Gannett Co Inc, the largest U.S. newspaper publisher, reported a lower quarterly profit and a 28 percent drop in publishing advertising revenue on Monday, but the results were better than expected and shares rose more than 8 percent.
Gannett's profit beat reflects painful attempts to slash expenses during the past year, from furloughing and laying off workers to slashing pay. Similar moves at other publishers, such as McClatchy Co, which reported results last week, have helped them also beat Wall Street's forecasts.
Newspaper publishers are looking for ever more ways to cut costs to remain in shareholders' good graces, as their ad revenue slips away. One expense cut that Gannett has used in the past -- the furlough -- is not on tap for this quarter, executives said on a conference call with analysts on Monday.
The big unanswered question is whether, following the recession, revenue will return because advertisers are following people online as print newspaper circulation falls.
Gannett, publisher of USA Today, posted third-quarter net income of $73.8 million, or 31 cents a share, compared with $158.1 million, or 69 cents a share, a year before.
Profit excluding items was 44 cents a share, ahead of the average analyst estimate of 41 cents a share, according to Thomson Reuters I/B/E/S/. Those items included non-cash charges for consolidating facilities and job cuts. The company's operating expenses were 14 percent lower in the quarter, totaling $1.2 billion.
The results beat Gannett's old forecast of 39 to 42 cents a share. That forecast, delivered in a rare pre-announcement, beat the expectation at the time of 29 cents.
Revenue fell 18 percent to $1.33 billion, in line with analysts' estimates, according to I/B/E/S/.
Although recessions in the U.S. and UK continued to temper ad demand and revenue growth during the quarter, we are encouraged by the revenue trends, said Gannett Chairman and Chief Executive Craig Dubow, back at the company after taking a medical leave of absence following back surgery in June.
The company did not provide a forecast, but Chief Financial Officer Gracia Martore, on a conference call with analysts, left open the possibility that revenue could improve in 2010.
Quarterly publishing revenue fell 23.5 percent to $1 billion. U.S. publishing ad revenue fell 26 percent. Gannett said it is seeking opportunities to print other companies' products, while outsourcing some of its own printing needs.
Broadcast revenue fell 23 percent, in part because of extra money the company's TV stations made from the Olympics and the U.S. elections last year. The company also said it could get more than $56 million in retransmission fees this year, money that it collects from cable and satellite TV network operators that broadcast Gannett's local stations.
Gannett also said it raised $500 million in debt, due in 2014 and 2017, and nearly a quarter of its debt matures in the fourth quarter of 2014 or later -- welcome news for investors worried that the company's debt load could be too much to bear as ad revenue falls.
Gannett shares rose $1.10 to $14.10 in morning trading on the New York Stock Exchange. Shares of New York Times Co and Media General Inc, which report their results later this week, rose more modestly.
(Reporting by Robert MacMillan, editing by Dave Zimmerman)