(Gannett earnings item updated to provide further detail from the company's press relase and for Gannett stock-price movement.)
MCLEAN, Va. (
) -- Investors bid up shares of
Friday after the company exceeded Wall Street's profit targets with its first-quarter results, reported before the opening bell.
As for Gannett's all-important print advertising business, sales continued to decline, but at a far slower pace than what it had suffered during the last four quarters. Gannett said ad revenue at its publishing unit amounted to $666 million, 8% less than the sum recorded in the first quarter of 2009, which itself was a terrible period.
The ad recession hasn't ended, in other words. But the shrinkage has slowed, which suggests to some that a bottom is approaching -- something that media chieftains have been alluding to (if not exactly promising) since last summer.
"Revenue trend comparisons improved in the quarter, reflecting the positive impact healthier economies in the U.S. and the U.K. had on advertising demand," said Gannett CEO Craig Dubow, in a written statement in the earnings release.
In the fourth quarter, which
Gannett reported in early February
, the company's print ad revenue fell 18% from a year ago. And for most of 2009, ad revenue for Gannett -- along with that of the rest of the industry -- had been declining year-over-year at a 30% clip.
The Northern Virginia-based publisher, which owns a slew of papers in mid-sized cities around the country and in Britain, has dealt with the plunging sales by slashing costs. It has eliminated jobs (24% of its staff in 2009, either through buyouts or layoffs) and scaled back its content, either by shuttering papers or trimming sections throughout its many titles.
Those moves have paid off for the publisher -- at least when judged by the literal bottom line. Gannett said it earned 50 cents a share in the first quarter, excluding a $2.2 million tax charge, better than the 41 cents analysts were expecting, on average, according to
survey of the sell side.
The decline in the business of selling news printed on paper has helped Gannett and the industry in one significant way: plunging newsprint prices, which again helped ease the company's costs and lift its bottom line, Gannett said. It also cited a spurt in ad spending by companies trying to ride the Winter Olympics TV viewership. Gannett's broadcasting segment saw a 55% rise in operating income from a year ago, climbing to $68.5 million.
Including the tax charge, Gannett posted a profit of about $117 million, or 49 cents a share. A year ago, Gannett earned $77 million, or 34 cents a share.
Total revenue came to $1.32 billion, down 4% from the corresponding period in 2009.
After earlier rising as high as $19.69, Gannett shares eased back in afternoon trading Friday as the Goldman Sachs fraud charges took the air out of U.S. equities as a whole. Gannett's stock was changing hands recently at $18.32, up 18 cents, or 1%. Volume reached nearly 11 million shares, more than double the daily average turnover.
For what it's worth, debt-rating service
used the occasion of Gannett's quarterly results Friday to upgrade its outlook on the newspaper sector's credit-worthiness to stable from negative.
In a note, Moody's analyst John Puchalla said he expects "a cyclical recovery in advertising spending" to ease industrywide revenue declines this year and create a "more stable revenue environment in 2011."
Puchalla expects overall industry ad revenue to decline by 5% to 10% in 2010, with growth a possibility in 2011. His ad revenue target for next year is a range between a 3% decline and a 2% rise.
Other publishers of community newspapers saw their shares rise Friday as well. (As opposed to the
New York Times
, whose core holding is of course a national newspaper, operating a chain of metro dailies in local markets is seen by some investors as a more promising business.)
shares were rising 2% to $6.19;
gained 1.3% to $9.97;
spiked 4% to $4.20; and
gained 5% to $5.10.
Shares of the New York Times, meanwhile, were faring much worse, declining 5% to $12.08.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.