US publisher Gannett reverses 4th-quarter loss; ad sales still dropping

Gannett reverses 4Q loss; ad sales still dropping

NEW YORK — Gannett Co., the largest U.S. newspaper publisher, said Monday it turned a profit in the fourth quarter, helped by a drop in one-time costs and a smaller decline in ad sales.

The earnings report showed Gannett has been able to slash expenses enough to stay profitable despite steady revenue declines. Other big publishers, such as Miami Herald owner McClatchy Co., have followed a similar course in trimming staff and consolidating printing and delivery operations.

“We are a leaner, stronger company as we move into 2010,” Gannett CEO Craig Dubow said during a conference call with analysts.

Although Gannett’s earnings topped Wall Street’s estimates, its shares tumbled nearly 10 percent, or $1.60, to $14.55 in morning trading Monday.

But the stock is still up significantly since Gannett and other publishers first signaled improving advertising trends in December at the annual UBS media conference. Gannett shares closed last week at $16.15, up about 62 percent over the previous two months. They had been as low as $1.85 early last year.

In the last three months of the year, Gannett earned $133.6 million, or 56 cents per share, compared with a loss of $4.7 billion, or $20.65 per share, in the same quarter of 2008, when it booked charges to account for the falling value of its newspapers.

Excluding $53.5 million in one-time charges in the most recent quarter, Gannett said it would have earned 72 cents per share, down from 85 cents the year before. Wall Street analysts, who typically exclude one-time losses or gains from their forecasts, expected 64 cents per share on average, according to Thomson Reuters.

Revenue dropped 14 percent to $1.49 billion, largely in line with the average forecast of $1.46 billion.

Gannett also announced Monday that it is promoting Chief Financial Officer Gracia C. Martore to chief operating officer, a new position. The company said Martore, who has been with Gannett since 1985, will handle day-to-day operations, while Dubow focuses on long-term strategy. Dubow returned to work in October after taking a medical leave this summer for back surgery.

In a statement earlier, Dubow said stabilizing economies in the U.S. and the U.K. helped slow the decline in ad revenue. The company is also benefiting from easier comparisons with year-ago figures; because the ad slump had already set in by the end of 2008, the latest quarter’s ad performance is being compared with figures that are already down significantly from earlier years.

Advertising sales in Gannett’s publishing division, which includes USA Today and more than 80 other daily newspapers, dropped 17.9 percent compared with the year-ago period. That’s after a 28 percent year-over-year decline in the third quarter. USA Today sold 705 ad pages during the October-December period compared with 788 a year earlier.

By comparison, McClatchy’s ad revenue was down 20.5 percent in the fourth quarter after a 28.1 percent decline in the third quarter. Other newspaper owners, including The New York Times Co. and The Washington Post Co. are expected to show similar improvements when they report earnings later this month.

Broadcast revenue was down 14 percent to $183 million, in large part because of the lack of political ad spending.

Net income for the full year came to $355.3 million, or $1.51 per share, compared with a loss of $6.65 billion, or $29.11 per share in 2008. Revenue was down 17 percent to $5.61 billion. Gannett has its headquarters in McLean, Va.