The nation's largest newspaper chain, Gannett Co. (GCI), said Tuesday it expects to report third-quarter earnings results that far exceed expectations on Wall Street, bolstering newfound optimism that a recovery is underway for traditional media outlets such as publishers and broadcasters.

Following the announcement, shares of Gannett rose 15% to $11.48 at the opening bell, extending a strong summer rally in the stock. Shares of other major broadcasters and newspaper publishers also rose, adding to hopes that the dire predictions pervading the industry amid the rise of digital media are overblown.

Still, concerns remain over the USA Today publisher's ability to sustain its rebound as an aggressive round of cost-cutting remains the source of the company's bottom-line strength. It expects revenue results for the quarter to be down about 19%, missing analysts' estimates.

"Our continued efforts to achieve efficiencies and further consolidations company-wide along with significantly lower newsprint expense resulted in another substantial decline in our operating expenses," said Gracia Martore, the company's chief financial officer.

Martore is filling in for the company's chief executive, Craig Dubow, who is on extended medical leave to recover from back surgery at a difficult time for the company. Over the summer, Gannett unveiled plans to cut 1,400 jobs from its work force of 41,500.

For the third quarter, Gannett now expects to report earnings excluding restructuring charges in a range from $93 million to $100 million, or 39 cents to 42 cents a share. That marks a decline from the 76 cents a share it posted for the same quarter last year, excluding charges, but it far surpasses the mean estimate of analysts surveyed by Thomson Reuters for earnings of 28 cents a share.

John Miller, a portfolio manager with Ariel Investments LLC - Gannett's largest shareholder - said the company's guidance is a sign that both print and broadcast media are recovering from the depths of the recession that had many observers wondering whether some publishers could survive.

"This company was priced to go out of business," said Miller, noting that the stock has more than tripled since Ariel doubled its stake in the company in April. "We think there is more upside here as advertisers return to the market."

Alongside Gannett's rally on Tuesday, shares of New York Times Co. (NYT) rose 6.4% to $8.50; shares of McClatchy Co. (MNI) added 6% to $2.63; shares of E.W. Scripps Co. (SSP) gained 8.2% to $7.79; shares of Media General Inc. (MEG) increased 12.6% to $8.89; and shares of Lee Enterprises Inc. (LEE) were up 48.1% to $3.17.

While the media industry has been flooded with chatter about a pick-up in advertising, a rebound has yet to materialize in the financial results of major media companies, and Gannett's third-quarter results will do little to change that. The company said it expects to report quarterly revenue of $1.31 billion to $1.32 billion, while analysts, on average, had expected revenue of $1.38 billion.

"Everything that we're hearing and reading indicates that a lot of advertisers are coming back into the marketplace," said Miller. "It's just a matter of time before this advertising has a positive impact on the revenue numbers."

Martore said publishing advertising declines continue to get smaller, with the third-quarter's year-over-year decline expected to improve from the one-third tumble seen in the first half of 2009. Specifics for the third quarter weren't provided, and the newspaper industry continues to grapple with long-term declines as its online revenue gains are outpaced by its offline declines.

Underscoring the challenges still facing Gannett, the company said it expects third-quarter operating cash flows of between $241 million and $252 million, which will mark a 22% decline from last year's $324 million. Last year's results showed a 29% drop-off from the previous year.

The trend doesn't bode well for Gannett's ability to meet its long-term obligations if newspapers continue to suffer long-term declines, but its short-term credit concerns were alleviated by Tuesday's report.

The company said it cut its total debt in the quarter by $200 million to $3.31 billion. It expects its senior leverage ratio under its credit agreements to be between 3.04X to 3.07X at the end of the quarter, well below its required ceiling of 3.5X - its nearest term credit risk.

Gannett has no debt maturities on the horizon for nearly two years after aggressively restructuring its debt following the financial crisis. The process continued Tuesday as it also announced plans to sell $400 million in five- and eight-year notes as it joins the raft of companies raising fresh capital to pay off other debt.

In July, Gannett swung to a second-quarter profit amid aggressive cost cuts, but operating results continued to weaken sharply.

"We do want to make sure that Gannett's not sacrificing quality with these cost cuts, but, so far, we feel that's not the case," said Miller.

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com

(Mike Barris and Kevin Kingsbury contributed to this article.)