GateHouse Media Q3 Loss Widens, But Revenue Dips Slowing

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By: Mark Fitzgerald

GateHouse Media reported a third-quarter net loss of 18.5 million Friday, an increase from the year-ago period of $8.8 million — but the community newspaper publisher also showed revenue declines that were more modest than its peers during this reporting season.

GateHouse said its same-store “as adjusted” revenue of $174.6 million represented a decrease of 5.1%, which compares favorably with the double-digit Q3 revenue declines newspaper companies have reported over the past two weeks.

For GateHouse, online revenue was also a good news story, as same-store sales jumped 34% over the third-quarter of 2007.

But the Fairport, N.Y.-based publisher of 92 dailies reported continuing cash flow shrinkage. GateHouse reports “as adjusted” EBITDA, which includes earnings before interest and taxes, but not depreciation, amortization, and several other non-cash items. GateHouse said its cash flow calculated this way fell 20.8% on a same-store basis to $32.7 million.

Local advertising revenues “continued to hold up well given the current economic environment,” declining only 1.1% on a same-store basis, GateHouse said.

Classified plunged 21% on a same-property basis — accounting for 97% of the total ad decline, GateHouse said.

Circulation revenues in the quarter increased by 4.0%, while revenue from commercial printing and other sources fell 21.6% on fewer commercial jobs.

During the quarter, GateHouse paid $28.8 million to take its revolving credit facility to zero, eliminating any leverage test under its long-term credit facility. “The company does not intend to borrow on the revolving credit facility in the near term and intends to fund working capital needs with cash from operations,” GateHouse said.

As previously reported, GateHouse has suspended its once-high dividend to plow free cash flow into reducing its debt. Long-term debt as of Sept. 30 stood at $1.195 billion, GateHouse reported.

GateHouse executives were scheduled to hold a conference call with analysts later Friday morning. For a complete report on their comments, check Fitz & Jen blog.

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