Monday, October 15, 2012

Earnings | GCI seen reporting Q3 rev, profit jump; broadcasting and paywalls are likely bright spots

Corporate reports third-quarter financial results this morning, and Wall Street's expectations are bullish.

Company-wide revenue is forecast to rise 2.3% to $1.29 billion from $1.27 billion in last year's third quarter, according to average ratings by nine media stock analysts surveyed by Thomson Financial. Profits are expected to soar 20.5% to 53 cents per share from 44 cents a year ago, the survey says.

By contrast, second-quarter revenue fell 2.1% to $1.3 billion on an 8.1% drop in newspaper and other publishing advertising. EPS was 51 cents, down from 62 cents the year before.

Any revenue increase in the third quarter would be striking. Corporate has reported lower quarterly revenue results for the past six consecutive quarters. Indeed, the last time GCI's top line rose was in the fourth quarter of 2010 -- and then, only by a hair: 0.4%. (Spreadsheet shows quarterly totals by division since January 2011.)

A 10 a.m. call
Getting revenue growing again through an increase in advertising sales or from other sources is crucial to the company's long-term prosperity. If revenue continues falling, the only way to shore up profits is through more cost-cutting.

CEO Gracia Martore will lead management in discussing the results with analysts during a 10 a.m. ET conference call. That conference will be webcast; details on how to listen in. Look for the earnings news release by about 8:30 a.m. ET, before stock markets open.

The broadcasting division will once more save the day as the 23 TV stations rake in more political advertising in the final months of the general election.

But circulation revenue also will be front and center as more of the new U.S. newspaper paywalls come into play. Management has already reported average 25% increases in subscriptions as the paywalls were erected and bundled into existing and new print subscriptions earlier this year.

By the middle of last month, the community newspaper division had rolled out paywalls to 69 of 81 dailies, Martore told a Goldman Sachs conference. That's already helped reduce circulation revenue declines; in the second quarter, revenue fell just 0.6% vs. 1.8% in the first quarter.

Watching any USAT progress
Also of special interest will be USA Today's results, which will reflect the first full quarter overseen by Larry Kramer. He was named publisher in May in a bid to turn around the struggling brand. Gannett-wide national advertising, largely from USAT, plunged 17% in the second quarter from a year before. That followed a 14% decline in the first quarter.

More recently, USAT launched a newly redesigned website and print edition. But that came in mid-September, the final weeks of the quarter, so is unlikely to have much of an impact on the overall results.

Investors have been bidding up GCI's stock in anticipation of a strong quarter. GCI has jumped 25.1% in the past three months vs. a much smaller 5.3% gain in the closely watched S&P 500 index, a broad measure of overall stock market activity.


  1. Keeping my fingers crossd that management has not snared defeat from the jaws of victory.

  2. Today's buzzword phrase to listen for: continued cost containment. Translation: more layoffs and furloughs; shitty raises.

  3. Layoffs and furloughs is yesterday’s news 7:01 as dropping employee health plans, as rewarded by the Affordable Care Act ($2,000 penalty per employee versus paying 5x more for employee plans) is where the really money is at in the future.

    Get ready.

  4. News release on the financials is out. Revenue up year-over-year, but advertising revenue for publishing remains down. Broadcast, digital, circulation revenue up.

  5. 56 cents vs. .44 q/q, might get a bounce to $20 soon over expectations from political season spending:

  6. Correct, 8:03 AM, I'd be shocked if the Evil Empire kept health care for its slaves after ACA kick in.

    MUCH cheaper to pay the penalty, or tax, whatever the Supremes say it is.

  7. Pension fund probably OK. For now.

  8. ACA - quality down, lines longer. Nice.

  9. Self-insurers are mostly beyond reach of ACA (except to the extent it drives inflation and cost-shifting).

  10. Print advertising down ..again.
    No surprise there.
    Broadcsting up,guess where the growth will be and guess where the cuts will be.
    Not rocket science.

  11. The one thing Gannett knows how to do is make money. There have been ups and downs, of course, but profitability hasn't really been an issue since the days when USA Today lost money year in and year out.

    Of course, decent profit margins weren't enough to save jobs during the great recession. Gannett is a ruthless company, despite some of it touchy feel initiatives it occasionally rolls out. It used to recession to get rid of far more people than it had to -- and some of those people were pretty damn loyal and talented.

    Bottom line ... if you want to work for a company with integrity and true concern about its employees and news products, Gannett is not for you. If you simply want to work for a company that stays afloat by underpaying/overworking its worker and throwing them overboard as soon as profit margins or stock prices dip, then you'll love Gannett.

  12. Jim.....

    Your comment suggesting "Any revenue increase in the third quarter would be striking" is a bit dramatic. While it's definitely a 180 from recent past performance, guidance provided for 3rd quarter expected revenue growth. I would have figured a miss in this area to be more striking.

  13. 11:53 AM - Sorry, but what constitutes "decent" profit (to the extent it is controllable) is entirely the prerogative of the shareholders — who you will recall were voting with their dollars and their feet during the period you refer to.

    The hallmark of "a company with integrity" is that it is a prudent fiduciary. The alternative is a failing company.

  14. 12:26 I meant relative to the last several quarters of revenue declines.

  15. Gannett still sinking enjoy the temporary increase in revenue. Next year it's going to be a difficult comparison. Company won't save much from the buyouts and restructuring.

  16. Wait for next year when Broadcast has no Olympics, no Election and just a few stations with one night of Superbowl. It will suck compared to this year and with that many Broadcast workers will get chopped! After all, Lougee has to make more money to keep the pohick bugle afloat!


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