Amid hiring slowdown, digital stuck in neutral

[Digital's share of overall quarterly revenue; dollars in millions]

In the emerging online world, CareerBuilder and Gannett's other digital businesses should be the company's fastest growers, contributing an ever-increasing share of overall revenue.

But the past six quarters of financial results show the segment has been mostly stuck in neutral, underscoring the company's continued dependence on traditional revenue streams -- especially U.S. newspaper advertising.

Corporate blames digital's performance on the recession, which sharply curtailed hiring among employers. That hurt sales at digital's big kahuna, jobs website CareerBuilder, because companies didn't place many help-wanted ads.

The impact of lost CareerBuilder revenue was especially pronounced in the fourth quarter. Digital segment revenue totaled $158 million, down 7.2% from $170 million in the fourth quarter of 2008.

The segment's other businesses are PointRoll, ShopLocal, Planet Discover, Schedule Star and Ripple6. Their revenues have been combined into a separate digital segment in the company's financial reports since the third quarter of 2008.

Consider this: Digital's share of overall revenue was just 10.6% of Gannett's total $1.485 billion in fourth-quarter revenue. That share hasn't changed much since the fourth quarter of 2008, when it was 9.8%. (See chart, above.)

In other words, publishing and broadcasting revenue -- especially newspaper advertising -- still represent nearly 90% of all Gannett revenues. If those continue falling, and digital doesn't pick up the slack, the company is going to be hard-pressed to maintain the bottom line: profits.

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