Things are so bad in the newspaper industry and the economy at large that Gannett (NYSE: GCI) is suspending the monthly revenue reports, said Gracia Martore, the company’s CFO, during the morning earnings call. Later on, that drew a sharp rebuke from Barclays’ Craig Huber, who questioned discontinuing the updates during a time of such volatility. “You publish newspapers — would you stop publishing newspapers because of a series of bad news? Investors need this information.” In response, Martore said the suspension of monthly revenue reports weren’t a reaction simply to “bad news,” and said the company would consider changing its mind on that at some point.
The call began with a review of the the pain afflicting newspapers. From the dismal housing market to the global financial crisis, Gannett CEO Craig Dubow said that the difficulties in many of the markets and regions the company operates in will only accelerate the drive to build up its digital business.
Apart from the poor Q3 showing — as reported earlier, net income plunged 32 percent to $158 million ($0.69 per share) and revs slid 8.9 percent to $1.64 billion — Dubow noted that the shifts in the newspaper business and the slumping economy pushed real estate and employee classified ads down for most of its segments. That said, digital has remained a bright spot, he said. The digital segment brought in $77.5 million in revenues in Q3, compared to just $17.1 million the year before, and broadcasting’s online revenue was up 15 percent. Considering the slowdown in online ads, the double-digit growth is either proof of the company’s new focus on its web extensions, or a statement of how far behind it was last year. Perhaps a bit of both.
Asked about trends on the print side during the Q&A, Dubow said there hasn’t been much change — in other words, more and more declines. As for details about particular categories, auto ad spend, retail, packaged goods and telecom have been down significantly, with autos in the double digits.
As for acquisitions, Dubow and Martore indicated that it’s unlikely that Gannett would mainly be looking to increase its stakes in companies in which it already has holdings, as opposed to looking for new purchases. Martore “It would be a continuation of what we did this past quarter, such as buying up the controlling interest in CareerBuilder and acquiring all the stakes in ShopLocal, which we knew would result in expense synergies by aligning it with PointRoll.”