Gannett Q4 income falls 12% due to lower ad sales
- Fourth quarter net income %2490.7 million%2C impacted by absence of political ads from 2012
- Print and broadcasting segments report lower income%2C while digital unit gains
- Earnings per share of 66 cents beat expectations of 65 cents
Gannett Co., the parent of USA TODAY, said Tuesday fourth quarter earnings fell 12% due to the absence of political advertising from last year's elections and a decline in print ad sales.
The fourth quarter net income attributable to Gannett totaled $90.7 million vs. $103 million a year ago. Adjusted earnings per share of 66 cents beat analysts' estimates of 65 cents but were down from 89 cents a year ago.
Shares of Gannett rose 3% on Tuesday morning to $27.33.
Quarterly revenue for the McLean, Va.-based media company -- owner of 40 TV stations, 82 daily newspapers and a network of websites -- was $1.37 billion, down 10% from a year ago.
While earnings were down, Gannett said its publishing and broadcast units' comparative results were impacted by an extra week in the fourth quarter of 2012.
Gannett has been looking to diversify revenue streams by lessening its dependence on newspapers and adding TV stations and digital properties. During the quarter, Gannett completed the acquisition of competitor Belo for a deal valued at $2.2 billion, and expanded its stable of TV stations to 40 from 23.
Now reaching nearly a third of U.S. households, Gannett is the largest independent station group of major network affiliates in the top 25 markets, with 21 stations in those regions.
Gannett's total digital revenues, including news websites and job search site CareerBuilder.com, climbed 6.1% to $390.6 million.
"Our strong fourth quarter results cap off a highly productive, transformative year for Gannett," wrote Gannett CEO Gracia Martore, in a statement. "We have fundamentally changed the composition of our company."
Excluding the extra week in 2012, the publishing segment's operating revenue fell 4.6% to $944.3 million in the quarter due to lower advertising demand and "challenging circulation revenue comparisons" brought on by the introduction of a pay-meter system for reading content online. Print advertising sales fell 5.9%, while circulation revenues declined 1.6%.
But the unit's digital revenues were 10.8% higher as digital ad sales at local domestic publishing operations grew 8.8%. Digital revenues at USA TODAY and its associated businesses rose 8.9%.
The broadcasting unit's revenue, excluding the extra week in 2012, totaled $228.2 million, down 15.7% from a year ago. The company attributed the decline to the absence of $85.8 million in political advertising during the fourth quarter of 2012. Excluding the impact of political spending in the quarter, the broadcasting unit's revenues would have been 23.4% higher, the company said.
The loss of political ads was offset by a gain in retransmission revenues, which are derived from fees paid to Gannett by cable and satellite TV providers for the rights to carry its TV stations. Retransmission revenues rose 31.5% to $38.9 million in the quarter.
Television station digital revenues were up 40.3% as digital marketing service sales grew.
Operating revenues at the digital unit, which doesn't include the news websites operated by its newspapers and TV stations, grew 4.4% to $195.6 million. Its growth was fueled by a 7.3% revenue gain at CareerBuilder.
At the end of the quarter, Gannett had about 120 domestic web sites affiliated with its local publishing and television markets, USA TODAY, Gannett Government Media and Gannett Healthcare Group.
For all of 2013, Gannett's net income fell 8.3% to $388.7 million. Revenue fell 3.6% to $5.16 billion.