NEW YORK (Reuters) - Gannett Co Inc (GCI.N), the largest U.S. newspaper publisher, reported stronger-than-expected quarterly results after slashing jobs to cut costs, sending its shares up 22 percent.
Even though revenue fell 18 percent as advertising sales slumped, Gannett posted a second-quarter profit of 46 cents a share excluding writedowns and layoff charges. That beat the average analyst forecast of 37 cents, according to Reuters Estimates.
Gannett, owner of USA Today, the largest U.S. newspaper by circulation, is navigating through an “unprecedented economic storm,” Chief Financial Officer Gracia Martore said in a statement.
The McLean, Virginia-based company is the first U.S. newspaper publisher to report its results this quarter. Next week New York Times Co (NYT.N), Media General Inc MEG.N and McClatchy Co MNI.N will provide their quarterly reports.
Gannett’s second-quarter revenue fell to $1.4 billion on a 32 percent drop in publishing ad revenue.
“Fundamentally, we don’t see a significant improvement in the tone of business,” Wachovia analyst John Janedis wrote in a research note.
Net income was $70.5 million, or 30 cents a share, compared with a loss of $2.29 billion, or $10.03 a share, a year earlier. Last year’s loss included a writedown and other charges. Operating profit per share a year ago was $1.04.
Since last year, several publishers have filed for bankruptcy and more are engaging in negotiations with their lenders to avoid defaulting on their debt.
Many media experts think Gannett will survive the twin threat of permanent advertising declines and the ill effects of the recession. Its debt position improved after exchanging some debt with bondholders.
Gannett’s debt was $3.5 billion as of the end of the second quarter, and it has extended the due dates for some of the debt to 2015 and 2016.
More importantly for media companies that depend on advertising, Chief Financial Officer Gracia Martore said advertising revenue, while still lower, was more stable in the past three months.
Still, Gannett is laying off about 1,400 workers this summer, following several thousand layoffs last year.
Chief Executive Craig Dubow is out on medical leave with back troubles, and Gannett is uncertain when he will return.
Classified ad revenue, traditionally the lifeblood of newspapers, fell nearly 45 percent in the second quarter, with job classifieds falling 62 percent.
Gannett shares rose 78 cents to $4.27 in morning trade on the New York Stock Exchange. Other newspaper publisher shares also rose. McClatchy was up 11 cents, or 26 percent, to 53 cents on the NYSE, and Lee Enterprises (LEE.N) was up 16 cents, or 29 percent, to 70 cents.
Reporting by Robert MacMillan; Editing by Derek Caney, John Wallace and Matt Daily