Gannett Company, Inc
) posted better-than-expected fourth-quarter 2012 results. The
quarterly earnings of 89 cents a share came a penny ahead of the
Zacks Consensus Estimate, and jumped 23.6% year over year,
reflecting growth in revenue and margin expansion.
Including one-time items, earnings came in at 44 cents a share
compared with 49 cents in the comparable prior-year quarter.
Behind the Headline
Gannett's total revenue climbed 9.4% year over year to
$1,518.3 million during the quarter under review due to increase
in revenues across Broadcasting and Digital segments. Total
revenue also came ahead of the Zacks Consensus Estimate of $1,507
Gannett stated that total
revenues, including Captivate, surged 43.9% to $287.5 million
buoyed by robust television advertising demand and retransmission
revenues. Excluding the impact of an extra week, total revenues
in the Broadcasting division jumped 39%.
Television revenues soared 45.7% to $280.2 million primarily
driven by a significant rise in political advertising.
Retransmission revenues increased 38.7% to $29.6 million during
the quarter. Broadcasting adjusted operating income grew 76% to
Management now expects television revenues to rise in the
high-single digits in the first quarter of 2013 compared with the
prior-year quarter. Moreover, management stated that the revenues
for first quarter fiscal 2013 will be negatively impacted by the
absence of political revenues and the shift of the Super Bowl to
) from NBC.
revenue rose 3.2% to $187.2 million due to robust revenue growth
at CareerBuilder. Digital segments adjusted operating income came
in at $39 million compared with $38.7 million in the year-ago
Company-wide total digital revenues augmented 29.4% to $375.6
million, driven by improved digital advertising and marketing
solutions as well as sustained rollout of the all-access content
subscription model and includes 87.1% growth registered in
publishing digital revenue and an 4% increase in television
station digital revenues. Excluding the impact of an extra week,
company-wide total digital revenues increased 26.7%.
revenues increased 3.7% year over year to $1.04 billion.
Publishing Advertising revenues fell 2% to $657.5 million.
Publishing Circulation revenues portrayed a substantial
improvement, increasing 16.8% to $313.1 million on the back of a
subscription based model. Total Publishing segment's operating
income slipped 13.1% to $153.2 million.
Tepid recovery in the economy along with weakness in
advertising demand in the U.S. and U.K. impacted the results.
Advertising revenue dipped 5.6% in October, 7.4% in November and
6.7% in December. The downturn in the publishing industry came in
the wake of declining print readership as more readers opt for
free online news, thereby making the print-advertising model
Advertising, which remains a significant source of revenue for
the company, depends upon the global financial health. Gannett is
taking initiatives to diversify its business model, shielding
itself against any economic onslaught by adding new revenue
streams. The company is also adapting to the changing face of the
multi-platform media universe, which currently includes Internet,
mobile, social media networks and outdoor video advertising in
In an effort to restrict declining revenue and shrinking
market share, publishers are scrambling to slash costs. Gannett
has been realigning its cost structure and streamlining its
operations to increase efficiencies.
To curb shrinking advertising revenue and seek new revenue
avenues, the publishing companies contemplated charging readers
for online content. Despite glitches in the economy, it still
promises revenue generation.
News International, the subsidiary of
) started charging readers for the online content of
The Times of London
Sunday Times of London
from Jun 2010.
The New York Times Company
), another diversified media conglomerate, launched a
pay-and-read model on Mar 28, 2011.
Gannett initiated a subscription based model, commenced
Digital Marketing Services in top markets, and refurbished its
to generate new advertising and marketing revenue sources.
Other Financial Aspects
Gannett lowered its interest expense during the quarter to
$38.9 million compared with $40.8 million in the prior-year
quarter, reflecting lower average debt balances. Long-term debt
at the end of the quarter was $1.43 billion.
The company generated net cash flow from operating activities
of $258 million and free cash flow of $248.1 million in the
quarter. Cash at the end of the quarter totaled $175 million.
The company, during the reported quarter, repurchased
approximately 2.1 million shares aggregating $37.4 million.
Year-to-date, Gannett has bought back 10.3 million shares worth
Currently, shares of Gannett hold a Zacks Rank #3 (Hold).
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