NEW YORK (TheStreet) -- Gannett (GCI) recorded lower third-quarter revenue on declining advertising sales at its newspapers. The media business posted a 4% year-on-year decline in revenue to $1.25 billion, and earnings per share of 43 cents a share, 2 cents higher than Thomson Reuters estimates, but lower than 56 cents in the year-ago quarter.
Advertising sales, particularly across its newspaper properties such as USA Today, were a major factor in the revenue drop. Total publishing revenue was 3.6% lower to $858.1 million, while revenue in broadcast TV dropped 15% to $198.5 million (in comparison to an unusually high 2012 third quarter thanks to Olympics and presidential election coverage). Excluding major events in 2012, broadcast revenue for the quarter rose 14% over the year-ago quarter.
During the quarter, shareholders for Belo, a Dallas-based media company, approved a merger with Gannett whereby the latter will acquire all outstanding Belo shares for approximately $1.5 billion in addition to $715 million in debt.
"We continue to anticipate bringing the transaction to a close following the attainment of regulatory approvals," said CEO Gracia Martore. "We are working towards a seamless integration that will accelerate our transformation and create an even stronger Gannett."
Shares for Gannett, the largest U.S. newspaper publisher, dropped 5.2% to $26.05 on Monday.
TheStreet Ratings team rates GANNETT CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:
"We rate GANNETT CO (GCI) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."