Ad slump weighs down Gannett results

Mon Apr 16, 2012 9:38pm IST

Stocks

   

* Q1 adj EPS 34 cents vs 31 cents Street view

* Total revenue down 2.6 pct in line with analysts' forecast

* Publishing advertising revenue down 8.4 pct

* Shares down 8 pct

(Adds executive comment from call, updates share price)

By Jennifer Saba

April 16 (Reuters) - Gannett Co (GCI.N) reported a decline in total revenue in the first quarter as advertisers fled the pages of newspapers and instead shifted spending to digital media.

The largest newspaper chain in the United States by circulation said on Monday that total revenue fell 2.6 percent to $1.22 billion, roughly in line with analysts' average expectations of $1.24 billion, according to Thomson Reuters I/B/E/S. Gannett's shares were down 8.1 percent to $13.82 in late morning trading.

Gracia Martore, Gannett's chief executive, pointed to an "industry-wide slowdown" in January advertising sales.

"Improving advertising activity in February and March, while encouraging, did not overcome the slow start to the year," she said in a statement.

Advertising revenue at its publishing division dropped 8.4 percent to $551.4 million in the first quarter.

Benchmark analyst Edward Atorino said Gannett's newspaper advertising revenue was worse than he expected. "What's to talk about? Newspapers are still deteriorating," he said.

As a bellwether, Gannett's results show that the industry's problems are more structural in nature -- mainly a dependence on print ad sales -- and they do not bode well for other companies slated to report.

The New York Times Co (NYT.N) will announce first-quarter results on Thursday.

National advertising at USA Today fell 13.3 percent as entertainment, telecommunications, automotive and financial advertisers dropped their spend. USA Today is searching for both a publisher and editor.

During a conference call with analysts, Martore mentioned that the national newspaper historically made up less than 10 percent of the company's revenue. "We are working to more fully realize its potential as we approach the brand's 30th anniversary in September," she said on the call.

Gannett is attempting to move past the negative headlines dogging the newspaper industry by placing an emphasis on its digital and marketing efforts. During its investor day in February, executives laid out plans that included a dividend increase, a share buy-back program, and a digital pay model roll-out to its 80 papers. [ID:nL2E8DM9DD]

Yet those efforts that Gannett announced at its investors day will take some time to show results, Martore said on the call. "We are working to stabilize our publishing businesses," she said adding there is no "quick fix."

Digital revenue at Gannett increased 8.2 percent to $272.8 million.

The company, which also owns several television stations, said broadcasting revenue rose 7.5 percent to $176.2 million.

Excluding special items including staff cuts, Gannett reported first-quarter earning per share of 34 cents, beating the analysts' forecast of 31 cents.

(Reporting By Jennifer Saba; Editing by Maureen Bavdek and Gunna Dickson)

((jennifer.saba@thomsonreuters.com)(1 646 223-6173)(Reuters Messaging: jennifer.saba.reuters.com@reuters.com)) Keywords: GANNETT/

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