Gannett’s Digital Revs Continue Double-Digit Rise

The improving advertising outlook helped Gannett (NYSE: GCI) ease the declines in publishing, especially in the classified area in Q4, as digital revenues provided the main engine for growth in that segment. Digital revenues at flagship paper USA Today were particularly strong.

The results appear to validate the McLean, VA-based publisher’s increased focus on finding ways to mine local advertising and marketing revenues in general, and USAT’s major restructuring around digital and mobile that began last year.

Specifically, revenues at the roughly 80 papers in the U.S. Community Publishing division’s digital dollars were 15.8 percent higher in Q4. Digital ads at USAT jumped 19 percent in the quarter.

Even during the worst parts of the recession, Gannett’s separate interactive units had performed consistently well, except for its holdings in jobs site, Careerbuilder. In Q4, Careerbuilder was able to benefit in the thaw in unemployment ads, joining rich media provider Pointroll and social media marketing unit Ripple6 on the positive side of the balance sheet.

But digital has not been totally immune to the deep cost cuts Gannett has pursued the last few years as it regained profitability in the depths of the recession on the back of massive layoffs. Last May, Gannett decided to streamline its digital holdings by folding Ripple6 into Pointroll.

Gannett still doesn’t outline the results for each of its digital properties. Pointroll and Ripple6 aren’t even mentioned in the Q4 release. So, with that in mind, the total digital segment’s operating income was $37.8 million, 45.3 percent higher than the fourth quarter last year. Operating cash flow was $45.2 million, a 31.3 percent increase over the same period last year. Operating revenues were 5.2 percent higher in the quarter and totaled $165.8 million compared with $157.7 million in 2009.

For the full year, total digital revenue was about $1 billion, which represents about 18.1 percent all of Gannett’s revenues and an 8 percent gain.

Costs were also held down at digital, as operating expenses were $128.1 million, 2.8 percent lower than last year on a comparable basis.