Bloomberg News

Gannett Fourth-Quarter Profit Rises on USA Today Ads

February 02, 2007

Gannett Co. (GCI:US), the largest U.S. newspaper publisher, said a jump in advertising sales at USA Today and its 23 television stations helped drive the company to its first earnings gain in two years.

Fourth-quarter net income (GCI:US) rose 3 percent to $353.5 million, or $1.51 a share, from $343.3 million, or $1.44, a year earlier. Sales climbed 7.5 percent to $2.21 billion, McLean, Virginia- based Gannett said today in a statement. Profit beat the $1.49 average estimate (GCI:US) of 14 analysts in a Bloomberg survey.

An extra week in the quarter gave a boost to revenue at Gannett's 90 newspapers and helped Chief Executive Officer Craig Dubow overcome a shift in advertising to the Internet. Ad sales at USA Today, the largest newspaper by circulation in the U.S., rose 13 percent. Midterm elections held Nov. 7 helped drive a 30 percent jump in revenue (GCI:US) at the company's 23 U.S. television (GCI:US) stations, which reach about 18 percent of homes with TVs.

``Newspapers came in better than expected and so did revenue overall, which was helped by that extra week,'' said Michael Kupinski, an analyst at A.G. Edwards & Sons Inc. in St. Louis, who has a ``buy'' rating on the stock. ``USA Today had double-digit growth, which is impressive.''

Gannett shares (GCI:US) rose $1.52, or 2.6 percent, to $59.46 at 4 p.m. in New York Stock Exchange composite trading. They've fallen 4.4 percent in the past year.

Newspaper Gains

Newspaper revenue rose 4.9 percent to $1.94 billion. Advertising sales rose 3.7 percent and would have been up 5.3 percent if the company had owned the same newspapers in both quarters. Classified sales rose 1.7 percent.

Sales at Gannett's broadcast group, which includes stations in Atlanta, Denver and Phoenix, rose to $270.6 million on advertising tied to the congressional elections.

Total revenue also beat the $2.14 billion average estimate.

Revenue in 2006, which included 53 weeks compared with 52 weeks in 2005, rose 5.7 percent to $8 billion. Profit rose 6.7 percent to $1.16 billion. Advertising at USA Today increased 13 percent.

Dubow described the year as a period of ``interesting challenges'' in the statement.

Gannett said in December that per-share profit would be at the high end of its $1.46 to $1.49 forecast. That disappointed investors who had been betting the company may earn $1.50 and drove analysts to reduce their estimates.

Publishers are benefiting from the extra week of advertising and a rise in national spending. Dow Jones & Co. last week said profit was driven by a 5.1 percent jump in advertising revenue at the Wall Street Journal. New York Times Co. (NYT:US) on Jan. 31 reported profit that beat analysts' estimates and said ad sales at its namesake newspaper rose 1.6 percent. Tribune Co., the second-largest publisher, and McClatchy Co. (MNI:US) report results next week.

Options expenses cut profit by $7.9 million, or 3 cents a share, Gannett said today. The company started accounting for options in the first quarter.

Gannett forecast broadcast revenue will rise by a mid-to- high single digit percentage this quarter, slowing from a year earlier when the company recorded more than $22 million in ad sales tied to the Olympics.

``The print advertising picture hasn't been great but Gannett has benefited from political spending,'' said Thyra Zerhusen, the Chicago-based manager of the $635 million ABN Amro Mid-Cap Fund, which owns shares in Gannett.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

To contact the editor responsible for this story: Emma Moody at emoody@bloomberg.net.


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Companies Mentioned

  • GCI
    (Gannett Co Inc)
    • $32.74 USD
    • 0.48
    • 1.47%
  • NYT
    (New York Times Co/The)
    • $12.91 USD
    • 0.07
    • 0.54%
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