NEW YORK Gannett Co's quarterly profit and revenue fell in the latest sign U.S. newspapers have yet to recover from an advertising slump.
Gannett, the largest newspaper chain in the United States, said on Monday total revenue fell 2.2 percent to $1.33 billion in the second quarter, in line with the average analyst forecast, according to Thomson Reuters I/B/E/S.
The publisher of USA Today and 81 other newspapers said ad revenue at its newspapers dropped 6.5 percent to $646.9 million as retail, automotive, and national advertisers pulled back on their spending.
Advertising revenue this quarter is "getting off to the same start" as the second quarter Gracia Martore, president and chief operating officer of Gannett, said during a conference call.
The company also doubled its quarterly dividend and reinstated its $1 billion share buyback. Nevertheless, Gannett's shares fell 3 percent in early trade.
"It's not a surprise that print media continues to drag down Gannett," said Joscelyn MacKay, an analyst at Morningstar. "We don't expect Gannett to return to (revenue) growth in a 10-year time horizon."
Gannett cut 2 percent of its workforce, or 700 employees at its U.S. newspaper division in June, citing a sputtering economic recovery weighing down on national and local advertising.
Derek Maupin, research analyst at Hodges Capital management, which holds shares in Gannett, is slightly concerned about Gannett's print advertising but believe shares are still undervalued at its current price.
"If you look at it as a whole, (Gannett) had strong increases in the other segments," he said adding that he expects broadcasting revenue to be strong next year.
Digital advertising rose almost 13 percent to $173.4 million.
At the company's broadcast division, which includes Captivate, total revenue inched up to $184.4 million compared with $184 million in the same quarter a year ago.
TV revenue was up slightly to $177.7 million and the company forecast the percentage decline in the third quarter to be in the mid-single digits.
Gannett posted a net profit of $151.5 million, or 62 cents per share, compared with $195.5 million, or 73 cents per share a year earlier.
Excluding costs for facility closures and job cuts and a net tax benefit, Gannett posted a profit of 58 cents per share, beating analysts forecast by a penny.
The company doubled its dividend to 8 cents per share. It expects to repurchase $100 million in shares over the next 12 months, as part of the $1 billion share buyback originally approved five years ago.
(Reporting by Jennifer Saba, editing by Maureen Bavdek and Derek Caney)