Gannett ad sales still drop despite profit

MCLEAN, Va. - Profits at Gannett Co. fell 53 percent in the third quarter as the nation's largest newspaper publisher endured another big decline in ad revenue.

The earnings report, released Monday, was the latest to show how newspaper companies such as Gannett have been using cost cutting to stave off losses even as their main source of revenue withers.

Advertising sales in the publishing division of Gannett, which includes USA Today and more than 80 other newspapers, dropped 28 percent from a year ago. That follows a 32 percent decline in the second quarter and a 34 percent decline in the first.

Gannett highlighted those moderating declines. "We see revenue trends moving in the right direction in our publishing segment," CEO Craig Dubow said on a conference call with analysts.

But comparisons to year-ago figures have been getting easier. By this time in 2008, publishers including Gannett were already seeing ad declines deepen as the recession intensified.

USA Today sold 493 ad pages compared with 713 in the same quarter a year ago, contributing to a 37 percent fall in revenue at the newspaper. Its circulation also fell, because the drop in travel cut into USA Today's sales in hotels and airports. Figures to be released next week by the Audit Bureau of Circulations are expected to show that USA Today recently was supplanted by The Wall Street Journal as the top-selling daily in the U.S.

Gannett's broadcast revenue fell 23 percent to $151.5 million. The drop came largely because of the absence of advertising tied to the Olympics and political campaigns, which contributed $50 million in the same quarter last year.

Overall revenue fell 18 percent to $1.34 billion.

Gannett has been slashing its payroll costs aggressively. It eliminated 1,400 positions this summer, 3 percent of the work force, less than a year after a 10 percent cut. The company also has frozen wages and imposed unpaid furloughs for most of its U.S. workers.

These moves and falling newsprint costs helped the company earn $73.8 million, or 31 cents per share. That was down from $158.1 million, or 69 cents per share, a year earlier.

Excluding unusual items, Gannett said it would have earned 44 cents per share. On that basis, analysts expected 41 cents, according to Thomson Reuters. On Sept. 29, Gannett guided analysts to expect 39 cents to 42 cents per share.

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