Gannett’s 2nd-quarter profit more than doubles as advertising declines ease

Gannett’s 2Q profit jumps as ad slump eases

NEW YORK — Gannett Co., the largest U.S. newspaper publisher, said Friday that its second-quarter profit more than doubled, helped by a rebound in broadcast revenue, a one-time tax gain and a less severe drop in print advertising.

The owner of USA Today, more than 80 other daily newspapers and 23 TV stations is a bellwether for other publishers. The New York Times Co., Lee Enterprises Inc. and McClatchy Co. report earnings over the next two weeks.

Like other publishers, Gannett has seen the rate of decline in its print ad business taper off as the recession fades. At the same time, its TV stations have started to rebound, helped by an uptick in automotive advertising and ads tied to political campaigns.

Gannett, based in McLean, Va., has also cut expenses sharply through layoffs and consolidation of operations such as printing plants. Second-quarter expenses fell 12 percent.

That helped Gannett report net income of $195.5 million, or 81 cents per share, for the three months ended June 27, up from $70.5 million, or 30 cents per share, a year earlier.

Excluding one-time items, Gannett would have earned 61 cents per share. That was better than analysts’ forecast of 53 cents, according to a survey by Thomson Reuters.

Revenue slipped 1.6 percent to $1.37 billion from $1.39 billion a year ago, the smallest decline in three years. A 20 percent jump in broadcast revenue helped offset a 6 percent decline in publishing. In the month of June, Gannett’s newspaper advertising was down by just under 4 percent, the least erosion in that category since early 2007.

“We are absolutely heartened by the strong results of our divisions, and we are very well-positioned to continue to make significant progress,” Gracia Martore, Gannett’s chief operating officer, told analysts during a Friday conference call.

But Martore and Gannett CEO Craig Dubow wouldn’t say whether they expect the company’s newspaper advertising to finally increase in the current quarter ending in September after 3 1/2 years of uninterrupted declines. Martore said it remains difficult to gauge advertiser demand for the second half of the year because the U.S. economy remains “fragile.”

Like other newspaper publishers, Gannett needs newspaper advertising to bounce back to avoid further cutbacks. Even with television advertising growing again while its newspapers still struggle, print advertising accounted for about half of Gannett’s total revenue in the second quarter.

The ongoing downturn in newspaper advertising caused Gannett’s second-quarter revenue to fall slightly below the average analyst estimate of $1.4 billion. In the conference call, Martore indicated the company would have probably matched that estimate if not for two factors that lowered print advertising revenue. Gannett didn’t book all revenue from The Honolulu Advertiser because it sold the newspaper during the quarter, and it also was hurt by adverse currency trends that translated into fewer dollars coming in from its publishing operations in England.

Investors still punished Gannett for the narrow miss as the company’s shares tumbled $1.12, or 7.4 percent, to $13.99 in afternoon trading Friday.

AP Business Writer Michael Liedtke in San Francisco contributed to this report.