More Evidence of Newspaper Turnaround: Gannett Doubles Q1 Profit as Revenue Decline Moderates

By: Mark Fitzgerald

Gannett Co. reported a first-quarter profit Friday that was double its year-ago earnings and said that U.S. newspaper advertising, down 8.5% compared to a year ago, showed improvement in every category.

“We achieved very strong results for the quarter,” Chairman and CEO Craig A. Dubow said. “All of our business segments delivered substantially higher operating income and operating cash flow in the quarter. We more than doubled adjusted net income despite lower revenues and reduced our debt by approximately $260 million in the quarter.”

Gannett said its earnings per diluted share, excluding special items, doubled to 50-cents from 25-cents for the first quarter of 2009.

Net income totaled $119.4 million, more than doubling the $57.0 million generated in the first quarter last year.

As newspapers have reported in the past several quarters, Gannett profit was built on continued cost-cutting. The McLean, Va.-based company said its operating expenses, adjusted for special items, fell 11.3% to $141.3 million.

Overall operating revenue was off 4.1% and operating cash flow increased to $274.1 million from $230.1 million in the year-ago quarter.

Publishing operating income jumped 59.4% to $165.6 million, publishing revenue continued to sag, declining 7.1% to $1 billion.

Publishing revenue comparisons were more than 8 percentage points better than for the fourth quarter of last year, Gannett said. “March pro forma publishing revenues declined just 2.8%,” the company added.

Gannett also pointed to improvements in advertising revenue. It said classified advertising was 14.0 percentage points better than the fourth quarter comparison. Retail was better by 9.3 percentage points and national by 7.9 percentage points.

U.S. classified advertising was down 8.9% overall compared to the first quarter of 2009. Automotive classified dipped 2.6%, while help-wanted was down 11.4% and real estate 22.5%.

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