Gannett reports higher revenue and earnings due to surge in broadcast revenue
But publishing revenue continues to decline as talk continues that media company will follow others and spin off publishing division
Strong growth in broadcast revenue led to increased income at Gannett, the publishers of USA Today. Broadcast revenue grew 87.9 percent, thanks mostly to the acquisition of new stations. The company also claimed $300 million in cash from its 26.9 percent stake in Apartments.com, sold by Classified Ventures in April.
“Our very strong second quarter results reflect the outstanding progress we’ve made in our strategic transformation, positioning Gannett to compete effectively in today’s multi-media landscape<” Gracia Martore, president and chief executive officer, said. “Our expanded broadcast portfolio drove overall company margin expansion during the quarter, as we continue to transform Gannett into a higher margin, higher growth business. In fact, our Broadcasting and Digital Segments generated approximately two-thirds of our Adjusted EBITDA during the quarter. However, the pressure on national advertising across media impacted results for our Publishing and Broadcasting Segments in the quarter.”
Gannett acquired six London Broadcasting Company television stations, all in Texas, paying $215 million in an all-cash transaction in May.
Gannett’s publishing results were less encouraging. Publishing revenues in Q2 totaled $867.4 million, a 4.1 percent decline from the same quarter last year. Ad revenue fell 5.7 percent, and circulation revenue fell slightly,. down 0.6 percent versus the same quarter of 2013. Digital revenue rose 6.9 percent, however. The company said it hoped for better national advertising in the fall (mid-term elections likely to drive ad dollars).
Talk will continue about whether Gannett will follow the Tribune Company and News Corp and spin off its publishing properties into a new company. Tribune Publishing is set to spin off from Tribune Company on August 4, loaded with debt, thanks to its parent company. Recently CRT Capital Group estimated the new company’s worth at $635 million, ten percent less than Tribune stated it, no doubt due to the games going on with the spin off.
Gannett may actually make a better target for a spin off than a sale as, in addition to USA Today, the company has a large regional portfolio. But for now the company has sought to dampen such talk, even as the company invests more heavily in broadcast.
“The board and I are always focused on what ultimately is going to create the most shareholder value in the intermediate to long term…so we would never rule anything out,” Martore told Barron’s.
Gannett stock is up over 4 percent today on its earnings news.