Gannett October Revenue Sinks on Local and Classified Ad Decline

By: E&P Staff and The Associated Press Gannett Co., publisher of USA Today, said Monday its October revenue slipped 6.8 percent mostly on declines in local and classified advertising sales.

The newspaper publisher's pro forma operating revenue fell to $710.4 million from $762.5 million in the prior year.

Pro forma assumes all properties currently owned were owned in both periods.

Gannett said its U.K. operations benefited from the British pound's strengthening exchange rate during the period.

Total advertising revenue dropped 5.3 percent to $461.1 million from $486.7 million. Local advertising sales declined 2.3 percent, while classified ad revenue slid 9.7 percent on weakness in real estate, employment and automobile categories. National ad revenue fell 2.3 percent.

The company's broadcasting revenue slumped 23.6 percent on fewer political ads. Excluding political ads, sales climbed 9.6 percent. Television revenue fell 24.5 percent for the month as local and national sales declined.

Advertising revenue dipped 6.1 percent at USA Today due to fewer paid ad pages. Growth in entertainment, technology, financial, retail, advocacy, pharmaceutical and home and building categories was offset by declines in travel, automotive, telecommunications and real estate.

Considered the industry bellwether, Gannett's results were not surprising according to Goldman Sachs. The company's October report was in-line with the research firm's expectations.

In a note to investors, Goldman Sachs said the results were as expected. It left its Q4 estimates unchanged for the company, which call for a 9.6% decline in total revenue and 14.5% drop in earnings per share. (Gannett will include 13 weeks compared to 14 weeks in the prior year period in Q4.)

"We expect October results form the rest of the industry... to mirror Gannett's results, with continuing weakness in the local/retail categories and deteriorating trends in classified," wrote analysts. "Nothing in these results alters our continuing cautious view of the near-term operating outlook for the newspaper industry."

Gannett publishes 85 daily newspapers and owns nearly 1,000 non-daily publications.