Diversified media conglomerate
Gannett Company, Inc
) is set to offer $500 million senior notes due to mature in
2020. This Zacks Rank #2 (Buy) stock will utilize the proceeds to
payback borrowings under its revolving credit facilities, and the
remainder, if any, would be channeled toward meeting other
obligations and for general business purposes.
The news of the debt offering came just 2 days after Gannett
reported its second-quarter 2013 results, wherein earnings of 58
cents a share missed the Zacks Consensus Estimate by a penny but
jumped 4% from the year-ago quarter.
The year-over-year growth was primarily driven by its all
access content subscription model coupled with sturdy performance
of its Broadcasting and Digital segments. However, soft
advertising demand remains a laggard.
Tough economic conditions along with softness in advertising
demand have been weighing upon the company's performance.
Consequently, Gannett is trying every means to shield itself from
the impact of an unstable market and has been contemplating new
revenue generation avenues.
Advertising, which remains a significant source of revenue, is
largely dependent upon the global financial health. We observe
that Gannett's total publishing advertising revenue fell 5.3%
during the second quarter, following a decline of 4.5% in the
first quarter. Other publishing companies such as
Journal Communications, Inc.
The E.W. Scripps Company
The New York Times Company
) are also encountering a similar setback.
Advertisers are shying away from making any upfront
commitments in an economy that is showing an uneven recovery.
Gannett is taking initiatives to diversify its business model
by adding new revenue streams in an effort to make it less
susceptible to the economic conditions. The company is also
adapting to the changing face of the multiplatform media
universe, which currently includes Internet, mobile, tablet,
social media networks and outdoor video advertising in its
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
revenue sources. Gannett acquired Mobestream Media and BLiNQ
Media to enhance its Digital Marketing Services.
The company has successfully deployed the subscription based
model in 78 local publishing markets. We believe that despite
glitches in the economy, the subscription based model still
promises revenue generation.
The company recently announced the acquisition of
television-station operator, Belo Corp. The deal will serve as a
game changer for Gannett as it will solidify its foothold in the
rapidly growing broadcast media business by almost doubling its
existing broadcast portfolio from 23 to 43 stations.
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