UPDATE: Gannett 3Q Profit Drops 53% But Beats Views
19 Ottobre 2009 - 4:20PM
Dow Jones News
Gannett Co.'s (GCI) third-quarter profit tumbled 53% amid an
advertising slump, but the newspaper publisher's results beat
expectations, helped by cost cuts.
The publisher of USA Today, which said late last month it
expected third-quarter profit to far exceed Wall Street's
forecasts, surpassed its raised earnings outlook, boosting hopes
that the worst may be over for newspaper publishers and
broadcasters as they suffer through the recession and a painful
transition to digital media.
Concerns remain, however, about the company's $3.5 billion debt
load and its ability to sustain a rebound through cost cuts. The
company's operating expenses fell 14% in the third quarter through
job cuts, salary reductions and other measures; however, publishing
ad revenue dropped 28%.
"Even though they were still down substantially, the ad revenue
trend is improving, and the third-quarter performance wasn't as bad
as I was expecting," Barrington Research analyst James Goss said.
"It's continually impressive that Gannett is able to keep cutting
back its cost base."
Shares of Gannett, which have risen more than five-fold in the
past seven months, rose 1.6% to $13.21. The company's chairman and
chief executive, Craig Dubow, who returned late last week from a
four-month medical leave, said the company is seeing better trends
in advertising.
"Although recessions in the U.S. and U.K. continued to temper ad
demand and revenue growth during the quarter, we are encouraged by
the revenue trends," Dubow said.
He also noted that a quarter of Gannett's debt outstanding now
matures in late 2014 or beyond after the company raced to
restructure its financing in the wake of the global financial
crisis. Gannett recently raised $500 million in new debt financing
to pay down near-term maturities, and in the third quarter it paid
down $197 million in debt.
The company, which owns more than 80 daily newspapers, said its
quarterly 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 September forecast, excluding
restructuring charges, was 39 cents to 42 cents a share, above
analysts' then-estimates.
Revenue dropped 18% to $1.34 billion, better than Gannett's
forecast for a decline of about 19%.
Publishing revenue dropped 24% while broadcasting reported a 23%
decline.
In a sign of the challenges still facing Gannett, its national
newspaper, USA Today, was unofficially surpassed by The Wall Street
Journal as the largest U.S. newspaper by weekday circulation. After
leading the industry in circulation for years, USA Today recently
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. Official figures will be released
Oct. 26.
-Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com
(Mike Barris contributed to this story)