Earnings | Revenue devil is in digital's details

Table shows quarterly revenue by major segments; figures in millions:

Gannett Bloggers are debating the company's ability to prosper on the still-small revenues from its non-print Digital Segment portfolio of companies, which includes jobs site CareerBuilder and ad services subsidiary PointRoll. In the fourth quarter, those revenues rose 5.2% from the prior year, to $166 million.

"We still have the problem of financing a newspaper chain with paltry digital revenues,'' Anonymous@1:39 p.m. writes today. "Yes, the digital revenues are increasing, but they were only $165.8 million in the last quarter. You can't run a newspaper chain with that amount of money, and without print."

Throw in digital revenues from other properties -- principally, the U.S. community newspapers, broadcasting, and USA Today -- and company-wide digital totaled $271 million during the quarter, Monday's financial report showed.

Yet, even that combined figure was only 18.5% of the quarter's total $1.46 billion in revenue -- a share that stayed relatively unchanged throughout the year.

Questioning slow growth
What's more, the Digital Segment's revenues grew just 5.2% in the fourth quarter from the prior year, a slower rate than the 10.3% in the third -- a potentially worrisome sign. Wall Street keeps a close eye on digital revenues, because they are the engine that's supposed to be driving the company forward.

Indeed, during Monday's conference call on the quarterly financials, SeekingAlpha's transcript shows, analyst John Janedis of UBS investment bank said:

"Your Digital Segment revenue slowed a little bit, maybe to a level not seen since the employment recession. Can you talk about where you're seeing maybe at the non-CareerBuilder properties and your outlook for the segment there? And also not sure if I missed it, but can you tell us the growth rate at CareerBuilder for the quarter?"

Here was CEO Craig Dubow's reply:

Dubow

"Yes, just starting with the digital properties, we saw PointRoll up overall for the year, and that was in double digits and felt very good about that. We had also very, very nice increases in our ShopLocal activities across the board. I think, the other key area that we talked about in our prepared comments, John, was really in the publishing side as well as in TV, where those sites in fact because of DataSphere as well, are really helping us garner greater opportunity here. So we are seeing some nice results from all of that. But in particular, the domestic Publishing has some nice results."

COO Gracia Martore then said:

"Just to add to what Craig said, at CareerBuilder, we saw our revenues on a network basis up in the high single digits. And one other comment with regard to PointRoll in the fourth quarter, as you may recall, in December of 2009 there was a fairly significant uptick in national advertising spending and in campaigns and PointRoll was a huge beneficiary of that, as was USA Today to a much lesser extent. And so, we had a very, very difficult comparison at the PointRoll level in December, particularly. So I think that is part of the reason why I think we saw a little bit more subdued results at those properties than we had otherwise seen."

GCI's not alone
An alert Gannett Blogger points out that few in publishing have cracked the digital code. Only today, for example, Advertising Age noted that People magazine had scored one billion pageviews last month -- "a first for the magazine and, it's likely, a first for all magazine websites."

But Ad Age writer Nat Ives says, "People's prize also poses a question, as a matter of fact, because its website contributed just 12% of People's overall ad revenue last year. Shouldn't one billion pageviews help a website comprise a bigger piece of the ad sales than 12%?"

Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.