers. They have done a better job than other local media like TV and radio," said Bear Stearns publishing analyst Kevin Gruneich.
Newspaper innovation coupled with the advertising boom have been heartily cheered by investors. Gannett stock (GCI) and New York Times shares (NYT.A) both are up 76 percent over the past year.
Analysts admit the papers' strong take from ad revenues does depend on the booming economy, but say the industry has morphed into a highly efficient and competitive medium for local and national advertisers.