This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Newspaper Dinosaur Gannett Finds Other Revenue Sources

NEW YORK ( TheStreet) -- My favorite "dinosaur" stock has done it again. USA Today publisher Gannett (GCI), which appeared to be on its' deathbed just a few years ago, put up another better-than expected quarter.

I call Gannett a "dinosaur" stock because the presumption has been that newspaper names are going the way of the dinosaur. Between intense competition from the Internet as a news source, and declining advertising revenue, newspapers appear to be a modern day version of the buggy whip, a device that was no longer needed once the automobile went mainstream.

Of course, Gannett is actually much more than a newspaper company; in the third quarter, nearly 37% of revenue was from non-publishing related activities. The broadcasting segment, which generated just 18% of total revenue, was responsible for nearly 55% of operating income. The digital segment generated 14% of revenue, and more than 18% of operating income.

While publishing advertising revenue fell 6.6%, publishing circulation saw a 5.6% uptick. That's the first time circulation revenue has grown in five years. It's been just over a month since the company debuted its' new design for the flagship USA Today, and it is too early to tell if there will be any impact.

Third quarter revenue rose 3.4% to $1.309 billion. While that quarter over quarter increase may not seem all that remarkable, it's been years since Gannett had a quarter/quarter revenue rise. Furthermore, revenue exceeded the $1.29 million consensus estimate. On the earnings front, the company bottom lined $133.1 million, or 56 cents per share, also better than the 53 cents per share consensus.

The company continues to generate significant free cash flow, including $163 million for the quarter. That's what has allowed Gannett to increase the dividend, which now provides a 4.5% yield.

While it appears that the company has the ability to raise the dividend further, the impending increase in taxes on qualified dividends (from 15% to ordinary income rates, as high as 43.4% including the new Medicare 3.8% surtax leveled by "Obamacare") may preclude the company from doing so. It's too early to tell on that front.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GCI $17.22 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs