Gannett earnings up 84%, beat analysts' estimates
Corrections and clarifications: An earlier version of this story mischaracterized Gannett CEO Gracia Martore's comments related to newspaper sales.
Gannett, the parent of USA TODAY, said Tuesday second-quarter earnings rose 84% from a year ago, boosted in large part by a massive increase in revenue from the broadcasting division.
The earnings come two full quarters after the company started operating the stations it acquired from its former television competitor, Belo. Gannett said the company's net income for the three-month period ending June 29 rose to $226 million. Adjusted earnings per share of 67 cents beat analysts' estimates of 64 cents and were up from 58 cents a year ago.
Overall quarterly revenue for the McLean, Va.-based media company — owner of 40 TV stations, 82 daily newspapers and a network of websites — totaled $1.46 billion, a 12% gain from a year ago.
Shares of Gannett closed up 4.8% to $33.24.
The broadcasting division's revenue rose to $398 million, an 88% increase, thanks to much higher retransmission revenue and political advertising across all of Gannett's stations. Retransmission fees are paid by cable and satellite operators for the rights to include Gannett's TV stations in their lineups.
In a call with analysts, Martore said the company's performance represented "a very strong follow-up to our terrific first quarter."
In recent years, Gannett has made moves to diversify itself to lessen its traditional dependence on newspaper revenue. That culminated in its $1.5 billion acquisition of Belo, which closed in December. The number of Gannett's TV stations nearly doubled with the deal.
"Our very strong second-quarter results reflect the outstanding progress we've made in our strategic transformation, positioning Gannett to compete effectively in today's multi-media landscape," Gannett CEO Gracia Martore said in a release. "Our expanded broadcast portfolio drove overall company margin expansion during the quarter, as we continue to transform Gannett into a higher margin, higher growth business."
The print business continues to be a challenge. Publishing advertising revenue, still the company's largest source of revenue, dropped 5.7% from a year ago to $530.2 million. Circulation revenue for the publishing segment declined 0.6% to $277.8 million.
An analyst on the call noted that Gannett had bought a lot of broadcast properties and asked, "Are newspapers for sale and at a price would you be interested?"
Martore replied, "Yes, there are newspapers for sale. Look, what this company is focused on and laser focused on as I said before is creating additional strong shareholder value. We are open to any opportunities that will do that …We are always evaluating the best ways to continue to meaningfully increase value for both the near and the long term."
Martore said the decline in print advertising was due in part to a "still not particularly robust economy" and a negative impact of World Cup advertising, some of which was diverted to social media. Martore noted that she expects national advertising for USA TODAY and TV to improve in the third quarter.
Revenue for the digital segment, which includes job search site CareerBuilder.com, rose 4.2% to $194.4 million.
Total industry revenue from digital channels — advertising, circulation, digital marketing services, and other — rose 5.8% in 2013 and accounted for 12% of total industry revenue, according to an April report from the Newspaper Association of America.
Gannett generated more than $300 million in cash flow during the quarter from operations as well as proceeds from the sale of Apartments.com.