- Texas man arrested for powder-letter hoax
- Islamic State opens ‘marriage bureau’ for single jihadists
- Drone almost blocks California firefighting planes
- Tornado rips off roofs, downs trees near Boston
- GOP: Environmental rules keeping agents from accessing border
- John Kerry: Millions displaced by religious fighting in 2013
- Federal appeals court rules against Virginia’s gay marriage ban
- White House says Russia ‘losing’ war in Ukraine
- Hamas turns to North Korea for weapons deal, Iran for money
- Syrian casualties surge as jihadis consolidate
Gannett’s newspaper ad woes drag down 1Q earnings
Question of the Day
A prolonged slide in Gannett Co.’s newspaper business overshadowed improvements in the company’s broadcast and online operations as the publisher of USA Today reported a sharp drop in first-quarter earnings.
The results released Monday marked the 17th straight quarter in which Gannett’s publishing division has brought in less revenue than the previous year.
Most other major newspaper publishers also have been struggling during the same stretch, which included the longest U.S. recession since World War II. With the economy slowly recovering, newspapers are still trying to adapt to a marketing shift that has driven advertisers from print to less expensive and more abundant alternatives on the Internet.
Digital revenue from newspaper websites and other businesses grew 12 percent, but that wasn’t enough to offset a 7 percent drop in newspaper advertising revenue, the bulk of which still comes from print. Net income fell 23 percent.
Gannett, which publishes more than 80 daily newspapers including USA Today, is the first major newspaper publisher to detail its performance for the first three months of the year. The New York Times Co. is scheduled to release its results Thursday. McClatchy Co., publisher of The Miami Herald and The Sacramento Bee in California, is set to report next week.
To cope with its downturn, Gannett has eliminated thousands of newspaper jobs in the past few years and imposed other cost-cutting measures such as requiring employees to take unpaid furloughs.
Gracia Martore, Gannett’s chief operating officer, told analysts Monday that about 1,000 workers at the company’s smaller newspapers will take furloughs in the current quarter, which ends in June. That’s 3 percent of the company’s work force of 32,600.
Gannett imposed more drastic furloughs in the first quarter, when most workers at all its U.S. newspapers except USA Today and the Detroit Free Press had to take one week of unpaid leave. The company did not say how many workers took the leave.
The cost-cutting has enabled Gannett to remain profitable and earned the company’s top executives larger bonuses. Gannett CEO Craig Dubow, for instance, received a $1.75 million bonus last year, a 21 percent increase from $1.45 million in 2009.
Shareholders also stand to benefit from the savings. During Monday’s conference call, Martore said that with the belt-tightening and an economy that is gradually improving, the company may be able to use its cash to buy back stock or restore part of the quarterly dividend. The dividend had been cut to 4 cents, from 40 cents, two years ago.
That prospect seemed to please investors. After initially falling on the first-quarter earnings news, Gannett shares gained 59 cents, or 4 percent, to close Monday at $15.39. The stock has dropped 75 percent since Gannett’s publishing revenue began falling in 2007.
Gannett earned $90.5 million, or 37 cents per share, in the three months ended March 27. Net income was $117 million, or 49 cents per share, a year earlier.
If not for charges to account for staff cuts and facility closures, Gannett said it would have earned 41 cents per share. That figure was a penny below the average estimate among analysts polled by FactSet.
Revenue fell 4 percent to $1.25 billion from $1.3 billion.
Gannett’s broadcast division saw revenue decline 2 percent to $164 million, in line with what the company indicated last month.
TWT Video Picks
By Richard Rahn
Treaty would let tyrants peer into Americans' financial information
- D.C. seeks to stay judge's order allowing gun owners to carry in public
- Illegal immigrants demand representation in White House meetings
- Hillary Clinton: Forget Obama, George W. Bush made her 'proud to be an American'
- Babson College, BYU win top spots in Money magazine's college rankings
- Iraqi Christians rally at White House: 'Obama, Obama, where are you?'
- Tennessee Gov. Haslam slams White House for secret dump of illegals in his state
- Romney would win popular vote in rematch against Obama: CNN poll
- White House defends Kerry failure to broker Middle East cease-fire
- D.C. plans to seek stay of order striking down ban on handguns in public
- Islamic State opens 'marriage bureau' for single jihadists
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq