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Yahoo Helps Boost Digital At Local Gannett Papers; USAT Digital Revs Jump

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The growth rate for Gannett’s local newspaper websites’ ad revenues in Q2 have held steady with last year’s results, thanks in part to the sales alliance that brought publisher into the Yahoo (NSDQ: YHOO) Newspaper Consortium a year ago. Overall, Gannett’s company-wide digital dollars remained strong with a 13 percent gain, even as profits and general revenues declined, a sign of the race to have interactive offset the falling print business in the U.S. and UK.

Here’s the basic rundown from Q2’s publishing segment, which saw revenues decline 4.9 percent to $977.1 million:

Digital advertising rose across retail, national and classifieds rose 12.2 percent in the quarter thanks to Yahoo and an increased emphasis on cross-platform sales efforts, the company said. U.S. Community Publishing digital revenues increased 8.9 percent — roughly the same as it was last year. Digital revenues at USA Today were 22.9 percent higher.

Total advertising in the publishing segment fell 6.5 percent. In the U.S., advertising revenues dropped 7.2 percent and at Newsquest, the company’s operations in the UK, ad dollars were 10.3 percent lower, due to the soft ad market and the weakening economy.

The Digital Unit, which houses rich media ad provider PointRoll and jobs site Careerbuilder, posted 12.6 percent higher revenues with $173.4 million in Q2. The segment’s operating income, which was not broken out according to the individual companies, was 31.6 percent higher and totaled $36.2 million. Operating cash flow was $43.8 million compared to $35.5 million a year ago, an increase of 23.6 percent year-over-year.

Profits: While Gannett’s took a $8.8 million hit due to 700 layoffs in the U.S. Community publishing segment that were handed down in June ($5.4 million after-tax or $0.02 per share), the drop also reflects the increasing difficulty in balancing industry-wide print losses and the inability of digital gains to offset it. Right now, digital makes up 21 percent of the McLean, Va.-based company’s revenues, including its broadcast operations. Both broadcast and print are also dealing with a sputtering economic recovery and a much cautious ad environment, which are only adding to Gannett’s many challenges.