Corporate reported better-than-expected financial results for the third quarter this morning.
Profit increased by 33% to $133.1 million, or 56 cents a share, from $99.79 million, or 41 cents a share, in the year-ago period. Adjusted for special items, profit totaled 56 cents a share. Revenue increased by a strong 3.4% to $1.31 billion, according to MarketWatch.
Wall Street analysts had expected GCI to earn 53 cents a share on revenue of $1.29 billion, according to a survey by FactSet.
The revenue increase was the first since the fourth quarter of 2010, when it climbed a very slim 0.4%. That's very important because revenue growth lessens the need to cut costs through layoffs and other steps to bolster profits.
Corporate cited record results in its broadcasting unit, which drew benefits from advertisers during the Olympics and through political spending. Operating revenue at Gannett's broadcasting unit rose 36% to $237 million.
Investor reaction has been choppy. Near 11 a.m. ET, GCI's stock was down 31 cents, or 1.7%, to $17.59 a share, according to Google Finance. Shares had been down 4% earlier.
This may be a case of investors taking profits after a big run-up. Year to date, GCI is still up 31% vs. a much smaller 14% increase in the S&P 500 index, a broad measure of overall stock market activity.
Here's Corporate's news release with the full results. And this spreadsheet shows quarterly revenue changes by major company division since January 2011.
CEO Gracia Martore is now leading 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. I'll be monitoring the call and will post updates as warranted.
Some highlights from the news release:
Profit increased by 33% to $133.1 million, or 56 cents a share, from $99.79 million, or 41 cents a share, in the year-ago period. Adjusted for special items, profit totaled 56 cents a share. Revenue increased by a strong 3.4% to $1.31 billion, according to MarketWatch.
Wall Street analysts had expected GCI to earn 53 cents a share on revenue of $1.29 billion, according to a survey by FactSet.
The revenue increase was the first since the fourth quarter of 2010, when it climbed a very slim 0.4%. That's very important because revenue growth lessens the need to cut costs through layoffs and other steps to bolster profits.
Corporate cited record results in its broadcasting unit, which drew benefits from advertisers during the Olympics and through political spending. Operating revenue at Gannett's broadcasting unit rose 36% to $237 million.
Investor reaction has been choppy. Near 11 a.m. ET, GCI's stock was down 31 cents, or 1.7%, to $17.59 a share, according to Google Finance. Shares had been down 4% earlier.
This may be a case of investors taking profits after a big run-up. Year to date, GCI is still up 31% vs. a much smaller 14% increase in the S&P 500 index, a broad measure of overall stock market activity.
Here's Corporate's news release with the full results. And this spreadsheet shows quarterly revenue changes by major company division since January 2011.
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| Martore |
Some highlights from the news release:
- Soft national ad demand domestically and in the UK resulted in an 8.1% decline in national advertising revenues although comparisons improved sequentially in the quarter. This reflects good news from USA Today, which accounts for much of national advertising. In the second quarter, for example, national had plunged 17% and in the first, it fell 14%.
- Circulation revenue jumped 5.6%, the first increase since early 2007. That's due to average 25% increases in print subscriptions that accompanied the rollout of digital paywalls in 69 of the company's 81 markets.
- Broadcasting's revenue soared 36% to a record $237 million.
Related: The industry's turn toward paywalls has been a hit with investors, according to this new Wall Street Journal story.
Wow, that was some drop down to $16.76!
ReplyDeleteYou have to register to listen to the CON call.
ReplyDeleteSo I registered as Frank Gannett!
2M shares repurchased.
ReplyDeleteSo after the elections, revenue is going to fall off the table, leading to the umpteenth furlough in the 1st quarter.
ReplyDeletePrint advertising still very soft. And you'll note that digital ad revenue was only up in the 4-5% range. For years, newspaper companies have been counting on a blue-sky projection of double-digit growth in digital to make up for print losses. Pretty clear that's not happening.
ReplyDeleteCirc revenue variance is not attributable so much to "paywalls," inasmuch as it is primarily due to higher rates for print customers, within a new model that seeks for the first time to place a value on content.
ReplyDelete10:39 is correct; I've tweaked the text in this post to show that.
ReplyDeleteIn the current conference call, two analysts have now questioned an increase in newspaper and other publishing expenses during the quarter, and wondering whether that will continue.
ReplyDeleteHistorically, these expense cuts have come principally through layoffs.
Martore says these expense increases are a result of investing in digital initiatives such as DealChicken.
Martore says she thinks GCI's stock is still undervalued, and so Corporate will continue a multimillion-dollar share repurchase campaign.
ReplyDeleteOne analyst just noted that the 4.7% increase in digital revenue wasn't a big improvement over the second quarter, when it grew 4.5%.
ReplyDeleteIn the third quarter of 2011, for example, digital revenue had climbed 10.3%.
It's worth noting that, as the dollar value base of digital revenue climbs, it becomes harder to maintain growth rate increases.
Yes, with a one-third increase in the subscription price of the local newspaper, shouldn't we expect "circulation revenue" to increase?
