Gannett Second Quarter Adj. Profit Meets View, But Revenues Miss

(RTTNews) - Media holding company Gannett Co., Inc. (GCI), the publisher of USA Today, reported Monday a profit for the second quarter that declined five from last year, reflecting strong broadcasting and digital results as well as the continued positive impact the access content subscription model in publishing segment. Adjusted earnings per share for the quarter matched analysts' expectations, while quarterly revenues missed their estimates.

"Earnings per share were higher in the quarter as our strategic initiatives, particularly our content subscription model and digital offerings, continued to gain momentum and positively impact our results," President and CEO Gracia Martore said in a statement.

The McLean, Virginia-based publisher of 82 U.S. daily newspapers reported net income of $113.62 million or $0.48 per share for the second quarter, down from $119.89 million or $0.51 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $135.12 million or $0.58 per share, compared to $132.05 million or $0.56 per share in the year-ago quarter.

On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

Total net operating revenues for the quarter edged down 0.3 percent to $1.30 billion from $1.31 billion in the same quarter last year, and missed six Wall Street analysts' consensus estimate of $1.33 billion.

The company noted that a significant increase in circulation revenue and higher revenue in the Broadcasting and Digital segments was offset by a decline in advertising revenue, a net reduction of almost $10 million in political revenues and an unfavorable exchange rate.

Publishing revenues for the quarter declined 1.7 percent to $904 million from last year as a substantial increase in circulation revenue was more than offset by lower advertising revenue. Circulation revenue grew 6 percent, while advertising revenues declined 5.3 percent from last year. Local domestic circulation revenue was up 11 percent, fifth consecutive quarter of growth.

Revenues from broadcasting were $212 million, up 3.2 percent from a year ago, and digital segment revenues grew 2.9 percent to $187 million from last year. Meanwhile, company-wide digital revenues increased 20.1 percent, reaching almost 30 percent of total revenue.

"Our long-term strategic plan - with a focus on both investment and execution - continues to position us for success well into the future. Gannett's pending acquisition of Belo, and finding new ways to get content and offerings to the right user at the right time, are steps in our long-term strategy. We are accelerating our transformation into the 'New Gannett' every day," Martore added.

Gannett agreed in mid-June to acquire Dallas, Texas-based television company Belo Corp. (BLC) for $13.75 per share or about $1.5 billion, plus the assumption of $715 million in existing debt, in an all-cash deal valued at about $2.2 billion. The deal, which has the unanimous approval of the boards of directors of both companies, is expected to close by the end of 2013.

The deal will help Gannett nearly double its broadcast portfolio from 23 to 43 stations, and create the fourth-largest owner of major network affiliates with 21 stations in top 25 markets, have greater geographic and revenue diversity.

GCI closed Friday's regular trading session at $26.36, down $0.35 on a volume of 2.71 million shares.