Good News On the Way from Gannett This Week?

By: The Associated Press


WHAT TO WATCH FOR: This quarter could be Gannett’s most encouraging performance in several years as an easing ad slump raises hope for a long-awaited upturn.

Gannett’s management last month indicated the company’s publishing ad revenue would decline by 1 percent to 7 percent from the same April-June period last year. If that forecast holds true, it would mark the 14th consecutive quarter of lower publishing ad revenue for the owner of USA Today and more than 80 daily newspapers.

The decay has hurt because newspaper advertising remains Gannett’s main source of income.

But at least the erosion is becoming less severe as the U.S. economy heals from its worst recession since World War II. The last time that Gannett’s newspaper ad revenue fell by less than 6 percent occurred in the third quarter of 2007.

The prolonged slump has helped make the year-to-year comparisons progressively easier.

Although Gannett executives haven’t made any promises, there’s a growing sense that it might not be much longer before newspaper advertising begins to increase again. Ad spending already has rebounded on the Internet, television and even in another print media format — magazines.

The recovery in television advertising already has helped Gannett. The company last month said the second-quarter ad revenue at its 23 television stations would increase by more than 20 percent. Online advertising is expected to rise in the 3 percent to 7 percent range.

Gannett believes Apple Inc.’s 3-month old computer tablet, the iPad, can help bring in more money. An iPad edition of USA Today already has been fetching ad rates five times higher than the prices that the newspaper can charge on its regular website. The iPad app also has attracted enough sponsorship deals that should ensure it remains available to readers through at least September.

WHY IT MATTERS: If they can’t revive revenue growth, newspapers eventually will face pressure to reduce their staffs and slim down their print editions even more than they already have.

Gannett will be the first major newspaper publisher to report how it fared in the second quarter.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters forecast earnings of 53 cents per share on revenue of $1.39 billion. The earnings estimate excludes the impact of unusual tax items and Gannett’s recent sale of The Honolulu Advertiser.

LAST YEAR’S QUARTER: In the second quarter of 2009, Gannett earned $70.5 million, or 30 cents per share, on revenue of $1.41 billion.

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