Gannett Q2 income falls, revenue up on higher circulation
Gannett, the media company that owns USA TODAY and 109 local news properties, said Wednesday that rising expenses sank its second-quarter net income from a year ago, but a key acquisition and higher circulation sales fueled a revenue gain.
Net income for the quarter fell 77% to $12.3 million from $53.3 million a year ago.
Per-share earnings, on an adjusted basis, were 30 cents, a penny below the 31 cents predicted by analysts polled by S&P Global Capital Intelligence. The quarter's bottom line included $23.9 million of after-tax restructuring, severance and other items, Gannett said.
Shares of Gannett, based in McLean, Va., were down 9% in late morning trading to $13.14.
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Total revenue rose 3% to $748.8 million, largely attributable to the addition of the recently acquired Journal Media Group (JMG) on April 8 and growing national digital advertising revenue.
Advertising revenue overall in the second quarter remained flat at $409.8 million. But national digital advertising revenue rose 22.4%. Excluding the recently acquired properties, it would be up 18.5%, the company said.
Circulation revenue climbed 8.2% to $287.6 million. Digital-only subscriptions rose 40%.
Gannett has been buying local newspapers and their affiliated digital properties in its strategy of consolidating the local news business and gaining digital marketing prowess that can be pitched to corporate clients and small-business owners.
During the second quarter, Gannett completed its $261 million acquisition of JMG, which owned the Milwaukee Journal Sentinel, The Commercial Appeal of Memphis and 13 other daily newspapers. In July, Gannett also bought assets of the North Jersey Media Group, including The (Bergen County, N.J.) Record and The (Passaic County, N.J.) Herald News.
Gannett also has a deal to buy digital marketing firm ReachLocal for $156 million. It also tried to buy Tronc, the news company formerly called Tribune Publishing, for $15 per share, or about $480 million, but Tronc's board of directors has rebuffed the offer. Tronc is the owner of the Los Angeles Times, the Chicago Tribune and nine other dailies.
"We are pleased to report tremendous progress in our strategy to further consolidate the U.S. publishing industry as well as make internal and acquisition investments to drive toward a digital future," CEO Robert Dickey said in a statement. "By the end of the third quarter, we expect that annualized revenues acquired in the last twelve months will be more than $800 million, and the annualized digital component of our revenues will approach $1 billion."
Dickey also said Gannett will continue to pursue "cost improvement initiatives" in its core operations and in its recently acquired assets, particularly in printing, packaging and distribution.
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In a conference call with analysts Wednesday, Dickey reiterated his plans to seek other acquisition opportunities to enlarge USA TODAY NETWORK, a news group Gannett created to unite local and national news properties and improve coordination among its large roster of journalists. "When you look at the horizon out there, we could see something between 15 to 30 (additional) titles," he said. "That's our primary focus today."
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Gannett revised its annual revenue guidance, citing “the continued successful implementation of the company's acquisition strategy.” Its year-over-year revenue growth for the second half of this year will be between 7% and 9%, it said.
Follow USA TODAY media reporter Roger Yu on Twitter @ByRogerYu.