Here's the transcript of this morning's call with Wall Street analysts on the first-quarter financial report.
[Updated at 4:15 p.m. ET.] Gannett's stock just closed at $19.97 a share, down $1.06, or 5%, as investors expressed disappointment with the quarterly report. Overall markets, meanwhile, were up strongly. Both the S&P 500 index and the Dow Jones Industrial Average were up 1%.
[Updated at 4:15 p.m. ET.] Gannett's stock just closed at $19.97 a share, down $1.06, or 5%, as investors expressed disappointment with the quarterly report. Overall markets, meanwhile, were up strongly. Both the S&P 500 index and the Dow Jones Industrial Average were up 1%.
This appears to be LAST year's Q1 transcript!
ReplyDeleteLOL it is. I didn't notice that after it asked me to sign in I just left.
DeleteSorry about that; I've now inserted the correct link.
ReplyDeleteThis is a very interesting exchange; here's the first part:
ReplyDeleteWilliam G. Bird - Lazard Capital Markets LLC, Research Division
I'm just curious, where are you at in terms of the number of paying digital subs?
Gracia C. Martore - On a digital-only basis, Bob is here. Just a quick comment: What I think that we are very pleased about on the digital-only sub is the fact that we're seeing folks who are beginning with digital-only, then upselling them to digital-plus of Sunday newspaper. So really, the digital-only number now is a net of all of those upsells that we're attaining, and I think we're in the 50,000-plus range, Bob, but...
Robert J. Dickey - Yes, when you take into consideration that a number have upgraded that started at digital -- digital-only, that right around 54,000 digital subs, about 50,000 today are digital-only. So we've upgraded just over 4,000 actually. That's about 8% conversion rate at this point. We're doing a number of -- as Gracia pointed out, we have a number of new sales channels that are new to us because of this new approach to business, and we're doing A/B testing, introductory offers, a number of things to see how we can best resonate with these new, younger consumers. And we're very happy that about half of them right now to date are under 45 years old.
Kannan Venkateshwar - Barclays Capital, Research Division
So I have a couple of questions. First is on the Publishing front. Obviously, you have the benefit from the price increase last year. But with 50,000 digital-only subs, that's clearly not an additional source of revenue. It's not a new revenue line that you're adding. As the price increase cycles through into late this year and early next year, we should expect the effect to wear off. So what's the longer-term plan on the Publishing side once the price increase wears off?
Gracia C. Martore - Well, perhaps, we haven't explained it as clearly as we should. Those digital-only subscribers are paying subscribers. So they are incremental to -- in 2012, we spent all of our time, frankly, rolling out 78 locations, simply moving them to the full-access content model. As we said at the end of 2012, we really didn't focus on digital-only -- picking up new digital-only subscribers. We were, first and foremost, in 2012, focused on taking the existing subscribers we had and moving them to this new model. We have subsequently gained an additional 50,000 -- actually, a net 50,000 because we gained more than that because some of those folks have been new digital-only subscribers and then converted to digital-only plus Sunday. So those are incrementally new subscribers. And as I said in our prepared remarks, our plan is that we are going to see that number increase five- to sevenfold by the end of 2013. So those are all brand-new subscribers.
And here's the second:
ReplyDeleteKannan Venkateshwar - Yes, that's true, Gracia, but the broader question is you're still losing subscribers on the print side. So overall, when you look across the whole subscriber base, the 50,000, and even if that continues to grow, it's not enough to offset what you're losing on the print side. So to that extent, we should expect, I guess, to some extent, the effect to wear off next year.
Gracia C. Martore - Well, if you assume that the only thing we are doing around our subscribers is the price increases that we did last year, that would obviously be the case because you would cycle those pricing increases. But there are a number of additional new platforms, and Bob, why don't you talk a little bit about that, that we are introducing, and we see more opportunities to impact pricing with new ways and additional content that we're going to provide. But, Bob, why don't you...
Robert J. Dickey - Certainly. And that's very important because, as noted earlier, we have just over 1.3 million digital active subscribers as well, on top of the 50,000 are digital-only. So our current subscribers are clearly performing and using our content across all the various platforms. Midyear, we will be launching native iPhone app followed by Android and iPad. We believe that product enhancement will be very well received by our subscribers. Later in the year, we will be relaunching a new desktop experience for all of our subscribers, another opportunity. And we have gone through extensive training with our editors to create new content following a broadcast model of really day-parting, and day-parting that content against the various platforms, taking in mind how the consumer uses those various devices. And we're seeing a number of product improvements on existing products across all of our markets. That is a major focus. So the combination of all of those will lead us to an opportunity to look at what pricing leverage that will bring to us later in this year and certainly, early in 2014.
What the hell is "day-parting"? If someone at my site uses that word with a straight face I may have to walk out the door. Meanwhile, we have ANOTHER round of social media training: "How to get your story on Facebook" and so forth. Note to corporate: First we need time to report and write the story, take the photos and shoot the video before we can get it on Facebook.
DeleteWalk. You won't be missed.
DeleteYou've never heard of the term "day-parting"? Geez, I hate corporate cliches more than anyone but day-parts have been in the media world for 100 years. It's a TV term now used a lot in digital. C'mon people!
