Gannett reports sharply lower revenue, earnings in Q4 report
Gannett said the company will close on its acquisition of Journal Media Group next month, but forecasts continued same property declines in advertising and circulation revenue in the new year, expects digital revenue growth
The publisher of USA Today and other daily newspapers, Gannett, today reported its year-end fourth quarter earnings. The newspaper company – which is the result of the splitting of the old Gannett into two separate companies, one concentrating on broadcast and named TEGNA, the other newspapers and retaining the Gannett name – reported lower revenue due to continuing falling print advertising.
Advertising revenue fell nearly 13 percent in Q4 to $419.5 million, compared to $481.5 million in the same quarter a year ago. For the full year, ad revenue fell 12.5 percent. Circulation revenue also fell 8 percent in Q4 and was down 4.5 percent for the year.
Some of the revenue decline was associated with lost sales from Cars.com and CareerBuilder, which with the split in the company went with the broadcast side, TEGNA.
In the fourth quarter of 2015, Gannett net income fell nearly 70 percent to $20.4 million from $66.9 million in the same quarter of 2014. For the year, income was down about 31 percent.
Gannett will next month close on its acquisition of Journal Media Group, the publisher of the Milwaukee Journal Sentinel and the papers it gained with JMG was formed from the media property swap with Scripps. Gannett said the cost of the acquisition will be approximately $280 million, net of acquired cash.
“Our two most important strategic initiatives, consolidation of the local publishing industry and driving digital growth through organic and external investment, are both progressing favorably,” Robert J. Dickey, president and chief executive officer, said. “The acquisition of JMG, which is subject to shareholder and regulatory approval, is expected to close in March and our digital presence continues to grow as we broke through the 100 million unique digital visitor barrier in the later part of the year, placing us squarely into a select group of leading news and information providers in the digital media space.”
Going forward it will be harder to do quarter against quarter comparisons unless Gannett chooses to reveal those numbers as the addition of the JMG newspapers will add revenue to the earnings reports. Whether they add net income will be the big question.
“Without taking into consideration the impact of the JMG acquisition, we expect revenue trends to improve over 2015 driven largely by growth in digital,” Dickey said. “We expect advertising revenues to decline in the 5%-7% range and circulation revenues to decline in the 2%-4% range. EBITDA margins will likely stay under pressure in the short term and improve sequentially throughout the year as we continue to offset incremental public company costs, the earnings impact of declining revenues, higher non-cash pension expense, and lower contributions from CareerBuilder, with ongoing cost efficiency programs and growth in digital revenue.