("Gannett 3Q Profit Drops 53% But Beats Views," published at 8:54 a.m. EDT, incorrectly called publishing revenue as print revenue. The story also was unclear that a 14% drop in operating costs was companywide, not just for Gannett's publishing operations. A corrected story follows.)

   DOW JONES NEWSWIRES 

Gannett Co.'s (GCI) third-quarter profit tumbled 53% amid an advertising slump, but the newspaper publisher's results beat its heightened expectations, helped by cost cuts.

Shares rose 2.2% premarket to $13.29. The stock through Friday was up 63% this year after bottoming in March at $1.85 amid debt and advertising concerns.

The publisher of USA Today late last month said it expected third-quarter profit to far exceed Wall Street's forecasts at the time, adding to hopes that the worst may be over for traditional media outlets. Gannett has been cutting jobs and last month sold $500 million of notes to pay off other debt. However, concerns persist over Gannett's ability to sustain its rebound with cost cuts.

Chairman and Chief Executive Craig Dubow, who last week returned from a four-month medical leave, reiterated the more optimistic view, citing "better trends in advertising." Publishing ad revenue dropped 28% in the quarter. Operating expenses companywide fell 14%.

The owner of more than 80 daily newspapers said profit fell to $73.8 million, or 31 cents a share, from $158.1 million, or 69 cents a share, a year earlier. Excluding asset write-downs and restructuring costs, earnings fell to 44 cents from 76 cents. Gannett's upbeat September forecast, excluding restructuring charges, was 39 cents to 42 cents.

Revenue dropped 18% to $1.34 billion, better than Gannett's forecast for a weaker-than-expected decline to about $1.32 billion.

Publishing revenue dropped 24% while broadcasting reported a 23% decline.

Gannett said last month it cut its total debt in the latest quarter by $200 million to $3.31 billion. It faces no debt maturities for nearly two years, thanks to its debt-restructuring efforts.

Gannett's challenges are reflected in USA Today's being unofficially surpassed by The Wall Street Journal as the largest U.S. newspaper by weekday circulation. In the last two weeks, the Gannett flagship, which had the largest circulation for years, said it had slipped to about 1.9 million, while the Journal, which, like this newswire, is owned by News Corp. (NWS), said its circulation rose to 2.02 million, including online subscriptions. Official figures will be released Oct. 26.

-By Mike Barris, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com