Gannett Co., Inc. Reports First Quarter Results

Business Wire, April 21, 2008

MCLEAN, Va. -- Gannett Co., Inc. (NYSE:GCI) reported today that 2008 first quarter earnings per diluted share from continuing operations were $0.84 compared with $0.88 per share in the first quarter of 2007. The results included a gain on the sale of land of $25.5 million ($15.8 million after tax) or $0.07 per diluted share.

Commenting on the first quarter results Craig Dubow, chairman, president and CEO said: "We faced a very challenging advertising environment as the economy further weakened in the quarter, particularly in the latter half of March. We are focused on positioning the company for the future from both a revenue and expense perspective as we navigate the uncertain economic environment."

"In our publishing segment the softening economy led by a difficult real estate market continued to have an unfavorable impact on classified categories as well as some retail categories. However, we benefited from stronger national advertising at both USA TODAY and USA WEEKEND for the quarter. In the broadcasting segment higher political advertising was offset by softer ad demand in other categories and the absence of Super Bowl related ad revenues. Online revenues company-wide contributed to results for the quarter. Cost control and efficiency efforts had a positive impact on the quarter including lower newsprint usage and expense, and we also benefited from lower interest costs."

CONTINUING OPERATIONS

Total operating revenues for the company were $1.7 billion in the first quarter compared to $1.8 billion in the first quarter of 2007, an 8.4 percent decline. The decline was due primarily to a weaker economic environment that negatively impacted advertising demand in our publishing and broadcasting segments. Operating cash flow (defined as operating income plus depreciation and amortization) was $395.5 million. Net income was $191.8 million in the quarter.

Reported operating expenses were down 6.9 percent to $1.3 billion from $1.4 billion for the same quarter a year ago. The decline was driven by continued focus on cost containment and efficiency company-wide as well as lower newsprint usage and expense. Corporate expenses were 31.9 percent lower and totaled $15.7 million compared to $23.1 million in the first quarter of 2007 due primarily to lower stock based compensation and tight cost controls.

Average diluted shares outstanding in the first quarter totaled 229,661,000 compared with 235,005,000 in 2007's first quarter. Shares repurchased totaled approximately 1.5 million in the first quarter.

PUBLISHING

Publishing segment operating revenues totaled $1.5 billion for the quarter. Advertising revenues were $1.1 billion compared to $1.2 billion in the first quarter of 2007. Retail advertising revenues were 7.8 percent lower, national revenues were unchanged and classified revenues declined 16.0 percent. In the U.S. advertising revenues declined 11.2 percent while at our UK operations they were 7.2 percent lower, in pounds. Operating cash flow in the first quarter for the total publishing segment, which includes USA TODAY and Newsquest, was $340.9 million.

Total publishing operating expenses were $1.2 billion, a 6.6 percent decline from the same interval a year ago, reflecting significantly lower newsprint expense and other cost control efforts. Reported newsprint expense was 19.3 percent lower for the quarter due to declines of 5.9 percent in usage prices and 14.3 percent in volume.

At USA TODAY, advertising revenues increased 2.1 percent in the first quarter compared to the same quarter of 2007. Paid advertising pages totaled 826 compared with 904 in the year-ago quarter.

BROADCASTING

Broadcasting revenues (which include Captivate) totaled $170.2 million in the quarter, 7.0 percent lower than the same quarter in 2007. The decline reflected the softer economic environment and the absence of ad revenues related to the Super Bowl that benefited our CBS affiliates in 2007 offset, in part, by a $4.2 million increase in politically related advertising. Online revenues increased 11.2 percent in the quarter compared to the same quarter a year ago. Operating expenses in the broadcasting segment were down 5.5 percent. Operating cash flow was $66.3 million in the first quarter. Revenues for television operations were $163.9 million for the quarter. Television expenses declined 6.1 percent to $106.0 million compared to $112.9 million for the same period a year ago.

NON-OPERATING ITEMS

At the end of 2007, the company's equity share of operating results from its newspaper partnerships, including Tucson, which participates in a joint operating agency, the California Newspapers Partnership and Texas-New Mexico Newspapers Partnership, were reclassified from "Other" revenue and reflected as "Equity income (losses) in unconsolidated investees, net" in the non-operating section of the Consolidated Statements of Income. This line also includes equity income and losses from online/new technology businesses which were previously classified in "Other" non-operating items. "All other" revenue is now comprised principally of commercial printing revenues and revenue from PointRoll. All periods presented reflect these reclassifications.