GateHouse Q1 Loss Widens To $28.8 Million

By: E&P Staff GateHouse Media Inc. Friday reported a first-quarter net loss of $28.8 million, or 50 cents a share, compared to a $6.1 million loss, or 16 cents a share, a year ago.

The acquisitive community newspaper publisher said its revenues climbed 78.4% to $168.9 million, but on a same-store basis, revenues fell 4.2%, principally on classified ad sales that dropped 12.8%.

GateHouse said its "as adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization)," which does not include depreciation and amortization, increased 93.9% from the year-ago period to $30.1 million. On a same-store basis as adjusted EBITDA was up 1.4%.

GateHouse's strategy had been to ramp up revenue by buying newspapers, and using the free cash flow from expected cost savings to pay out a big dividend that would support a higher stock price.

But Friday it announced a dividend of 20 cents a share, a steep drop from the 37 cents a share dividend it paid out in the first quarter of 2007.

GateHouse also said its levered free cash flow had fallen in the quarter to $3.0 million from $3.1 million a year ago.

And the chain signaled that it was ready to jettison some properties, including real estate. It said it had identified property worth $35 million it intends to shed.

In a statement, GateHouse CEO Michael E. Reed maintained the chain had outperformed peers in a "very challenging" operating environment.

The same-store revenue drop of 4.2% was "considerably better than our peers which in most cases had double-digit declines."

On a same-store basis, GateHouse Internet ad revenues jumped 28.4% and its circulation revenue was up 1.5%.

"Longer term, I am confident we will see a turnaround in advertising spend," Reed said. "Conversations with advertisers support our belief that the majority of the slowdown in ad spend is cyclical in nature and that it will return when economic conditions improve. In the meantime, we will continue to execute on our small local market strategy and position the company for future growth."