Gannett Q3 Earnings Slip On 14% Decline In Newspaper Revenue -- But Still Profitable

By: E&P Staff Gannett Co. Inc. remained profitable in the third quarter, reporting Friday earnings per share of 69 cents, down from $1.01 a share a year ago. Without a $23 million charge for severance costs, Gannett said, its earnings per share would have been 76 cents.

Total operating revenue for the quarter was $1.64 billion, compared with $1.80 billion in the same quarter a year ago.

"The decline was due to softer publishing advertising demand resulting primarily from weak economic conditions in the U.S. and the U.K., offset partially by Olympic and political ad spending in broadcasting and revenues from the consolidation of CareerBuilder and ShopLocal," Gannett said.

Gannett's newspaper operating revenue, including revenue from its Newsquest chain in Britain, was $1.36 billion for the quarter -- down 14.4% from the year-ago period.

Total publishing advertising revenue slumped 17.6% to $977.1 million. Ad revenue was down 14.9% in the U.S., and 23.6% in Britain.

Overall retail ad revenue was down 10.1%; national was down 7.8%; and classified down 28.5%.

At its U.S. Community Publishing newspapers, Gannett said, classified revenue fell 26.5%.

Real estate classified dropped 33.4%, help-wanted was down 36.5%; and automotive slipped 18.7%.

At USA Today, advertising revenue was 7.1% than in the year-ago quarter, on paid advertising pages that dipped to 713 compared with 803 last year.

Gannett said it cut total publishing operating expenses 6.6% to $1.18 billion, with lower newsprint expense offset partly by an increase in severance costs. Newsprint expense declined 3.4% for the quarter, with a 15.9% price increase offset by a 16.7% decline in consumption.

For the first time, Gannett reported a "Digital" business section that includes results from CareerBuilder and ShopLocal -- both of which it gained complete ownership of in the last year -- as well as its PointRoll, Planet Discover, and Schedule Star properties.

Gannett said its total digital operating revenue from those businesses was $77.6 million for the quarter. Operating expenses totaled $71.5 million.

Operating cash flow was $10.2 million "reflecting positive results for CareerBuilder, PointRoll and ShopLocal partially offset by continued investment in Schedule Star and the ramp up of our digital infrastructure," Gannett said.