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Earnings: Gannett Profit Down Nearly 60 Percent; USAT Revs As Bad As Expected

This story was written by David Kaplan.
Sometimes it helps to lower expectations, but not much can soften the blows Gannett (NYSE: GCI) took in the first three months of this year. The publisher's net income fell 59.5 percent to $77.7 million ($0.34 per share) from $191 million ($0.84) the year before. Also, Gannett said that Q1 revenues fell 21.4 percent to $1.37 billion. Still, the company beat an analysts consensus from FactSet Research that anticipated it post a per-share profit of $0.28, while it missing FactSet's revenue target of $1.47 billion. The company's numbers augur poorly for other newspaper companies this earnings season.

Digital: It wasn't all bad for the McLean, Va.-based publisher of USA Today, just mostly. Online continued to be a bright spot, though the comparison is a bit skewed, as the Q1 results reflect the addition of its increased stakes in both CareerBuilder (to 50.8 percent from 40.8 percent) and ShopLocal (100 percent from 42.5 percent). The segment's operating revenues came in at $143.2 million in Q1 compared with just $13.9 million during last year's period. However, that doesn't mean that Gannett's online segment was able to avoid the downturn. On a pro forma basis, digital's operating revenues were 13.1 percent lower in Q1.

USAT revs fall 33 percent: Last month, as it tried to lower expectations about its Q1 earnings, Gannett warned that its flagship paper's revenues would fall 30 to 35 percent. In fact, USAT's revenues dropped 33 percent, squarely in the middle of its target. Ad pages also fell 36.2 percent to 527 compared with 826 in Q108. More after the jump.

Earnings release | Webcast (10:00 AM EDT)

Publishing: The overall print segment experienced double digit declines all over. Publishing's operating revenues were $1.1 billion for the quarter, a 26.9 percent decline from the year ago period. And while Gannett was able to lower operating expenses by 20,9 percent, those savings were offset by the severance costs related to the company's massive layoffs. Ad revs were $722.8 million or 34.1 percent lower than the first quarter of 2008. Ad dollars in the U.S. were 28.2 percent lower, while at Newsquest, Gannett's UK, ad revenues declined 38.7 percent, in pounds. The retail, national and classified categories for the publishing segment were 23.4 percent, 30.8 percent and 46.5 percent lower, respectively.

Classifieds: As bad as those percentages are, the big hit was within classifieds. Real estate ads there fell 50.6 percent, while job ads dropped 62 percent, and autos sank 39.2 percent. In the UK, classified dollars were down 45.1 percent (including 60 percent in real estate, 51.4 percent in employment and 43.2 percent in automotive.)

By David Kaplan

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