paidContent - Earnings: Gannett Swings To Profit; But Revenues Drop 17.8 Percent
This story was written by David Kaplan.
While Gannett (NYSE: GCI) has little to cheer about these days, the company did reverse its $2.2 billion net loss from last year, posting a profit of $70.5 million ($0.30 cents per share) in the second quarter. The pressures on advertising and circulation continued to bear down on the McLean,Va., publisher of USA Today. Total revenues were down 17.8 percent to $1.4 billion. Meanwhile, the digital side had its challenges as well, though they were somewhat masked by additional revenue from acquisitions that Gannett closed last year.
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—Digital: Revenue tied to Gannett’s digital holdings, which include PointRoll, ShopLocal, Planet Discover, Schedule Star, Ripple6 and a majority stake in jobs site CareerBuilder, was $142 million compared to $20 million the year before. The numbers reflect the Q3 consolidation of ShopLocal and controlling interest in CareerBuilder, as well as the shifting of PointRoll, Planet Discover and Schedule Star from the publishing segment to digital. Operating expenses were $123.9 million for the digital segment, which has been largely shielded from the massive layoffs that have continued through recent weeks.
—Digital costs down: One reason digital can avoid the kind of job reductions that have hit Gannett’s 84 community newspaper division is because of other cost cutting. While operating revs fell 18.5 percent as CareerBuilder was indirectly hurt by rising unemployment figures, Gannett pointed to 24.7 percent lower operating costs in the unit, giving digital operating cash flow a 54.2 percent gain ($9.6 million higher than it was in Q208).
—Publishing: This segment’s operating revenues slid 25.8 percent to $1.1 billion.
—Publishing ad revs fall: Ad revenues were 32 percent lower in Q2, coming in at $753.1 million. Specifically, retail declined 23.7 percent, national was 22.4 percent lower, and classified was down 44.9 percent.
—UK declines: A number of sources have suggested that Gannett may eventually consider selling Newsquest, the company’s publishing operations. It certainly had good reason to give that more thought in Q2, as the unit’s ad revenues dropped 36.9 percent. Gannett pointed to unfavorable exchange rates between the dollar and the pound, as it has in past quarters. But overall, the same weakness that’s affected the U.S. is an issue in the UK. In particular, retail was down 21.9 percent, national fell 21.1 percent and classifieds fell 40.5 percent.
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By David Kaplan