Gannett: Focus Is On Growning Digital Business, Not Margins

With Gannett’s digital revenues reliably growing by double digits for the past year, analysts on the company’s Q2 earnings call noted that the segment’s operating margins are around 25 percent. But with digital making up just 21 percent of total revenues, Gannett (NYSE: GCI) executives cautioned against expecting it to maintain those margins, as its still in the process of using the revenues from those businesses, which include rich media provider PointRoll, jobs site Careerbuilder and the recently launched local deals network Deal Chicken, for continued investment.

Meanwhile, CEO Craig Dubow said that while the company is still looking at various options for the business model around USA Today’s ad-supported tablet app, which has been downloaded 9 million times since debuting in April 2010 on the iPad, there are no changes planned just yet.

Gannett attributed the 13 percent growth in digital revenues to stronger gains at Careerbuilder. Though it did not specify just how well the jobs site performed revenue-wise, Careerbuilder reached 24.1 million uniques in Q2, a 9.8 percent increase from the same period last year. Considering the anemic job market, that seems pretty good.

Part of that growth appears to be the result of an international expansion, as Careerbuilder is now in 20 countries, Dubow told analysts during the Q2 earnings call.

Like the rest of the company, mobile is going to be a larger part of Careerbuilder’s operations, as it’s going to release an app solely for employers sometime in the next few months. The mobile app is designed to make it easier for companies to post jobs to Careerbuilder. Executives also hinted that Careerbuilder may offer a wider range of services besides employment listings. Careerbuilder is no longer just a job site, said Gracia Martore, Gannett’s president and COO, “but rather they are evolving into a true human capital solutions company.”

One of the themes of the call was what sort of “investments” Gannett would be making. For example, one analyst wondered if the company was strictly concentrating its acquisition strategy or if it would look to build up its broadcasting side by purchasing some local TV station assets.

“On the TV side, we look at everything,” Dubow said. “I think you know the priorities that we have… [we’re] not as interested in pure stand-alone… we’re looking for greater opportunity where there is a synergy that we can really bring together on it.”