Greg's Corner

Gannett Profit Falls 53%

By Mark Fitzgerald
MediaWeek

Gannett Co. said Monday that its third-quarter profit fell 53 percent on continued weak newspaper advertising and impairment charges on the value of its properties. But Chairman and CEO Craig Dubow noted the results “exceeded the high end of previously announced estimate ranges for revenue, operating cash flow, and earnings per share.”

Gannett said it earned $73.8 million, or 31 cents a share, compared with earnings of $158 million, or 69 cents a share, in the same period in 2008. The 2009 quarter included asset impairment charges and other unusual items of about $29 million. Excluding those charges, Gannett said it would have earned $104.1 million, or 44 cents a share.

Overall revenue was off 18 percent in the period to $1.34 billion.

Publishing revenue fell 23.5 percent to $1.0 billion. Print newspaper advertising revenue fell 28.4 percent to $699.6 million on across-the-board weakness.

Retail advertising fell 22.4 percent, national was down 25 percent, and classified plunged 36.9 percent.

The drop is classified, while steep by any measure, reflected a slowed decline. But all major categories were down in the quarter: automotive by 35 percent, real estate by 37 percent—and employment by 56 percent.

U.S. advertising revenue fell 26 percent, while advertising at Gannett’s British chain Newsquest was down 28.7 percent measured in pounds.

Like its peers, Gannett’s third-quarter results reflect deep cost-cutting in the past year. Operating expenses fell 14 percent.

“Our operating expenses were significantly lower in the quarter reflecting substantially lower newsprint expense as well as our continued success in lowering costs across all of our businesses,” Dubow said.

The CEO also said Gannett “finished the quarter on a stronger note with better than anticipated results due primarily to better trends in advertising and greater efficiencies across all of our business segments.”

He said Gannett is “encouraged by the revenue trends.” Third quarter year-over-year comparisons of publishing advertising revenue were “a few percentage points” better than year-over-year comparisons for the second quarter and “September was our best comparison month of the year.”