Gannett Co., America’s largest newspaper publishing company, is reporting its Q1 earnings tomorrow morning.
Just so you understand how important this company is to the media business, let’s review their assets (from Gannett):
Newspapers: 85 daily newspapers including USA TODAY, and nearly 1,000 non-daily publications.
Broadcast: 23 television stations, reaching more than 20 million households, and Captivate, which delivers news, information and ads to nearly 7,000 elevator screens.
Newsquest: Their U.K. division, which publishes 17 daily newspapers, more than 300 non-dailies, and more than 80 web sites.
Employees: About 35,000 total.
Gannett came back from a harsh $4.7 billion loss in the 4th quarter of 2008 by earning $133.6 million, or 56 cents per share during the last quarter of 2009.
In 2010, Gannett made tough cost-cutting decisions, including recently putting up the Honolulu Advertiser up for sale and possibly laying off 600 workers. They also asked USA Today and other employees to take an unpaid week off and froze wages during the first quarter. They are also utilising new technology to provide more automatically updated, aggregated content that don’t require so many staffers.
For Q1, analysts expect shares to come in at 41 cents, up from 34 cents from last year during the same quarter.
The AP has a great breakdown of what to watch for with these earnings:
From the Associated Press:
WHAT TO WATCH FOR: Just how much longer will the newspaper industry’s three-year streak of crumbling revenue last?
It didn’t end during the first three months of the year for Gannett, which owns USA Today and more than 80 smaller dailies. The company’s management told investors last month that its publishing division’s first-quarter ad revenue — newspapers’ main source of income — would be down in the high single digits.
But a drop of less than in 10 per cent marks progress. Gannett’s publishing ad revenue fell by 18 per cent in 2009’s final quarter.
A miserable first quarter last year makes for easier comparisons this year. Gannett’s publishing ad revenue plunged by 34 per cent during the first three months of 2009.
Despite the progress, Gannett seems to be bracing for further revenue erosion at its newspapers through at least the second quarter. The still-bleak outlook is the main reason Gannett ordered USA Today’s nearly 1,500 employees to take one week of unpaid leave between Feb. 28 and July 3. Most of USA Today’s workers had to take two weeks of unpaid leave last year.
Cost-cutting measures like that, along with a series of mass layoffs in recent years, have enabled Gannett to boost its profit even as its newspapers bring in less money.
The company also is getting a boost from its broadcasting division, which includes 23 TV stations. Management last month predicted first-quarter ad revenue from broadcasting would rise in the mid-teens.
WHY IT MATTERS: If newspaper ad revenue doesn’t bounce back soon, Gannett will be more likely to impose more staff furloughs or lay off more of its remaining 35,000 workers (down from 46,100 employees three years ago).
A persisting slump also could prompt Gannett to close or sell some of is newspapers. The company stopped publishing the print edition of the Tucson Citizen in Arizona last year and recently struck a deal to sell The Honolulu Advertiser.
WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect earnings of 41 cents per share on revenue of $1.32 billion.
LAST YEAR’S QUARTER: In the first quarter 2009, Gannett earned $77.4 million, or 34 cents per share, on revenue of $1.38 billion.
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