Monday, October 15, 2012

Gannett beats income estimates, though publishing ad revenue remains weak, falling 6.6%

The publisher of USA Today and other media properties, Gannett, today announced third quarter earnings that beat analyst estimates (though if anyone still listens to analysts then I have a bridge to sell them). Thanks to strong political advertising and the Olympics, Gannett saw its broadcast revenue rise 36 percent over the same period last year.

Overall, though, revenue only increased 3.4 percent, despite the huge spike in broadcasting. (Gannett stock is down slightly at $17.85 per share in after hours trading.)

Publishing advertising fell an additional 6.6 percent, and while digital rose 4.7 percent, in actual dollars it could not make up the difference. Publishing advertising fell $39 million while digital rose $8 million.

The revenue problems at Gannett newspapers really can't be seen in one quarter's earning statement, however. While the quarter's publishing ad revenue fell to $555 million might represent a decrease of only 6.6 percent, one should go back in time to see the cumulative effect. In 2010, the same category produced $664 million in revenue, while in 2009 Q3 was worth $681 million, in 2008 the number was $977 million, in 2007 it was $1.187 billion.

That means publishing ad revenue is now less than half what it was only five years ago. In the meantime, digital revenue has grown tremendously in terms of percentages. But in terms of real dollars, the $165 million in new digital revenue can not make up for the $635 million in print dollars that are now gone.

On the bright side, I suppose, is the fact that broadcast revenue is up $40 million over the same time period in 2008, another year with both a presidential election and Olympics occurring.