Broadcast boosts Gannett results, print ads still soft
(Reuters) - Gannett Co Inc (GCI.N) reported higher first-quarter revenue and profit on Tuesday, partly on the strength of its broadcast results but newspaper advertising sales were still weak.
Gannett, the largest newspaper chain in the United States, is starting to benefit from a pay model adopted last year for its digital newspaper products.
Digital revenue at its publishing segment jumped more than 75 percent as more people paid to read news online and through apps for smartphones and tablets. Gannett Chief Executive Gracia Martore said the company has 50,000 digital-only subscribers to its newspapers.
Newspapers across the United States from The New York Times to The Chicago Tribune have started charging readers to get access to its digital products in an effort to offset punishing declines in advertising revenue.
Overall, the industry has a way to go in getting digital subscription revenue to account for more of the total pie. Digital revenue for the industry, including subscriptions and advertising, represented only 11 percent of the $38.6 billion in total 2012 revenue, according to the Newspaper Association of America.
At Gannett, results at the numbers for its publishing division - which represents 70 percent of total revenue - indicated it was still struggling with advertising declines.
Subscription revenue could not fully push up total revenue at its publishing division, which slipped 0.3 percent to $871.2 million. Newspaper advertising sales fell 4.5 percent to $526.5 million.
Several analysts on Gannett's earnings call questioned executives about how much more Gannett can increase subscription revenue.
Digital-only subscriptions are forecast to grow to about 300,000 by the beginning of 2014, Martore said on the call, adding that there would be additional opportunities to charge for content down the road.
Shares of Gannett fell nearly 1 percent to $20.84 on Tuesday.
Gannett is the publisher of 82 U.S. newspapers, including USA Today, The Arizona Republic and The Des Moines Register. It also operates 23 TV stations.
Total revenue rose 1.6 percent to $1.24 billion, helped by an increase in broadcasting revenue. That was in line with analysts' expectations, according to Thomson Reuters I/B/E/S.
Quarterly net income rose to $104.6 million, or 44 cents per share, from $68.2 million, or 28 cents per share, in the same period a year before.
Adjusted for specials items, including cost cuts and a tax benefit, earnings were 37 cents per share compared with analysts' estimates of 28 cents.
(Reporting by Jennifer Saba in New York; Editing by Gerald E. McCormick, Nick Zieminski and Jeffrey Benkoe)
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