Gannett Company, Inc
) posted stronger-than-anticipated first-quarter 2013 results,
benefiting largely from its all access content subscription model
coupled with sturdy performance of its Broadcasting and Digital
segments. The adjusted quarterly earnings came in at 37 cents a
share that surpassed the Zacks Consensus Estimate of 34 cents,
and rose 8.8% year over year.
Including one-time items, earnings came in at 44 cents a share
compared with 34 cents in the prior-year quarter.
Total revenue came in at $1,237.7 million, up 1.6% year over
year but missed the Zacks Consensus Estimate of $1,242
Behind the Headline
Gannett stated that total Broadcasting revenues, including
Captivate, increased 8.7% to $191.6 million, buoyed by robust
growth in retransmission revenues and increased core advertising
Television revenues increased 8.5% to $185.5 million. Earlier,
management stated that television revenues for first-quarter 2013
will be negatively impacted by the absence of political revenues
and the shift of the Super Bowl to
) from NBC.
However, a significant increase of 58.7% in retransmission
revenues more than offset lower advertising revenues.
Broadcasting operating income grew 15.2% to $87.3 million.
Management now expects television revenues to increase in the
mid-single digits for the second-quarter of 2013.
Digital revenues rose 3.9% to $174.9 million due to robust
revenue growth at CareerBuilder. Digital segments operating
income came in at $23.6 million, up 45.1% year over year.
Company-wide total digital revenues augmented 28.6% to $350.3
million, driven by revenue gains at digital advertising and
marketing solutions as well as sustained rollout of the
all-access content subscription model.
Total Publishing revenues declined marginally to $871.2
million. Publishing Advertising revenues fell 4.5% to $526.5
million. Publishing Circulation revenues portrayed a substantial
improvement, increasing 8.6% to $286 million on the back of a
subscription based model. Local domestic circulation revenues
jumped 14.5%. Total Publishing segment's adjusted operating
income slipped 17.1% to $70.3 million.
Classified advertising at domestic publishing operations
decreased 5.4% during the quarter under review. Within
classified, softness persisted in every category with employment
(down 8.8%), real estate (down 4.5%) automotive (down 3%) and
legal (down 9%). Total retail and national advertising revenue
categories declined 3.4% and 5.2%, respectively.
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 revenues 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 revenues 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
iconic brand, USA Today to generate new advertising and marketing
Other Financial Aspects
Gannett lowered its interest expense during the quarter to
$35.4 million, down 10.5% year over year, reflecting lower
average debt balances. Long-term debt at the end of the quarter
was $1.4 billion.
The company generated net cash flow from operating activities
of $36.3 million and free cash flow of $38.6 million in the
quarter. Cash at the end of the quarter totaled $142.8 million.
The company during the reported quarter repurchased approximately
1.6 million shares aggregating $32.8 million.
Currently, shares of Gannett hold a Zacks Rank #4 (Sell).
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