Gannett Q1 Earnings Slip

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By: E&P Staff

Gannett Co. reported Thursday its earnings per diluted share (EPS) in the first quarter fell to 90 cents from 99 cents on slipping revenue hit by weakness in newspaper advertising and a tougher comparable with the Olympics in the first quarter of 2006.

At the flagship USA Today, advertising revenues fell 7.9% compared to a year ago due in part to the lack of Olympic-related ads, Gannett said. Paid ad pages totaled 904 compared with 1,012 in the year-ago quarter.

Total Gannett operating revenues were $1.87 billion in the quarter compared to $1.88 billion a year ago. On a same-property basis, operating revenues would have been down 1.2%, Gannett said.

Operating cash flow also fell, to $471.6 million from $488.2 million a year ago.

Net income was $210.6 million in the first quarter of 2007 compared with $235.3 million in the year-ago quarter.

Operating expenses increased less than one percent to $1.47 billion, Gannett said, reflecting “continuing strong cost controls, a slight increase in newsprint expense, the impact of the television station acquisitions and a higher exchange rate for the British pound,” the company said.

Newspaper operating revenues totaled $1.69 billion for the first quarter, a 0.7 percent decline from 2006.

Total advertising revenues were down 1.9% to $1.24 billion for the quarter, while circulation revenue was flat at $324.0 million.

On a same-property basis, ad revenues would have been down 1.8%. On a comparable basis, Gannett said, local advertising revenues increased 0.6%, national advertising revenues fell 4.8%, and classified was off 3.0%.

Total newspaper operating expenses were flat for the quarter. Newsprint expense rose 0.2%, reflecting higher newsprint prices that were offset by substantially lower usage.

“Results for the quarter were in line with expectations,” Gannett Chairman, President and CEO Craig A. Dubow said in a statement. “On the positive side, our operations in the UK contributed to our results as did online revenue company wide. Our broadcasting segment posted positive revenue growth. The acquisition of the additional television stations in Denver and Atlanta, and strong results for Captivate and online, offset the absence of over $22 million of Olympic-related ad spending. However, advertising demand was tempered by severe weather, the absence of the final week in the calendar year, which was included in the first quarter of 2006, and the softening domestic real estate market.”

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