Gannett Earnings Call: Decline Due Cyclical Downturn; Online Initiatives Making Us Better Positioned


imageGannett (NYSE: GCI) CEO Craig Dubow began addressing the company’s dismal preliminary Q4 earnings on its analyst call insisting that the company was the victim of a cyclical — not secular — financial turmoil. He then touted recent initiatives designed to better position the newspaper publishers for a return to more positive economy, including reducing home delivery for its Detroit papers the acquisition of social media company Ripple6 and the rollout of local/national web hybrid ContentOne. The first phase of ContentOne was centered on news coverage of President Barack Obama’s inauguration; the second one will be focused on sports, Dubow said, possibly alluding to Super Bowl Sunday.

— CareerBuilder revs declined, on falling job ads and diminished upsell opportunities, though traffic jumped over 20 percent.

— Debt $3.8 billion in long-term debt. $500 million of debt will be due in June, said CFO Gracia Martore. Looking ahead, digital is typically the weakest in Q1 and CareerBuilder is expected to incur some additional promotional costs.

December’s mixed bag: Where employment upsells are still important in the mix, it still looks tough, Martore said in a response to a question from Wachovia analyst John Janedis. Surprisingly, considering the poor state of display, banner ads and Newsquest automotives actually gained online revenues. Martore: “Overall, we’re pleased where we ended up on the digital side. CareerBuilder will be in investment mode in Q1, with the benefits of that showing throughout the rest of the year, as those expenses show reduction over time as well.”

— Similar to what the NYTCo (NYSE: NYT) said it was experiencing during its earnings call the day before, the financial market meltdown has hit Gannett with a large unfunded pension liability. Martore expects ’08 will end with a liability ranging from $575 million to $590 million. She cautioned that payments will be spread over the next few years and that Gannett has no required contributions for ’09.

4,000 jobs cut: Total headcount covered by the $56 million writedown was tied to severance payments to 4,000 staffers who let go during the quarter, Martore said, though she said she was not absolutely certain about that number.

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