Gannett Warns Of More Declines For Q3

Gannett (NYSE: GCI) is warning investors that profits and revenues are continuing to fall. The McLean, Va.-based owner of USA Today and dozens of other local papers expects net income, excluding special charges, to range between $93 million ($0.39 per share) and $100 million ($0.42 per share) for the third quarter. (In Q308, Gannett posted profits of $158 million, or $0.69 per share). On the revenue front, Gannett anticipates the final tally to come in somewhere between $1.31 billion and $1.32 billion—either way, it’ll be down nearly 20 percent from last year’s $1.64 billion. (from PaidContent.org)

I am getting tired of posting bad news.

Gannett's Wisconsin papers will begin offer free ads for an increase in an advertiser's buy. 

This story from Editor and Publisher: 

"Effective today through mid-October, if a current advertiser increases the media buy by 25%, the paper will double the entire run for free. A similar program exists for new advertisers."

E&P describes this as giving away advertising. My guess is that advertisers would describe it as 50% off. 

This good news would be even better if Gannett had achieved these profits as a result of some systematic change in its approach to advertising. The AP story reports that sharp cost cutting measures were used to achieve the gains.

SAN FRANCISCO (AP) -- Gannett Co., the largest U.S. newspaper publisher and parent company to the Reno Gazette-Journal, used sharp cost cuts to deliver a higher-than-expected second-quarter profit Wednesday and offered a wisp of hope that the industry's advertising drought might be subsiding.

Although the report showed Gannett's revenue continuing to slide in the last quarter, its executives indicated advertisers are gradually spending a little more money on newspapers.

From paidcontent.org. Full story here.

As Gannett (NYSE: GCI) continues to be roiled with huge debt problems, an absent CEO, and hundreds more layoffs across its community newspapers, its digital division appears to be a sea of calm. In fact, to hear Josh Resnik (pictured), Gannett Digital’s VP and GM of the Gannett Digital Media Network, PointRoll CEO Jason Tafler and Ripple6 CEO Sang Kim, tell it, things are going just fine on their respective ends. As Gannett prepares for its Q2 earnings report next Wednesday morning, the digital unit faces a question left over from the previous quarter: do they represent a meaningful strength amid the company’s general weakness?

—The digital mirage: None of the executives would offer specifics on Q2 numbers, claiming only that digital ad sales are holding up. Certainly, as Gannett’s Q1 revenues fell 21.4 percent and net income dropped 60 percent, the McLean, VA.-based publisher’s interactive businesses saw $143.2 million in Q1 compared with just $13.9 million.

But Gannett’s digital oasis is also something of a mirage. The Q1 results were skewed by 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). On a pro forma basis, digital’s operating revenues were 13.1 percent lower in Q1. That’s not to say that Gannett’s digital revenues are significantly under performing—and the incremental revenue from the online side keeps an ugly picture from looking even worse. Most importantly, as Gannett is expected to resemble a very different company by next year because of its debt woes, the digital business will ultimately take on greater prominence.

The Wall Street Journal reported on 7/1: 

Gannett Co., the largest U.S. newspaper publisher by daily circulation, will cut between 1,000 and 2,000 jobs out of its 41,500-person work force in response to continuing revenue declines, according to a person familiar with the company's thinking.