By: Seth Sutel, AP Business Writer
(AP) Gannett Co., the largest newspaper publisher in the nation, reported a 40% jump in first-quarter earnings Tuesday as it adopted new accounting rules. The company also issued a more optimistic outlook on advertising.
Gannett earned $243.6 million in the three months ending March 31, versus $174.5 million in the same period a year ago, reflecting the adoption of rules in early 2002 governing accounting for acquisitions.
Had the rules been in effect for both periods, Gannett’s net earnings would have risen 8% from $225.5 million on a comparable basis a year ago.
Per-share earnings were 91 cents for the latest quarter, in line with analysts’ estimates according to Thomson Financial/First Call, versus 85 cents a year ago.
Total revenues for the quarter fell 3% to $1.52 billion from $1.57 billion in the same period a year ago.
In early trading on the New York Stock Exchange, Gannett’s shares were off 80 cents at $77.18.
Gannett reported its interest expense fell sharply from a year ago, while its operating cash flow fell 5% to $457.7 million compared with $480.7 million due to a continued decline in advertising, which was offset partly by lower expenses for newsprint and declines in other costs.
Revenues from newspaper publishing, which makes up the bulk of the company’s business, declined 4% to $1.36 billion, while operating cash flow from newspapers declined 8% to $389.9 million.
Douglas H. McCorkindale, the president and chief executive of Gannett, said in a statement that despite the lower operating results from the company’s newspaper business, “recent trends suggest a more encouraging economic environment.” Advertising shortfalls, he said, were mitigated partly by a sharp decline in newsprint expense, which went down 18%, reflecting both lower prices for the commodity as well as lower consumption.
At the company’s flagship newspaper, USA Today, advertising revenues declined 9% compared with the same period a year ago while paid ad pages fell 12% to 1,178 from 1,332, reflecting continued poor demand for travel advertising.
McCorkindale said the company’s broadcasting properties benefited from increased advertising from the Winter Olympics.
Gannett publishes 95 daily newspapers in the United States, including USA Today, the largest-circulation daily. Gannett also owns more than 300 non-daily publications and a British company Newsquest that publishes more than 300 publications there, including 15 dailies. Gannett also owns 22 television stations.
On the Net: www.gannett.com