Gannett Reports Q1 Ad Revenue Dive

In the first of the major newspaper earnings reports for the 1Q, Gannett Co., Inc. reported today that 2009 first quarter earnings per diluted share were $0.34 compared with $0.84 per share in the first quarter of 2008.
In the publishing sector, ad revenues were off just over 28 percent, and 33.5 percent at flagship USA Today. Overall revenue decline for newspapers was 26.9 percent vs. 2008.
Circulation revenue climbed 1 percent based on single copy price increases.
“Although business conditions remain very challenging, we continue to transform all facets of the company as we position it for a more favorable economic environment and the opportunities we see in the changing media landscape,” Craig Dubow, the CEO and chairman, said in a statement.
“While revenue in the quarter benefited from growth in our digital segment and significantly higher retransmission fees for our television stations, our results reflect the pressure on advertising demand across all of our business segments due to continuing recessions in the U.S. and the U.K. Our results, however, highlight the positive impact of the company’s efforts to operate its businesses as cost efficiently as possible in light of the revenue realities we are facing in this extraordinary time.”
An excerpt from the Gannett release follows:
Total reported operating revenues for the company were $1.4 billion in the first quarter compared to $1.7 billion in the first quarter of 2008. The revenue decline reflects primarily the impact on advertising demand of the ongoing weakness in the economies of both the U.S. and the U.K. Digital segment revenues increased significantly due to the consolidation of CareerBuilder and ShopLocal for the full quarter in 2009.
Reported operating expenses were $1.2 billion, a 10.2 percent decline from $1.3 billion in the first quarter of 2008, reflecting cost containment efforts including the impact of headcount reductions in previous periods, furloughs in the current quarter and the pension settlement gain. The effect of these cost savings initiatives was offset partially by restructuring expense. As well, the full consolidation of CareerBuilder and ShopLocal impacted reported expenses. Excluding one time items in both years, pro forma operating expenses were 17.7 percent lower for the quarter. Corporate expenses declined 11.4 percent during the quarter compared to the first quarter in 2008.
Reported operating cash flow (defined as operating income plus depreciation and amortization) was $230.1 million for the quarter and net income was $77.4 million.
Publishing segment operating revenues were $1.1 billion for the quarter, a 26.9 percent decline from the same quarter a year ago. Advertising revenues were $722.8 million or 34.1 percent lower than the first quarter of 2008. Advertising revenues in the U.S. were 28.2 percent lower while at Newsquest, our operations in the UK, ad revenues declined 38.7 percent, in pounds. The retail, national and classified categories for the publishing segment were 23.4 percent, 30.8 percent and 46.5 percent lower, respectively. The exchange rate of the British pound declined over 27 percent year-over-year. Excluding the impact of the exchange rate, total advertising revenues would have been 29.8 percent lower including declines of 20.9 percent in retail, 29.2 percent in national and 40.7 percent in classified. Circulation revenue was 3.1 percent lower in the quarter.
Domestic circulation revenue increased 1.0 percent reflecting recent single copy and home delivery price increases in several markets and at USA Today.
Lower classified revenues reflect declines of 50.6 percent in real estate, 62.0 percent in employment and 39.2 percent in automotive. On a constant currency basis, real estate, employment, and automotive would have been down 44.3 percent, 57.2 percent and 34.8 percent, respectively. For U.S. Community Publishing, classified revenues were 39.0 percent lower reflecting declines of 36.6 percent in real estate, 60.2 percent in employment and 32.8 percent in automotive. In the UK, classified revenues were down 45.1 percent, in pounds, comprised of declines of 60.0 percent in real estate, 51.4 percent in employment and 43.2 percent in automotive.