Gannett Co. Inc., the largest U.S. newspaper chain, reported a 4-per-cent drop in third-quarter revenue on Monday on declining advertising sales, mainly at its papers, sending shares down 6.5 per cent.
Publishing revenue fell 3.6 per cent to $858.1-million (U.S.) on a 6-per-cent slide in advertising revenue. Circulation revenue dipped 0.6 per cent. Gannett, whose properties include USA Today, started charging for digital content a year ago at its U.S. newspapers.
Total revenue fell to $1.25-billion versus analysts’ estimates of $1.27-billion.
“It’s a mixed bag,” Doug Arthur, an analyst at Evercore, said about the overall results.
Arthur said the publishing division looked “weak” and that the slip in circulation revenue was “one cause for concern.”
Gannett is considered a bellwether of the newspaper industry, which has been dogged by years of declines in ad revenue that has shifted to digital. New York Times Co., whose flagship paper competes with USA Today, is expected to post moderating declines in advertising revenue when it reports third-quarter results on Oct. 31.
To counter print declines, Gannett has rolled out a digital pay model and has made a big bet on local television.
Digital revenue jumped 12.4 per cent to $376.1-million.
“Our strategy ... was never meant to be a short-term plan,” said Gracia Martore, Gannett’s chief executive, during an earnings conference call, referring to efforts to reap more revenue from digital and broadcast TV.
“It is a smarter, more strategic way of running our business that positions us to weather challenges as they come, like the secular downturn in publishing or a tepid economy.”
Gannett nearly doubled its broadcast holdings to 43 station from 23 with its agreement to buy Belo Corp. for $1.5-billion. Belo shareholders approved the transaction in the third quarter, and Gannett is waiting for government approval before the deal closes.
Broadcast revenue currently makes up 16 per cent of the total, while publishing represents 63 per cent.
At Gannett’s broadcast TV station divisions, total revenue fell 15 per cent to $198.5-million because of the absence of Olympic or political advertising recorded in the third quarter last year.
Profit for the quarter totalled $79.7-million or 34 cents per share, compared with $133.1-million or 56 cents for the same quarter last year.
Adjusted for special items, earnings per share was 43 cents, ahead of analysts average expectations of 41 cents, according to Thomson Reuters I/B/E/S.