Gannett Co., Inc. Reports Third Quarter Results

Business Wire, Oct 24, 2008

At USA TODAY, advertising revenues were 7.1 percent lower in the third quarter compared to the year ago quarter. Paid advertising pages totaled 713 compared with 803 in the same quarter of 2007. Growth in the advocacy, financial and home and building categories was offset by softness in the entertainment, travel, automotive and technology categories.

Total publishing operating expenses were $1.18 billion, a 6.6 percent decline from the same quarter a year ago reflecting continued efficiency efforts in the U.S. and the UK and lower newsprint expense offset in part by severance expenses. Pro forma publishing expenses excluding severance expenses were 7.1 percent lower. Newsprint expense declined 3.4 percent for the quarter reflecting a 15.9 percent increase in usage prices which was more than offset by a 16.7 percent decline in consumption. Operating cash flow in the third quarter for the total publishing segment, which includes USA TODAY and Newsquest, was $231.7 million.

BROADCASTING

Broadcasting revenues (which include Captivate) were $197.0 million in the quarter, a 3.9 percent increase compared to $189.5 million in the third quarter of 2007. The increase was driven by almost $24 million in ad spending related to the Olympics on our NBC affiliates and about $26 million in politically related advertising. Online revenue in the quarter was up 15.0 percent. The weakening economy had an unfavorable impact on certain core advertising categories including auto and retail which partially offset the increase from Olympic and political ad revenue.

Operating expenses in the broadcasting segment totaled $113.0 million down 4.3 percent from $118.1 million a year ago reflecting continued efficiencies, offset in part by severance expense. Broadcasting expenses excluding severance were down 6.0 percent. Operating cash flow was $92.5 million in the third quarter. Television revenues were 4.8 percent higher and totaled $192.8 million. Based on where we are today, we would expect television revenues to be up in the low single digits for the fourth quarter of 2008 compared to the fourth quarter of 2007 led by strong political advertising demand.

DIGITAL

As noted previously, the digital segment includes results for CareerBuilder, PointRoll, ShopLocal, Planet Discover and Schedule Star. Results for ShopLocal were included for the entire third quarter while CareerBuilder's results were included for the last month in the quarter. Results for PointRoll, Planet Discover and Schedule Star, which had been previously reflected in the publishing segment, have been reclassified to the digital segment. Total digital operating revenues from these businesses were $77.6 million in the quarter driven by the consolidation of CareerBuilder and ShopLocal. Operating expenses totaled $71.5 million. Operating cash flow was $10.2 million reflecting positive results for CareerBuilder, PointRoll and ShopLocal partially offset by continued investment in Schedule Star and the ramp up of our digital infrastructure.