News / 

Gannett, Media general disappoint in 3Q

Save Story
Leer en espaƱol

Estimated read time: 3-4 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

NEW YORK (AFX) - Newspaper industry bellwether Gannett Co. reported third-quarter earnings in line with expectations Wednesday, but the company's shares slumped after reporting a 3.9 percent decline in September advertising. Shares in Media General Inc. also fell after that company missed earnings estimates. 

The reports did little to assuage investors' concerns about the newspaper business, which has been struggling with sluggish advertising and slumping circulation as readers and advertisers increasingly move to the Internet. Gannett, which owns USA Today and 89 other daily U.S. newspapers, earned $261.4 million in the third quarter, down 12 percent from a year ago, as a poor advertising market continued to soften.

Part of the decline was because of stock-compensation expenses in the most recent period as well as one-time gains and discontinued operations in the year-ago period. On a continuing operations basis, the earnings fell 4.8 percent.

The per-share earnings of $1.11 were in line with the estimates of analysts surveyed by Thomson Financial and compared with $1.13 in the year-ago period excluding the year-ago gains. Stock- compensation expenses in the current quarter amounted to 3 cents per share. Companies began reporting those expenses this year in line with new accounting rules.

A sharp 3.9 percent slump in September newspaper advertising revenues caught investors' attention, particularly since it followed a 1.8 percent decline in August and a decline of less than half a percent in July.

The numbers were adjusted to exclude the effect of currency fluctuations -- Gannett owns a major newspaper publisher in the United Kingdom -- and calculated as if the same set of newspapers were owned in both periods.

Chief Executive Craig Dubow told analysts on a conference call that the results reflected a "very challenging" advertising environment that softened further as the quarter progressed.

With Gannett's size and geographic reach, many look to its results as an indicator of how the industry is doing. The weak monthly results signaled that September would be "no savior for newspapers," Merrill Lynch analyst Lauren Rich Fine wrote in a note to investors Wednesday. Fine said the fundamentals for both Gannett and the industry were "uncompelling" and were likely to remain so for the foreseeable future.

Gannett's shares fell $1.54, or 2.7 percent, to $56.18 on the New York Stock Exchange, and shares of other publishers also weakened. No. 2 publisher McClatchy Co.'s shares fell $1.09, or 2.5 percent, to $42.04, and New York Times Co. fell 25 cents or 1.1 percent to $22.97.

By far the biggest decliner in the industry, however, was Media General, whose shares tumbled $3.20, or 8.4 percent, to $34.80 after the company reported earnings well below Wall Street's estimates.

The Richmond, Va.-based company reported net earnings of $20.6 million, or 87 cents per share, which included a gain of $11.8 million, or 50 cents per share, from the sale of several CBS television stations.

Excluding the gain, profit was $8.8 million, or 37 cents per share, below the results of $9.8 million, or 41 cents per share, in the year-ago period and also short of the 44 cents per share that analysts surveyed by Thomson Financial had been expecting.

Media General's Chief Executive Marshall N. Morton told analysts on a conference call that the company wasn't satisfied with its third-quarter performance and wants all parts of the company to focus on growth strategies and cutting expenses.

Media General's publishing unit, which includes the Richmond Times-Dispatch and The Tampa Tribune, reported a 12 percent drop in profit as revenue fell nearly 1 percent. Newspaper advertising revenues were flat with the year-ago period, reflecting an increase in retail ad sales and declines in national and classified ads.

Circulation sales fell 6 percent, primarily because of the elimination of subsidies to independent carriers at several newspapers.

AP Business Writer Zinie Chen Sampson contributed to this story from Richmond, Va. Copyright 2006 Associated Press. All rights reserved. This material may not be

Copyright 2006 AFX News Limited. All Rights Reserved.

Most recent News stories


Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the Trending 5.
By subscribing, you acknowledge and agree to's Terms of Use and Privacy Policy.

KSL Weather Forecast