Optimism Makes a Comeback During Gannett Call

By: Jennifer Saba

Newly appointed Gannett President and COO Gracia Martore signaled during a Q4 earnings call this morning something that has been AWOL the past year or so: potential positive results in the months ahead.

“I think we certainly have seen some follow-through from the good results we realized in Q4,” Martore said, adding that for the company’s publishing division that momentum has led executives to believe Q1 may exceed their projections by a couple of percentage points.

“We are very excited by what we are seeing,” CEO Craig Dubow said during the call. “But we are going to be cautious.”

Better times may be around the corner for newspapers, judging from the tenor of this call and the types of questions pitched to executives, including the use of free cash flow for a stock buyback — an action probably last raised four years ago.

Or how about the potential of acquisitions? Gannett plans to use cash to pay down debt but Dubow said on the acquisitions front — there is one — the strategy is to find businesses that will “cross the entire company.” He said, “With $755 million paid down this year, it does help put us in a position to make other decisions that are appropriate.”

Circulation too could exceed the expectations of Gannett’s management. Martore said volume was a little better in Q4 than in Q3 thanks to additional dollars spent toward starts on important days, like Sundays. She said that several Gannett newspapers are seeing Sunday circulation numbers that are above 2008 levels. One caveat: like advertising revenue, circulation results are improving due to easing comps.

Digital readers are a “large area of interest” to Gannett, and the company is watching the platform very closely. It is rolling out experiments with e-readers and subscriptions including its property in Detroit to see how the market plays out, executives said.

Dubow also disclosed that conversations are ongoing with Google, but that Gannett doesn’t have any final conclusions regarding the Internet giant and its wildly popular Google News site. “It’s hard for me to say at this point anything specific. Just know that part of the strategy we have going is to look [at] each opportunity out there from the portals to eBooks,” he said.

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