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NEW YORK (AFX) - Gannett Co., the largest newspaper publisher in the country, reported an 8.3 percent decline in second-quarter earnings Wednesday on stock compensation expenses, softness at papers it owns in Britain as well as higher costs for newsprint and interest payments.
Gannett, which publishes 90 daily newspapers in the United States including USA Today, the largest-selling daily, earned $310.5 million in the 13 weeks ending June 25, down from $338.6 million in the comparable period a year ago.
The company earned $1.31 per share, in line with the estimates of analysts polled by Thomson Financial and below the $1.37 reported a year ago. The company's shares fell $1.29, or 2.3 percent, to close at $55.62 on the New York Stock Exchange.
The most recent results include 3 cents per share in stock-based compensation expenses, which the company began recording this year in line with new accounting rules. Also, excluding discontinued operations, the year-ago earnings came in at $1.34.
Revenue climbed 6.1 percent to $2.03 billion from $1.91 billion a year ago, as the company consolidated results from newspaper operations in Detroit. Assuming Gannett owned the same properties in both periods, revenue would have increased 0.5 percent.
Last year the company bought the Detroit Free Press from Knight Ridder Inc. and combined it into a partnership with The Detroit News, which MediaNews Group Inc. bought from Gannett.
CEO Craig Dubow said in a statement that the company's performance "continues to reflect the unevenness of the advertising environment in the various markets we serve."
Dubow said that strength in domestic community newspapers and growth in digital operations and niche publications was offset partly by "continued soft ad demand" at its operations in Britain, where Gannett owns Newsquest, the second-largest regional newspaper company.
On a conference call with analysts, Dubow said the company was continuing its discussions about increasing its stake in CareerBuilder, a print and online help-wanted advertising business that Gannett jointly owns with Tribune Co. and the former Knight Ridder Inc., but he declined to comment further. Chief financial officer Gracia Martore said a resolution of the matter was likely by the end of the quarter.
Both Tribune and Gannett have said they're interested in exercising their right to buy up more of CareerBuilder following the acquisition of Knight Ridder by McClatchy Co. Lehman Bros. analyst Craig Huber values all of CareerBuilder at about $1 billion.
At USA Today, advertising revenue rose 0.7 percent in the quarter while paid advertising pages declined 7.1 percent to 1,107 from 1,191.
Reported newspaper advertising revenue rose 6.4 percent in the quarter, or 0.3 percent had the company owned the same properties in both periods, and 0.6 percent if the effect of an unfavorable exchange rate with Britain is excluded. Same-property advertising revenue in the United States rose 2.2 percent.
Newspaper operating expenses rose 9.8 percent in the quarter on the inclusion of Detroit, or 1.3 percent on a same-property basis and 0.9 percent excluding stock compensation costs.
Newsprint expenses, including the addition of Detroit, rose 12.2 percent, reflecting higher newsprint prices and usage. On a same-property basis, newsprint expenses rose 5.2 percent.
Interest expenses rose to $67.4 million in the quarter from $48.4 million in the same period a year ago as interest rates rose. The company also issued $1.25 billion in debt in the quarter.
Broadcasting revenues rose 3.8 percent to $205.4 million. Gannett operates 22 television stations in the United States.
In June, the company reported a 1.1 percent gain in revenues, on a same-property basis.
In a note to clients, Deutsche Bank analyst Paul Ginocchio called Gannett's newspaper results "strong," citing good costs controls. Copyright 2006 Associated Press. All rights reserved. This material may not be
Copyright 2006 AFX News Limited. All Rights Reserved.
