The largest US newspaper chain and publisher Gannett Co Inc reported a 4 per cent drop in third-quarter revenue this week as a persistent decline in advertising sales has dogged the industry.
Gannett the publisher of USA Today, is considered a gauge for other newspaper companies, which have similarly been hurt by advertisers who have shifted their dollars to digital.
Shares of Gannett, which also owns TV stations, dropped 5 per cent to $26.23 after the announcement.
Publishing represents 63 percent of Gannett’s revenue, while broadcast currently makes up 16 percent.
To counter print declines, Gannett has rolled out a digital pay model at its papers and has made a big bet on local television. Digital revenue jumped 12.4 per cent to $376.1 million.
Gannett chief executive Gracia Martore said during an earnings conference call that the company’s strategy was never meant to be a short-term plan, referring to efforts to reap more revenue from digital and broadcast TV.
“It is a smarter, more strategic way of running our business that positions us to weather challenges as they come, like the secular downturn in publishing or a tepid economy.”
Gannett almost doubled its broadcast holdings to 43 stations from 23 with its agreement to buy Belo Corp for $1.5 billion. Belo shareholders approved the transaction in the third quarter, and Gannett is waiting for government approval before the deal closes.
Publishing revenue fell 3.6 per cent to $858.1 million on a 6 per cent slide in advertising revenue. Circulation revenue dipped 0.6 per cent. Gannett started charging for digital content a year ago at its domestic U.S. newspapers.
At Gannett’s broadcast TV station divisions, total revenue fell 15 per cent to $198.5 million because of the absence of Olympic or political advertising recorded in the third quarter last year.
Total revenue fell to $1.25 billion versus analysts’ estimates of $1.27 billion. Year-to-year revenue was $1.3 billion.
Net income for the quarter totalled $79.7 million, or 34 cents per share, compared with $133.1 million, or 56 cents per share, for the same quarter last year.