Anonymous@2:39 p.m. posted a good summary, spotlighting an important power shift involving Senior Vice President Chris Saridakis (left), the company's chief digital officer. At 40, he is the youngest member of the powerful Gannett Management Committee."What I heard from that conference is that ad losses at GCI widened in January and February, and there was a sharp loss of revenues at the flaghsip USA Today,'' @2:39 wrote in a comment. "The losses of 23% of retail ads, 32% national, and 46% classified ads represents an increase in the losses for the last quarter of 2008. Dubow skirted the question of layoffs, and failed to answer the question if more is in store. The impression I got from the session is that GCI is putting a lot of effort in whatever Saridakis is doing, and that he is the new bright star for GCI, replacing USAT."
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Interesting how there were "sharp losses" in USA TODAY ad revenue just days after Gannett announced a huge increase in on-line USA TODAY hits.
ReplyDelete24 was the number I heard, Jim.
ReplyDeleteWow, Jim, you are usually really up on this stuff, but I'm worried you were out taking photos of cats while the call was rolling. Here's what I heard from on the Midwest efforts, and on consolidation in general. If you want to replay, it's at the 1 hour, 24 minute marker of the call:
ReplyDeleteDickey says the company is looking at 25 papers that are candidates for printing consolidation. Also, the company is looking at a "very aggressive opportunity to regionalize within the (news) division" starting with the four papers in the Interstart group, which he said can be used as hubs for a "wide range of activities and duties" from copy editing to sales and marketing to printing and distribution sites. He also said classified departments at some papers may be consolidated into call centers. "The number one thing at this point in time is regionalization," he said.
3:41 pm: I welcome -- and need -- contributions from everyone on days like today: I cannot do it all myself.
ReplyDelete3:41 I also heard the discussion about consolidation, but it wasn't clear to me whether Dickey was talking about consolidations already done, or new ones being put together. Is it your recollection he was talking about what has already been accomplished, or of what is yet to come?
ReplyDeleteActually, this is quite a depressing analyst meeting. All thing considered, the only hope came from the digital segment. I think USAT is in trouble. To be down so much is unconscionable. I like Mr. Moon, but at what point does he take responsibility for these declines.
ReplyDeleteDidn't they hire a new head of sales last year after they kicked Jeff Webber out?
Do you think with this bad performance, someone on this GMC team will be fired? Has anyone ever been fired from the GMC?
Dickey was clearly speaking about consolidation to come, including 25 additional sites where printing may be consolidated, and an unknown number where classified sales will be grouped together. But one of the best portions of the call came at 1:18 on the tape, when an analyst lambasted the company for how it is handling its debt structure, for its decision to continue paying a dividend, and for its future earning prospects. Martore's response: we're working on some stuff, but I can't tell you about it.
ReplyDeleteIs it a coincidence that about 1 p.m., in the middle of the teleconference that the stock was dancing around $2.60 and then plunged 20 cents?
ReplyDelete5:04 Of course there was a coincidence. Note that the stock market rallied after the FED decision was annnounced, yet GCI sagged. If the Fed announcement had not been made, it would have ended up down, IMo. It was a very dismal report that Dubow and Martore headed up. There was not a single positive I heard.
ReplyDeleteCall highlights [for what it's worth]:
ReplyDeleteStill a huge amount of growth left in Career Builder.
CB passed Monster in 2006.
HR Consulting program being sold around the recruiting process to target accounts.
Social networks are real. Have FB partnership.
Employment will come back in 2010.
In newspapers in first two months of 2009:
Retail declined 23%
National declined 32%
Classified declined 46%
Overall... just bad.
Circulation revenue up 1% YTD.
National: volatility tremendous.
3 of 17 categories at USA TODAY up... total ad inches down 30-35% at USA TODAY.
Circ. down substantially at USA TODAY. Revenue better per copy, but not overall.
Dickey: 25% of costs in production and circ. excluding newsprint.
[basically getting out of printing and delivery... making this someone else's problem]
21 newspapers being printed by another newspaper.
25 production sites [notice he does not address these locations as newspapers] being reviewed for combination or printing at other locations.
Regional toning centers... saving $3.2MM annually.
Tuscon: will continue publishing beyond 3/21 pending sale.
GMartore: Newprint: prices have declined during Q1. Domestic prices are down. There is an E/W price divide. We expect newsprint prices to fall throughout 2009.
[Newspapers are Information Delivery Vehicles. Gannett is moving away from talking about them in terms of delivered copies to your door.]
Martore: Capital spend: $100MM instead of $150MM... mostly at Career Builder.
Debt: May 2009. $565 due. Won't have issues with paying.
