Gannett Q1 revenue rises on Belo integration

Gannett Co., the parent of USA TODAY, said Wednesday first quarter revenue and operating income rose from a year ago following the acquisition of former competitor Belo, but quarterly net income fell as it incurred interest expenses related to the deal.

Reporting after its first full quarter of operating Belo's TV stations, Gannett said the net income attributable to the company for the three-months period ending March 30 declined 43% year-over-year to $59.1 million after accounting for $69.6 million in interest expense. But adjusted earnings per share of 47 cents beat analysts' estimates of 46 cents and were up from 37 cents a year ago.

Quarterly revenue for the McLean, Va.-based media company -- owner of 40 TV stations, 82 daily newspapers and a network of websites -- totaled $1.4 billion, a 13.4% gain from a year ago. Operating income rose 35% year-over-year to $204 million.

Shares of Gannett fell 0.33% Wednesday morning to $27.06.

The broadcasting division's revenue nearly doubled to $382.3 million as Belo's TV stations were integrated following the closing of the Belo deal in December.

"This was a terrific first quarter for Gannett, in which the fundamental changes we've been making to our business meaningfully impacted our top and bottom lines," said Gannett CEO Gracia Martore, in a statement. "An outstanding performance by our new broadcast stations fueled double-digit increases in both revenue and profitability in our Broadcast Segment."

Reflecting the continued sluggishness in the print business, publishing advertising revenues for Gannett -- still the company's largest source of revenue -- fell 4.8% from a year ago to $501.3 million.

Circulation revenue for the publishing segment dipped 1.4% to $282 million.

Revenue for the digital segment, which includes job search site CareerBuilder.com, rose 2.8% to $179.7 million.

In recent years, Gannett has sought to diversify business lines and lessen its dependence on print advertising, culminating in the acquisition of Belo for $1.5 billion. With the number of Gannett's TV stations now nearly doubled, the sharp rise in its first quarter broadcasting revenue was largely attributable to higher retransmission revenues.

Retransmission fees are paid by cable and satellite operators for the rights to include Gannett's TV stations in their TV lineup. Gannett's retransmission revenue for the quarter totaled $87.5 million, a 142% increase from a year ago.

Its NBC stations also generated about $41 million of advertising associated with the Winter Olympic Games during the quarter.

The company said bad winter weather -- and the shift of Easter to the second quarter this year -- was partly to blame for the drop in print advertising and circulation revenues. U.S. publishing advertising, including the performance of USA TODAY, fell 5.8% from a year ago.

The drop in print advertising was partially offset by the publishing unit's digital revenues, which rose 7.6%. USA TODAY and its associated businesses reported a 40.5% gain in digital revenue as they gained more readers. USA TODAY's page views were up 33% and video plays surged more than 150%, the company said.

Digital revenues at local domestic publishing operations increased by 2.5%.

Gannett's total digital revenues, including the digital segment and advertising sales generated by its 120 domestic websites, rose 6% to $375.6 million.