GateHouse Media Swings to Q1 Loss on Big Earnings Drop

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By: Mark Fitzgerald

GateHouse Media, publisher of 92 community dailies and hundreds of non-dailies, reported a first-quarter operating loss of $10.3 million from a year-ago profit of $200,000.

Total revenue fell by 15% to $139.2 million, and was down by 16.3% to $138.6 million on a same-property basis, comparing the results of newspapers and other businesses that have been operating continuously since the first quarter of 2008.

On a same-property basis, so-called “adjusted EBITDA” (earnings before interest, taxes, depreciation and amortization) plummeted 67.4% compared to the year-ago quarter.

Revenue was driven down primarily by print classified advertising, which GateHouse said dropped 37.2% on a same-property basis.

Local advertising, including preprints and online, fell 13.4% on a same-property basis.

GateHouse CEO Mike Reed, in a statement accompanying the quarterly results, said the Fairport, N.Y.-based company is “highly focused on liquidity and improving our cash position.”

Like several other big chains, GateHouse took on substantial debt to grow by acquisition. It also paid an above-average stock dividend that for a while supported a lofty share price following its initial public offering in late 2006.

With the industry recession, however, GateHouse stock fell precipitously, and it was delisted from the New York Stock Exchange. Last year it suspended its dividend to concentrate on preserving cash. It also recently won permission from lenders to hold so-called Dutch auctions that could allow it to buy back debt at a discount.

GateHouse said its long-term debt at the end of the quarter was $1.195 billion, unchanged from the year-ago quarter.

“Our cost controls were very good in the first quarter,” Reed said, noting expenses fell 7.1% in the quarter. “However, we will be even more aggressive over the next couple of quarters, as we weather this economic downturn.”

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