AP News

Gannett up as analyst says pay walls working

LOS ANGELES (AP) — Gannett Co.'s stock rose Wednesday after an analyst raised his price target on the newspaper publisher's shares, saying the rollout of so-called online pay walls across 70 of its 80 regional newspapers was going better than expected.

THE SPARK: UBS analyst John Janedis said in a research note Wednesday that Gannett's move to charge readers for online access after being allowed to read 7 to 20 stories for free each month is working so far.

He said the loss of subscribers who are being charged more for a package that combines home delivery and online access has been below the 5 percent expected by management. Janedis said the move helped raise circulation revenue in April, May and June. The analyst raised his forecast for 2013 circulation revenue growth from 5 percent to an increase of 12 percent to $1.19 billion.

Janedis also trimmed his estimate for the company's newspaper advertising revenue declines to a drop of 7.2 percent in the three months through September, slightly better than the 8 percent drop he forecast earlier. Janedis also sees advertising revenue at Gannett-owned TV stations rising by 33 percent, at the upper end of the company's guidance.

THE BIG PICTURE: Gannett publishes national daily newspaper USA Today and about 80 regional newspapers such as the Detroit Free Press. The company, based in McLean, Va., also owns 23 TV stations and websites such as CareerBuilder.com and ShopLocal.com.

THE ANALYSIS: Janedis raised his price target on the stock from $14 to $18 but left his rating unchanged at "Neutral." The price target is roughly 8 times his projected earnings per share of $2.19 in 2013.

STOCK ACTION: Gannett's stock rose 71 cents, or 4 percent, to $18.23 in afternoon trading Wednesday. It has climbed steadily since recovering from a 52-week low of $8.28 last September.

Steve Ballmer, Power Forward
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