Dividend action was a prudent step to maximize flexibility.
We will focus on paying down debt.
_________
Questions: unusual balance sheet... 80% of debt comes due in 2011 and 2012. What is the plan to retire this debt? $100MM in cash is given up in the dividend. How can we have confidence that you can get through this? Will EBITDA go up that much by next year?
GM: Clearly, we have a number of initiatives that we are working on right now that I can not talk about.
We are not focusing on increasing EBITDA and that will get us through this.
The dividend is what it is now, and we will see where it is in the future.
Cal, Nev, Ariz, Florida... question: These markets are significantly impacted. In fairness to Detroit, Michigan fits into this as well. That does not change the fact that we monitor it.
CD: We will continue to size our expenses to our revenue opportunities.
Bob Dickey: Consolidation on printing and distribution processes. Trying to keep this momentum moving forward.
Regionalize around Indy and have more hubs. Everything from copy editing to sales and marketing. #1 thing is regionalization.
Can we consolidate call centers?
[these are very small cost savings in terms of total dollars... probably give up more than gain in these silly expense savings channels... but they do justify management jobs.]
USA TODAY using partners to pick up delivery.
1/3 of our printing agreements have been renewed in order to save money at USAT.
Newsprint... using lighter basis weight. Shifted to narrower webs.
[more one time savings initiatives... after year one, they don't matter.]
CD: We are always looking for ways to save money.
Anything is up for consideration. Free in on-line has become a challenge. We are going to pursue every option. We are taking a hard look at opportunities.
[lots of CEO speak here... making no sense.]
Craig Moon: Detroit piece... when we looked at the opportunity... how do you re-size... how do you keep the products in place. We have to look at consumer demand and advertiser demand.
90% of ad revenue was happening on 3 days. The other days didn't hold a lot of revenue. There is not going to be a big change there.
Single section... 32 page broadsheet on other days going forward. We brought in clients as partners instead of as vendors. March 30 day 1.
What about carryover savings from next year on head count?
CD: As an overall, we are basing things on revenue... at the end of the day, we want to put out the right product. Like in Graphics. Yes it creates savings. But in the high quality and the new technology. We are first going to look for those technologies. We don't have specific revenue amount. This will end, at some point.
Our goal is to be properly positioned when we come out of this. I think that will really position us.
GM: Headcount: we did a number of actions in 2008 on the FTE front. In the last 2 quarters... we saved $250MM in the last two quarters in FTE count. Newsprint will be coming down as well. Q1 will not be any significant impact on newsprint [because we bought so much paper].
Are there any papers losing money?
CD: Let me start with Detroit... that model is not going to be deployed throughout. We may be able to leverage some opportunities from what we learned here. We can apply that to other scenarios.
GM: Lions share of our newspapers enjoy great margins. Detroit is having to deal with worst economy in the U.S. So that newspaper has not performed well. And USA TODAY does not have the high margins of some of our other papers.
On Detroit... if you are a subscriber, you get a different looking web presence.
Craig Moon: All subscriptions that we have sold over the last four months had access to a replica edition on-line. We found that existing newsprint readers using this replica product.
CD: Local ad dollars are hard to track. Everything that we are doing... we are going to find opportunity. The product really counts.
[Cutting it short...]
DL: Affiliation agreements... NBC through 2016... the model...
$100MM unfunded pension... future contributions will be dependent on a lot of things including FTE.
[Over... abrupt.]
[general tone didn't sound so great... a lot of uncertainty... but some lift with lower newsprint pricing and continued expense focus. Whether that keeps up with loss of revenue remains to be seen. The qualifier on newsprint (lower) pricing is that it is incremental to the upside regardless of price. Newspapers always charge more for space that the paper that is used to print the ad. So, I guess you have to temper that lower cost with the fact that fewer pages will be printed. As the products get smaller and less useful, the advertising dollars tend to dwindle even in a better economy. If Gannett is positioned to handle an upswing in the economy, the thought is that fewer advertisers and readers will be at the table to give the product any incremental revenue lift. Gannett won't start suddenly hiring more people if the economy gets better, and if they do, those new hires will be cheaper and will not get a pension.]
-Scott
If you want a good way to track the direction Gannett's heading, just visit the corporate career site and see the job postings for publishing, corporate, USAT, etc. The consolidations will become crystal clear when you follow the money, which in this case is staff resources.
ReplyDeleteJim, you might consider posting Scott's review of yesterday's call in a separate post today. It's thorough, accurate, and might help to dispel some of the rumors that are rampant on this blog from folks who don't know what they're talking about. Nice job, Scott.
ReplyDelete