Skip to comments.Gannett quarterly earnings drop; newspapers struggle
Posted on 04/12/2006 1:11:39 PM PDT by new yorker 77
Gannett Co. Inc. (NYSE:GCI - news) on Wednesday said quarterly earnings fell 11 percent as advertising revenue dropped at its newspapers, including the flagship USA Today, while high newsprint costs rose further.
Gannett, which publishes about 90 daily newspapers and runs 21 television stations, said first-quarter earnings fell to $235.3 million, or 99 cents a share, from $265.7 million. or $1.05 a share, in the period a year ago. Results from a year ago included 2 cents a share for discontinued operations.
Another media company, Media General Inc. (NYSE:MEG - news), reported its earnings dropped 28 percent, further demonstrating how tough business currently is for newspapers, which are battling the Internet and other new media for readers and advertisers.
Dave Novosel, an analyst at Gimme Credit, an independent research service on corporate bonds, cautioned fundamentals may not improve much in the near term for Gannett.
"Gannett's first quarter earnings appear to have disappointed equity investors, but they were in line with our bearish outlook," Novosel wrote in a research report.
He added that "circulation is declining, advertising revenue is falling, and margins are dropping. We do not expect meaningful improvement in the advertising environment in the near term."
Profits at Gannett and Media General were largely in line with analysts' forecasts, which were updated after each company recently issued cautious statements about their results. Shares were slightly lower on the New York Stock Exchange.
Both companies, which also own television stations, saw results from their broadcast divisions improve thanks in part to advertising from the Winter Olympics.
Still, that was overshadowed by troubles in publishing, where the entire industry is struggling with advertising money moving to the Internet, declining circulation, and higher costs for energy and newsprint.
At Gannett, whose United Kingdom operations have been particularly weak, overall operating expenses increased 10.8 percent with the higher costs for newsprint, stock compensation and consolidating its operations in Detroit. That offset a 6.5 percent increase in overall revenue.
For its flagship USA Today, advertising revenues fell 4.2 percent in the first quarter. Paid advertising pages totaled 1,020 compared with 1,101 in the same quarter of 2005.
Given the tough advertising environment and the high cost of newsprint, Gannett has pushed hard to keep a lid on other expenses. But Chief Executive Craig Dubow said that he was mindful that too many cost cuts could take a toll on content.
"Rest assured we are not going to do anything that will impact us for the long term," he told a conference call.
Meanwhile, as its newspaper unit continued to struggle, especially in the United Kingdom, its broadcasting results were helped by ad demand on stations that carried the Olympics.
Broadcasting revenues totaled a record $182.6 million for the quarter, a 10.9 percent increase.
At Media General, which publishes The Tampa Tribune and owns 26 television stations, earnings fell to $6.7 million, or 28 cents a share, from $9.3 million, or 39 cents a share, excluding an accounting charge of $325 million a year ago. With that charge, it posted a year-earlier loss of $316.2 million.
Revenue rose nearly 4 percent to $226.4 million. And while its publishing division's total revenue rose 3.3 percent, the gains were offset by 5.7 percent increase in expenses.
Like Gannett, Media General is expensing stock options.
Shares of Media General were down 51 cents, or 1.17 percent, at $43.19. Gannett shares were down 67 cents, or 1.14 percent, at $58.15.
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how long until they become an attractive target for a hostile takeover by some enterprising businessman on the Right?
if liberal newspapers (and that's all there is around here) go out of business whatever will I do for bird cage liner ?
Where's the tiny violin player?
Considering their financial situation, IMHO, a foolish policy.
I'm deeply saddened!
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