Gannett Co., Inc. (GCI)
Q2 2010 Earnings Conference Call
July 17, 2010 09:00 am ET
Craig Dubow - Chairman & CEO
Gracia Martore - President, COO & CFO
Edward Atorino - Benchmark
Scott Davis - JPMorgan
Doug Arthur - Evercore Partners
Michael Kupinski - Noble Financial
Jim Goss - Barrington Research
Monica DiCenso - JPMorgan Chase
Craig Huber - Access 342
Bishop Cheen - Wells Fargo Securities
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Good morning ladies and gentlemen and welcome to Gannett’s Second Quarter 2010 Earnings Conference Call. (Operator's instructions). Our speakers today will be Craig Dubow, Chairman and Chief Executive Officer; and Gracia Martore, President, Chief Operating Officer and Chief Financial Officer. At this time I would like to turn the call over to Gracia Martore. Please go ahead.
Thanks Joshua and good morning, welcome to our conference call and webcast to review our second quarter 2010 results. Hopefully you’ve had opportunity to review this morning’s press releases, you can also find them at www.gannett.com. Before we get started however I need of course to remind you that our conference call and webcast today may include forward-looking statements and our actual results may differ.
Factors that might cause them to differ are outlined in our SEC filings. This presentation also includes certain non-GAAP financial measures. We’ve provided a reconciliation of those measures to the most directly comparable GAAP measures in the press release and on the Investor Relations portion of our website.
As many of you know Craig and I’ve provided a fairly detailed review of the quarter in early June, so we will try to keep our comments relative brief today. Craig will start off by reviewing our quarterly results and update you on several strategic efforts, we initiated during the quarter. I’ll review the quarter in detail particularly for each of our business segments. I’ll now turn it over to Craig.
Thanks Gracia and good morning, everyone. I’m extremely pleased to announce another quarter of improving results. Advertising demand firmed during the quarter as we benefited from the strength of our local market franchises, both here and in the UK. In second quarter, our revenue comparisons were better relative to the first quarter with total revenue down only slightly.
Broadcast and digital revenues were particularly strong while publishing revenues were down in the mid-single digits. Expense declines again, outpaced the revenue decline for the quarter. As a result, we increased our bottom line significantly with a 33% increase in both adjusted operating income and adjusted earnings per share.
As the economy improves and ad demand strengthens, the efficiency efforts we put in place are continuing to contribute results in the quarter. We have also made great strides in transforming Gannett to a multimedia, multiplatform company. We are positioned for growth in both our core assets and our unique digital businesses. We are committed to leveraging the strength of our local brands and extending our reach particularly our digital reach in all of our markets.
In the second quarter, we announced several initiatives that will help achieve that goal and today’s announcement is also significant. Our local advertising partnership with Yahoo! will further extend the digital reach for both our local publishing and several of our broadcast properties. The partnership combines our strong local brands and deep local connections with Yahoo!’s broad digital audience and audience targeting capabilities.
As a result of the partnership, we will increase our digital reach to as much as 80% of the total local digital audience. That will promote greater results for our advertising clients as they will be able to reach larger audiences as well as deliver more relevant ads based on demography, geography, user interest and more.
Yahoo! as a reminder does not have a local sales or marketing presence to work with local advertisers and businesses. From our operational perspective, our corporate US community publishing and broadcast teams in conjunction with Yahoo’s dedicated partnership team will work closely with each site’s management and sales teams on a detailed training and deployment plan.
All messaging, scheduling and delivery on Yahoo! sites for programs sold by Gannett’s local media organizations, sales teams to advertisers will be developed and fulfilled by Gannett. We expect, that all of our local, domestic publishing operations and several of our broadcasting properties will be participating.
In addition to the partnership with Yahoo!, we are enhancing the value of our local television brands through the development of community focused websites and our television markets. Through these hyperlocal websites, we will be able to extend the services we offer to our viewers as well as our advertisers. The sites will be integrated with an existing broadcasting websites and feature news content as well as user-generated content concerning local events.
With this more local focus, advertisers will be better equipped to target local audiences. Not only is their reach an important component of our business model, but the demand for our content is critical to the strength of our local market franchises. We think our content has tremendous value and we want to better understand consumer response to paying for that content. We began testing on July 1, paid content models in three of our publishing markets. Those are Greenville, South Carolina, Tallahassee, Florida and St. George, Utah.
We hope to glean some insights from these tests that will help us formulate and develop our long-term strategy for paid content. As you are well aware, the number and diversity of our markets allow us to experiment without disrupting our business model for the company as a whole. We view that as a tremendous advantage and we intend to leverage it as we gauge consumer and advertiser response. In the mean time, we are providing our content to consumers wherever, whenever and however they choose to receive it. Whether it is on mobile, web, print, broadcast or through wireless devices such as the iPad. Consumer and advertiser response has been strong for our mobile applications on the iPhone, iPad, iTouch and Android platforms.