ReplyDeleteBUT, when will circulation NUMBERS be reported? Rumors have it that big hits were taken in subscriptions as the paywall/price increases began.
By the way, when do the next set of circ numbers come out?
ReplyDeleteJust to be clear . . . is the circ revenue up 5.6% because the (average) PRICE increased 25% ? If you're the NY Times, I suppose you can do that year after year. Not sure if that is sustainable across GPS.
ReplyDeletePaywalls have only been up a short time, so the cancellation rate is as yet unknown. And I believe the subscription pay periods have changed to monthly, perhaps to lessen the perceived cost.
Be interesting to see the numbers after the 1st Q (calendar) of 2013. Until then, you have to expect that the EXCUSE of diminished revenues won't be valid.
Who cares if circulation numbers took a hit? Don't you think that was expected and part of the plan? If fewer people using the content, but are paying more and revenue is up, then so what? And with more finely tuned demographic information, audiences can be better targeted which increases the value for the advertisers. So who cares if the actual number of "readers" is up or down. That's old school thinking.
ReplyDelete"Martore says these expense increases are a result of investing in digital initiatives such as DealChicken."
ReplyDeleteclearly money well spent
Clearly money well spent where there's a national deal with Sharper Image that cant even break 500 by 3:00pm. When will the doors be shut on this thing?
ReplyDeleteMary Murcko and Banikarim should not be in charge of national sales.
ReplyDeleteBring in a powerhitter to run national sales. Someone who understands how to build it out on the digital side.
Numbers were not impressive considering the Olympics and the election. This company is really going to struggle next year. They say buy outs and pensions were offset by a tax dispute being settled for the last few years. Any word on what the dispute was?
ReplyDeleteProfits up 33% . Jim, do you salary increases will follow suit, or doesn't it work that way.
ReplyDelete" .. Martore says she thinks GCI's stock is still undervalued .."
ReplyDeleteReally? More than NYT?
Did she elaborate?
Buybacks can be B.S. Reduce number of shares -- price goes up. Kind of a silly game, IMHO.
Can't get excited by this. If economy keeps dragging along, with very few jobs because taxes are so screwed up -- so does GCI. And Fed cannot keep propping up economy -- only more jobs will fix the problem.
Suddenly, Simpson-Bowles is making sense.
@6:29 p.m. said: Buybacks can be B.S. Reduce number of shares -- price goes up. Kind of a silly game, IMHO.
ReplyDeleteNo, wrong actually. You buy stocks because each share is a claim on earnings. Buybacks increase the value of remaining shares because doing so increases the claim on earnings retained by each remaining share. It is neither silly nor a game. To be sure (and fair) it is not looked upon by all members of the investment community as the best way to spend excess cash. But it is not silly. And it is not a game.
WHOA
ReplyDelete1. Where do the bought-shares go? Into treasury? Is that an effective use of capital? What about share-liquidity? Why not put the money into the pension fund?
2. If those shares were so valuable -- why don't the institutional investors, who hold 92% of GCI, buy them, on the open market? Isn't that begging the question?
3. Corporate managements have been buying up their shares for decades. There is a huge debate about this.
At bottom, when someone's bonus depends on the stock price, as Harry Truman once advised about those who "want to help," go home and "lock the meat-freezer."
Thanks, Gracia, have a nice day.
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No, wrong actually. You buy stocks because each share is a claim on earnings. Buybacks increase the value of remaining shares because doing so increases the claim on earnings retained by each remaining share. It is neither silly nor a game. To be sure (and fair) it is not looked upon by all members of the investment community as the best way to spend excess cash. But it is not silly. And it is not a game.
REALITY
ReplyDeleteWhat would be more impressive is if the CFO and CEO bought 500,000 GCI shares, with their own money.
That would show, they have real skin in the game. That would get investors going.
Not holding my breath, waiting for that to happen. I could write something sarcastic about various forms of D.C. welfare, but stating the obvious is tedious.
@1242 I guess if you're a journalist, circulation numbers do matter. By extending your reach, audience, and message - "owning" your market - wouldn't you maybe see your revenues go up, too? Or do you really think just charging your shrinking readership/viewership more for a shrinking product is a sustainable path? Maybe so - if you also continue to shrink your staff, offer fewer (or no) benefits, laugh at the idea of pay raises. Maybe so, if your community has shrinking confidence in you and sees you as a disinterested corporate 'person.' Maybe you have a point there.
ReplyDelete"Clearly money well spent where there's a national deal with Sharper Image that cant even break 500 by 3:00pm. When will the doors be shut on this thing?"
ReplyDeletelets do the math on The Chicken. 400 sharper image coupons sold x 25 dollars each = $10k. Gannett keeps half of that? if they're lucky??? so the whole thing made $5,000 dollars AT MOST!!! Across 50 cities - thats $100 a city. does that even pay there share of the electricity bill?
well 2:55. Let's just say Deal Chicken --- bad as you say --- has more revenue than 25 Gannett newspapers. How about them apples.
ReplyDelete