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Gannett Q4 profit down 12% on lower ad spending

Rochester Business Journal
February 5, 2014

Gannett Co. Inc., parent of the Rochester Democrat & Chronicle and USA Today newspapers, reported a 12 percent drop in fourth-quarter earnings, attributed to a decline in print sales and the lack of political advertising last year, company officials said.

The media and marketing solutions company’s fourth-quarter net income was $90.7 million or 39 cents a share, compared with $103 million, or 44 cents a share during the same quarter a year ago. The adjusted earnings per share beat analysts’ estimates of 65 cents, totaling 66 cents, down from 2012’s adjusted earnings per share of 89 cents.

Quarterly revenue was down by 10 percent—$1.37 billion—compared with the same time last year.

For the full year, net income dropped 8.3 percent to $388.7 million. Revenue totals decreased by 3.6 percent to $5.16 billion.

The company has been focused on finding new revenue streams and weaning off of newspapers dependency, officials said.

During the fourth-quarter acquisition of Belo Corp., the company’s TV station portfolio increased from 23 to 40 stations. The Belo acquisition deal was assessed at $2.2 billion. Gannett officials expect television revenues to increase 100 percent this quarter.

The company saw higher digital revenues—a 6.1 percent increase—totaling $390.6 million. The digital operating revenues grew to $195.6 million—a 4.4 percent increase—a total that excludes news websites operated by the company’s newspapers and TV stations. The growth was driven by CareerBuilder’s 7.3 percent increase in revenues, company officials said.

Despite a drop in earnings, the company’s publishing and broadcast segments had an extra week in the fourth quarter of 2012 which impacted the company’s results.

Digital revenues were 10.8 percent higher due to the 8.8 percent growth of digital ad sales at local domestic publishing operations. Total broadcasting revenue was $228.2 million, down 15.7 percent from a year ago; excluding the extra week in 2012.

The absence of $85.8 million in political advertising during the fourth quarter was the reason for the revenue decline. According to the company, broadcasting revenues would have been 23.4 percent higher with political advertising.

The firm’s publishing segment's operating revenue dropped 4.6 percent to $944.3 million in the quarter, excluding the extra week in 2012. The reason for the decline was lower advertising demand and challenging circulation revenue comparisons, Gannett said. Print advertising sales dropped 5.9 percent and circulation revenues fell by 1.6 percent.

The broadcasting segment’s revenue was down 15.7 percent—$228.2 million—compared to a year ago with the exclusion of the extra week in the fourth quarter of 2012.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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