In 2Q, Gannett Profit Up Big On Newspaper Sales — But Revenue Slips

By: E&P Staff

Gannett Co. said Wednesday its second quarter profits increased to $365.7 million, or $1.56 per share, from $310.5 million, or $1.31 per share, in the period a year ago, mostly on sales of some newspapers.

Gannett’s revenue dropped to $1.93 billion in the quarter from $2 billion a year ago.

During the quarter, Gannett sold several papers, including the Norwich (Conn.) Bulletin, the Rockford (Ill.) Register Star, the Observer-Dispatch in Utica, N.Y., and The Herald-Dispatch in Huntington, W.Va.

“We achieved some positives in the quarter despite a very challenging advertising environment,” Chairman, President and CEO Craig Dubow said in a statement. Most notably, he said, Newsquest earnings in Great Britain were up on strengthening help-wanted and real estate classified advertising.

“Our domestic community newspapers, however, faced softening ad demand in part due to the real estate slowdown that has affected a number of our markets,” he said.

Total operating revenues would have been 4.0% lower on a pro forma basis assuming Gannett owned the same properties in the second quarter of 2007 and 2006.

Operating expenses of $1.44 billion were down 1.6% from the year-ago period, which Gannett attributed to lower newsprint costs and other cost controls offset by the purchase of some television station, plus severance and accelerated depreciation.

Gannett said its newspaper segment operating revenues totaled $1.72 billion for the second quarter compared to $1.79 billion in the year-ago period.

Advertising revenues fell 5.3% to $1.28 billion for the quarter.

Local advertising revenues were 4.0% percent lower, national advertising revenues declined 2.8%, and classified revenues were down 7.5%.

Operating cash flow for the total newspaper segment, which includes USA Today and British properties, was $474.0 million in the second quarter.

Total newspaper operating expenses declined 2.0%, Gannett said, on cost efficiencies and lower newsprint expense.

Ad revenues at USA Today fell a little more than 1% in the quarter, Gannett said.

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