Gannett, the publisher of USA Today, is considered a bellwether for the newspaper industry, and the news isn't good.
Wall Street investors seem to focused on the six percent drop in ad revenue at the company's publishing division and the fact that results were slightly below expectations.
Not only is Gannett trading lower, off more than three percent, but its results are also dragging on the Washington Post Company , now down about a percent and the New York Times Company , off three and a half percent.
Gannett is facing cyclical and sector challenges. The newspaper business isn't getting any healthier: in addition to the 6 percent drop in publishing ad revenue, circulation revenue dropped 4 percent. On today's earnings call the company's Chief Operating Officer warned that rising newsprint costs would pose a challenge for the company this year.
Digital revenue is the newspaper business' great white hope and Gannett continues to eke out gains there ... growing digital to 19 percent of its total operating revenues. But much of that digital business has nothing to do with its core business of newspapers—the company's digital division, CareerBuilder, grew 5.2 percent, while the whole company's digital revenue grew 10 percent.
It wasn't all bad news. Gannett's Q4 profit jumped 30 percent on cost cutting and stronger results from its broadcast TV channels. Its 23 TV stations reported a 27 percent increase in revenue thanks to a flood of political TV ads.
The company reported a profit of $174.1 million up from $133.6 million a year-earlier, and revenue inched a fraction of a percent higher to $1.46 billion. The company's wider gross margins this quarter come from a 4.2 percent drop in operating costs.
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