Gannett Co., the nation’s largest newspaper company, reported a third straight month of steep advertising declines in its publishing segment Monday as a worsening economy weighed down an already troubled ad market.

The 16.8% year-over-year drop in August was only slightly worse than the declines of 16.3% in June and 16.7% in July, suggesting the market may be stabilizing. However the decline in August is still steeper than the 11% downturn during the first five months of 2008 combined.

Most analysts and industry executives do not expect a turnaround to start until at least next year, but some were hoping the declines would begin to get smaller because the year-to-year comparisons are now being done against already-weak figures in late 2007.

“I think investors have been hoping for the newspaper companies to turn the corner as they come up against easier comparable periods in the back half of 2008,” a media analyst at Fitch Ratings, Mike Simonton, said.

Analysts are closely watching the monthly reports from leading publishers after they reported revenue dipping even faster than anticipated in June and July.

The New York Times Co. and The McClatchy Co. are to release their August revenue later this month.

Even as newspapers face their own issues of slumping ad revenues and drainage of readers to the Internet, they could also be affected by spillover from problems in the financial sector as two more pillars of Wall Street — Lehman Bros. and Merrill Lynch & Co. — became the latest victims of the credit crisis.

Shares of many newspaper companies sagged today, even more than the broader market, as analysts feared an extended economic downturn would further dampen advertising revenue and impede the industry’s ability to borrow money.

The Gannett numbers and fears that the economy won’t recover quickly suggest “that the advertising turndown is going to be deeper and longer than people had hoped,” a news industry analyst for the research firm Outsell Inc., Ken Doctor, said.

Media General Inc. plunged $2.09, or nearly 20%, to $8.54 in trading today, after hitting a new 52-week low of $7.13 earlier in the day.

The New York Times Co. shed $1.76, or 11.5%, to $13.49, erasing gains from Wednesday’s disclosure that a Mexican financier, Carlos Slim Helu, and members of his family bought 6.4% of the company’s publicly traded shares.

Shares in Gannett slipped $1.21, or 6.9%, to close at $16.32.

Gannett already has announced cuts of some 1,100 jobs since August as it looks for cost savings to offset the revenue decline.

Overall revenue at Gannett, which includes circulation and broadcast, fell 9.5% in August, less than the 12% decline of the previous two months.

Olympics-related advertising at Gannett’s NBC affiliates and higher demand for political ads contributed to a 21% gain in the McLean, Va.-based company’s broadcasting unit. By contrast, broadcasting revenue dropped 6% in July.

Circulation revenue fell 3.4% in Gannett’s August period, which runs August 4-31.

Like the rest of the newspaper industry, Gannett has seen steep declines in classified advertising, which dropped 28% in August. Advertisers have long been turning to Internet sites like Craigslist, but the weak economy means there are still fewer listings for jobs and housing to go around.

Gannett said retail advertising declined 6.9%, driven largely by softness in the furniture, telecommunications and home improvement categories.

Ad revenue at USA Today fell 13.5% as Gannett’s flagship newspaper sold only 208 ad pages last month, compared with 236 in August 2007. Though the newspaper saw gains in telecommunications, advocacy, and financial services advertising, it saw declines in autos, technology, retail, and home and building.