Gannett Co., Inc.
) is repositioning itself to diversify its business model by
adding new revenue streams in an effort to make it less
susceptible to economic conditions. The company is also adapting
to the changing face of the multiplatform media universe,
currently including Internet, mobile, tablet, social media
networks and outdoor video advertising in its portfolio, which
augurs well for its growth prospects.
Gannett remains well positioned to harness the opportunities
of rapidly changing business model such as digitalization in
order to keep itself on the growth path. The company recently
provided update of its growth initiatives and stated that its
long-term objective is to attain annual revenue growth of 2% to
To achieve this, the company is focusing on its subscription
based model and Digital Marketing Services products. Management
expects U.S. Community Publishing division's subscription revenue
to increase 25% by the end of 2013, which would translate into a
contribution of approximately $100 million to operating
Gannett said that it has successfully deployed subscription
based model in 78 local publishing markets, and is so far eyeing
21% increase in subscription revenue.
For 2012, company-wide digital revenue is projected to come in
at $1.3 billion, up 19% from 2011, whereas retransmission revenue
is expected to reach $96 million, an increase of 20% from the
prior year. Retransmission consent fees for 2013 are expected
between $135 million and $140 million, reflecting over 40% jump
from 2012 level.
Management remains optimistic about the performance of its
Broadcasting division and hinted of generating robust revenue and
profit for 2012, propelled by record political advertising.
Political revenue came in at $150 million. Gannett's
CareerBuilder is growing leaps and bounds, and its acquisition of
Economic Modeling Specialists Intl. has proved to be a game
changer for this online job portal.
Based on above, Gannett now forecasts a total revenue growth
of over 5% and earnings in the range of 87 cents to 88 cents for
the fourth quarter of 2012. The current Zacks Consensus Estimate
for the quarter is 86 cents a share that dovetails with
management's guidance range.
Currently, we have a long-term "Neutral" recommendation on the
stock. Gannett, which primarily competes with
The New York Times Company
), holds Zacks #1 Rank (Strong Buy), and well defines the
company's growth prospects and initiatives undertaken to achieve
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