Gannett Co Inc (GCI.N) reported better-than-expected quarterly revenue and higher profit on Monday on strong television advertising from the Summer Olympics and the U.S. presidential election and subscription revenue from its newspapers.
The top U.S. newspaper chain in terms of circulation, said on Monday that third-quarter revenue rose 3.4 percent to $1.31 billion. Analysts expected $1.29 billion, according to Thomson Reuters I/B/E/S.
Net income was $133.1 million, or 56 cents per share, beating analysts' expectations of 53 cents.
The company, which also has 23 TV stations, turned in record revenue in the third quarter at its broadcast division that includes elevator display product Captivate.
The latest report also showed that revenue declines at its newspapers were moderating.
Still, investors sent shares down 1.6 percent to $17.61 in afternoon trading on Monday.
Evercore analyst Doug Arthur thinks investors were looking for a bigger upside. "The stock has done awfully well," he said, up about 26 percent over the past three months.
Gannett executives reiterated a forecast of hitting $100 million in operating profit next year, due in large part to an online pay model it rolled out for its local U.S. newspapers.
Gannett implemented a plan unveiled earlier this year to reduce its dependence on advertising at its newspapers and to capitalize on broadcast TV.
As a result of the digital pay model rolled out to 71 markets, circulation revenue rose 10 percent at its U.S. local newspapers.
"Political (advertising) is going off the chart, and newspapers are on track, which is encouraging," said Edward Atorino, analyst, Benchmark Co.
Even the pace of advertising declines at its newspapers has begun to slow. Advertising revenue fell 6.6 percent, compared with an 8 percent decline in the second quarter.
Gannett Chief Executive Gracia Martore suggested that fourth-quarter advertising trends will improve slightly from the third quarter.
"Holiday spending is extremely important," Martore said on a conference call with analysts and investors. "It's hard to say this early, but already our expectations are we will have a better comparison in the fourth quarter."
Total publishing revenue, which includes a group of newspapers in Great Britain, dropped 3 percent to $890.2 million, while broadcasting revenue increased 36 percent to $237.0 million.
Digital revenue increased almost 5 percent to $182.0 million and contributed more than 25 percent of total revenue.
(Reporting by Jennifer Saba; Editing by Gerald E. McCormick and Jeffrey Benkoe)