The pattern of swinging to profitability mostly on cost containment served Gannett (NYSE: GCI) well yet again in Q4, but advertising and classifieds remained bleak and weak during the period despite signs the bottom may have passed. The digital side was negatively affected by the dismal performance of classifieds, specifically employment ads. Gannett’s digital revenues fell 7.2 percent to $157.7 as rising dollars at rich media unit PointRoll and the e-commerce-based ShopLocal failed to balance out the downward spiral at jobs site CareerBuilder, which Gannett now has a majority stake in.
Publishing ad revenues were down about 18 percent to $790.8 million, worse than the company-wide revenue decline of 14.4 percent to $1.4 billion. Net income was $133 million, reversing the $4.7 billion loss in Q408.
Taking a closer look at the publishing segment, which includes the McLean, VA.-based Gannett’s flagship, USA Today and 84 pubs in the community newspaper division, classifieds took the biggest hit. But it wasn’t the only area of to take a hit. Classifieds were down 21.9 percent in total, with the U.S. off by 21.9 percent and the UK’s Newsquest division drop of 23.5 percent. In the U.S., autos were down 16.7 percent, real estate fell 28.4 percent and unemployment plunged 38.3 percent.
The publishing segment wasn’t all bad news. On the plus side, legal classifieds gained 14.5 percent. Also, the community papers division was up 12 percent.
While Gannett took a $56 million charge on pre-tax workforce restructuring costs ($36.1 million after-tax or $0.16 per share), reduced expenses in Q4 outpaced the revenue declines. Specifically, operating expenses were $1.2 billion — 82.4 percent lower than they were in Q408. But as has been pointed out many times before, Gannett, and other newspaper publishers that have spent the past year slashing costs left and right, will have a difficult time keeping that up, as there are only so many printing plants that can be closed or staffers that can be laid off.
For now, Gannett has once again implemented one-week without pay furloughs for Q1, though it is not company-wide. Only community newspaper staffers are affected, as USAT and broadcast employees are not required to participate in the mandatory unpaid leave in Q1.