Gannett Swings to Q4 Profit on Cost Cutting, Lower Ad Declines

By: Mark Fitzgerald Gannett Co., the nation's largest newspaper publisher, reported a fourth quarter profit of $133.6 million Monday, compared to a loss in the same period of 2008 that included a multi-billion dollar goodwill impairment charge.

Gannett's Q4 earnings of 56 cents per share missed the 63 cents a share of earnings forecast by analysts surveyed by FactSet Research. Excluding non-cash charges on plant consolidations and other items, however, Gannett said it would have earned 72 cents a share.

Total operating revenue fell 14.4% in the fourth quarter to $1.5 billion, with some of that loss attributable to Gannett's exiting a commercial printing business earlier this year.

Gannett Chairman and CEO Craig Dubow called the fourth quarter results "a strong finish to the year." He said advertising demand had "firmed" during the year.

"Our fourth quarter revenue comparisons were the best of the year with sequential improvement during the quarter," he said.

Results for the fourth quarter of 2009 include $50.1 million of non-cash charges mostly for plant consolidations and asset impairments, Gannett said. In the 2008 fourth quarter, Gannett took $5.6 billion in non-cash impairment charges on goodwill and equipment.

For Gannett?s newspapers, operating income excluding special items rose 5.5% to $219.1 million in the fourth quarter of 2009, and cash flow jumped 20.5% to $252.9 million on lower expenses and a moderating decline in revenue.

Publishing segment operating revenues fell 15.4% to $1.1 billion for the quarter.

?Sequential improvement within the quarter for all advertising categories resulted in the best year-over-year comparisons,? Gannett said. ?This was driven mainly by national and classified, both of which improved 15 percentage points from third quarter comparisons. Total publishing revenue comparisons were almost 8 percentage points better in the fourth quarter relative to the third quarter.?

Still U.S. ad revenue fell 18.0% in the quarter. In December, Gannett said, advertising revenue were down 9.8%, the smallest decline of any month in the year.

Retail advertising in U.S. papers, including the flagship USA Today, fell 19.0%, while national was down 10.4% and classified off 21.8%.

Among its community papers, excluding USA Today, fourth quarter year-over-year classified comparisons improved 12 percentage points from third quarter comparisons.

Inside U.S. classified, automotive declined 16.7% in the quarter, real estate was down 28.4% and employment fell 28.5%. U.S. papers recorded a 14.5% gain in legal ads.

At USA Today total paid advertising pages in the quarter declined to 705 from 788 in the year-ago period. ?For USA TODAY, growth in several categories including telecommunications, packaged goods, credit cards and home and building was more than offset by weakness in the travel, financial and retail categories,? Gannett said.