By: ANICK JESDANUN
Gannett Co., the nation’s largest newspaper publisher, reports earnings for the fourth quarter and full year before the market opens Friday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Gannett, the publisher of USA Today and other newspapers across the country, is widely regarded as one of the most fiscally sound newspaper publishers, but it is hardly immune from the economic and technological pressures that have depressed advertising sales.
As a result, Gannett slashed the work force at most of its U.S. newspapers by 10 percent and cut newsroom jobs at USA Today by about 5 percent. Those moves preceded a one-week unpaid furlough that Gannett is imposing in the first quarter of 2009.
During the fourth quarter, Moody’s Investors Service downgraded Gannett’s senior unsecured rating by two notches, citing ongoing pressures on newspaper advertising.
Gannett no longer releases monthly revenue totals, but reports from other newspaper companies suggest that Gannett will have a weak fourth quarter, a period normally boosted by holiday retail promotions. The New York Times Co. said Wednesday that revenue at its news media properties fell 18 percent during the fourth quarter, the steepest quarterly decline all year.
Gannett, which also owns broadcast stations, likely got a boost from political advertising early in the quarter, but those gains probably wouldn’t be enough to offset any weaknesses later in the quarter as well as those in publishing.
During the quarter, the company expanded its digital portfolio by acquiring social media services company Ripple6 Inc., whose platform already powers Gannett’s MomsLikeMe.com sites.
The quarter also saw a greater push toward Internet delivery. One of its papers, the Detroit Free Press, joined its MediaNews Group Inc.-owned rival, The Detroit News, in announcing a reduction in home delivery, scheduled to take effect in late March.
In a radical shift for the industry, the Detroit newspapers plan to slash home delivery to three days a week, print smaller editions on other days and encourage people to get information online. The two papers, though separately owned, share printing and distribution tasks through a joint-operating agreement.
BY THE NUMBERS: Analysts polled by Thomson Reuters expect, on average, net income of 82 cents per share on revenue of $1.79 billion. In the fourth quarter of 2007, Gannett had net income of $1.06 a share on revenue of $1.9 billion.
For the full year, analysts expect earnings of $3.35 per share on revenue of $6.83 billion. In 2007, Gannett earned $4.52 per share on sales of $7.44 billion.
ANALYST TAKE: In a research note that described Gannett as “holding its own in a difficult environment,” analyst James C. Goss of Barrington Research Associates said management has aggressively addressed its challenges by expanding non-newspaper activities and increasing efficiencies by reusing newsgathering efforts in multiple products.
WHAT’S AHEAD: Gannett continues looking for ways to cut costs.
Its one-week furlough should produce unspecified savings in the first quarter.
The chain’s USA Today newspaper said it will stop publishing its international edition on Feb. 6 and will look for partners in Europe and South America to continue operating it, allowing it to keep an international presence “under more favorable financial conditions.”
Gannett also said it will close the Tucson Citizen in Arizona if it does not find a buyer for certain assets owned by the newspaper by March 21.
Gracia Martore, the company’s chief financial officer, has said Gannett will face a tough first quarter of 2009 because its results would be compared with the year-ago quarter, before the recession began to take its toll on advertising. Comparisons should get easier later in the year, she said.
STOCK PERFORMANCE: Gannett’s stock fell 56 percent during the quarter to $8. For the year, it lost 79 percent.