Increases in digital and broadcast revenue were not enough to make up for the ongoing decline in Gannett Co.’s newspaper business, leading the publisher of USA Today to report a more than 22% drop in its second-quarter net income.
Still, the largest U.S. newspaper publisher with more than 80 dailies said its results are showing improvement, and to show confidence in its business prospects, Gannett said it is resuming share buybacks and doubled its quarterly dividend.
Gannett said Monday that its net income fell to US$151.5 million, or 62 cents per share, in the quarter ended June 26. That’s down from $195.5 million, or 81 cents per share, at the same time last year.
“Overall, the results reflect the current state of economies here and in the U.K., strength in some sectors while (weakness) in others, a challenging environment for ad demand,” said chairman and CEO Craig Dubow in a conference call.
Gannett said its company-wide digital revenue rose nearly 13% when compared with the year earlier, to $276.2 million. This consists of standalone digital businesses such as CareerBuilder.com, which Gannett said did well despite the anemic job market. It also includes digital revenue generated by other businesses, such as newspaper websites.
But its publishing division’s advertising revenue, which counts both print and digital and makes up about half of the company’s total, fell nearly 7% to $646.9 million. Print advertising revenue has been shrinking at most major newspaper publishers as advertisers turn to free or cheaper alternatives online.
Revenue at Gannett’s broadcasting segment grew slightly to $184.4 million from $184 million. Last year’s results were boosted by $11.7 million in political advertising that didn’t happen this year.
In June, Gannett announced it is laying off 700 workers to cope with the ongoing advertising slump. This amounts to 2% of the company’s work force, Gannett’s biggest round of cuts in two years. Such ongoing cost cuts have helped the company to stay profitable for shareholders throughout the downturn.
Gracia Martore, Gannett’s chief operating officer, said in the conference call that the company currently has “no intentions of looking at further reductions, but obviously that has to be driven by each individual business’ prospects and revenue opportunities going forward.” That said, she added that the company has been adding staff in key digital areas, as well as its broadcast division.
