Gannett just disclosed in a regulatory filing that advertising revenue at its biggest newspaper fell 11% in the first quarter compared to a year before -- unexpected news, because it indicates that strengthening sales during December apparently petered out.
The new disclosure, coupled with USAT's recent bad news on circulation, underscores the ongoing challenges that lay ahead for Publisher Dave Hunke, who just entered his second year as the paper's chief executive. What's more, the filing came the same day The Wall Street Journal reported a 25% pop in ad revenue for the same three-month period. Competition between the two national dailies has recently grown more fierce.
USA Today is Gannett's largest daily by circulation, and its most visible brand. As such, it is the only newspaper for which Gannett breaks out separate financial results, although with limited detail. Overall, GCI publishes 100 dailies in the U.S., Guam and the United Kingdom.
Today's filing, called a 10-Q report, only reveals the rate of change in advertising revenue; it doesn't give dollar amounts. The 11% decline is the smallest since the third quarter of 2008, company documents show. (See table, below.) Still, it is surprising and unwelcome news because Gannett had said in its last report that "fourth quarter comparisons were the best of the year and in December, USA Today ad revenues were nearly even with 2008."
The new 10-Q with the U.S. Securities and Exchange Commission shows that momentum didn't last.
Big advertising discounts?
Until now, Gannett had only provided first quarter page comparisons, in its general earnings release on April 16. Paid advertising pages totaled 544 vs. 527 a year before, it said at the time. Higher page counts amid falling revenue points to significant discounting. Such discounting would reflect USA Today's declining circulation; only last week, the paper said its circulation fell nearly 14% as of March 31 from a year ago.
The first quarter revenue decline was steeper than the 8% drop in Gannett's overall newspaper ad revenue for the period. As with the companywide figures, the continuing USAT decline is all the more worrisome because comparisons are against the first quarter in 2009, when the economy was in the grips of the worst recession in decades.
USA Today's latest results included advertising sales for its website. Overall ad demand "continues to be impacted by the soft travel and lodging markets,'' the 10-Q report says. "Several categories at USA Today improved during the quarter including automotive, technology and retail. These revenue gains, however, were more than offset by weakness in the travel, entertainment, financial, telecommunications and pharmaceutical categories."
The Wall Street Journal's 25% jump in ad revenue came in parent News Corp.'s quarterly earnings report this afternoon. Responding to the WSJ's growing threat, USAT recently targeted a trade campaign at the News Corp. flagship, in hopes of ginning up more ad sales.
The following chart shows quarterly advertising trend at USAT; Gannett didn't disclose a rate change for the fourth quarter:
Earlier: Documents reveal USAT's truly steep ad decline
[Image: today's paper, Newseum]