DeleteAll that jargon. All that obfuscation. Well, that's what Gannett brass is trained to do: to use gibberish to beat down the skepticism and forestall the inevitable death of this company. The smart money pulled its chips off the table on something that the suited monkeys couldn't explain away: quarterly revenue growth of a paltry 1 percent. Gannett hit that goal by selling more Twinkies and gum in its vending machines. What, the world wants to know, is it doing to GROW the business? Clearly, "new platforms" aren't enough to draw eyeballs and paying customers. Settling for mediocrity and promoting profitability over product quality all these years has reduced Gannett to digital roadkill.
ReplyDeleteVery good points. What this company needs is worthy content. All those platforms won't buy you growth without product. Our only product is content.
DeleteAnd Mr. Bob says, there will be "product enhancement."
DeleteOuch! Publishing took a hit: "Advertising revenues were $526.5 million in the first quarter compared to $551.4 million in the first quarter a year ago, a decline of 4.5 percent."
ReplyDeleteAlso interesting: Dickey confirmed that the relaunch of new U.S. community publishing websites won't take place until later this year -- as much as two years (or more) after the project was first announced. That's an awfully long time in Internet years.
ReplyDeleteLeading from behind yet again.
DeleteHe made millions last year. This is like a government construction site to him. One year, two? More money and golf trips on company time.
DeleteNot surprised....our execs always sound out-of-touch and under-informed on these calls. And the analysts have a great way of calling them on their bullshit.
Delete$526.5 million - $551.4 million = about $25 mill.
ReplyDeleteSay 90k per employee for bennies, taxes, and salary, and you get around 275 employees needed to be laid off to make up for the shortfall.
Hooray! That's only around 3 peeps per property!
Or just shut down the worst performing property.
DeleteThey could just stop overpaying for digital properties.
DeleteOr about 100 fat farts at Usa Today.
DeleteI will never understand why GPS let go of the people that had direct contact with the customers and brought in revenue. Why is the loss of revenue acceptable to them?
ReplyDeleteSold off most of the day; down $1.50 in after-hours from yesterday's close. Looks like Mr. Market isn't fazed by corporate's techno-babble.
ReplyDeletePerhaps they aren't explaining it very well, Bob can you? Bob? LOL
DeleteBob? Bob? Are ya there Bob? Help me....I don't have answers to there questions!! Someone PLEASE! I'm just the CEO...
DeleteThese material points…
ReplyDelete• Advertising revenue drops 4.5%.
• Publishing income down 3.1% to $60.1 million.
• A $27.8 million profit boost via a TAXgain.
• Circ revenue pop of 8.6% from a one-time, non-repeatable roll out of metered web access.
• On-going terminations, buy-outs
• Matore’s quip about buying more TV stations (in an online world)
• Investor reaction resulting in a 5% drop
• And, a still struggling economy about to get hit by another new Obama tax, this one for Internet sales that will put even more pressure on smaller, medium size advertisers…
all well explains why Gannett’s transformation, well, isn’t that transformative, nor strong enough to give confidence its sustainable anytime soon.
Lets forget about the product for a minute, which, for e most part, is second to third rate fluff and naive execution. We have a CMO and new sales types and still cannot sell or market worth a shit. Why not cut management overhead, spinoff TV and maybe Career Builder and let the publishing company survive or thrive on its own? The company is dying. Time to harvest and gene splice the surviving parts and let each operate independently. Warren Buffett would probsbly buy up the bulk of papers and run them with smart people.
ReplyDeletegracia, that would be the right thing to do as you ride off into the sunset of board seats for big bucks.
Nobody, least of all Buffett, is going to pay more for these properties than they're worth to Gannett.
DeleteAnd local TV franchises will be just as worthless soon enough.
Berkshire's interest in newspapers is highly unlikely to survive Buffett. In any event, it is sheer fantasy to suppose that Berkshire's ultimate strategy, if it is profitable, will be distinguishable from Gannett's.
DeleteLots of intelligent comments here, nice change of pace from usual sniping.
ReplyDeleteThe GCI stock, with its approximate 4% dividend, enjoys strong support in a 0% world, and Wall Street knows that management will do whatever necessary, as long as they can, to meet numbers and put investors first, but if and when interest rates rise, the lack of plan and growth will make dividend raising impossible and the party will be over for the stock.
Still, with the strong paying down of debt, the company might make a nice takeover target at some point. That's why the sale of property is curious. Property could be sold to pay off PE investors in on a takeover, so selling off assets now seems to indicate management wants to hang around as long as possible, and Gracia doesn't want to "run off into the sunset of board seats for big bucks."
At any rate, newspaper journalists may see the company has bought them more time, but they should not be lulled into a false sense of security.
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DeleteNot only is the 4 percent payout tempting, so is the possibility of a sale or breakup. I don't see much of a future in this rollup. No synergy between any of the parts. The only thing they have in common, other than being news/information sites, is that they share a bloated and unnecessary corporate headquarters. If Gannett were more like a Bloomberg or Reuters, I could see the value in its name and offerings, but "Gannett" produces nothing and the name stands for nothing. Better to sell the individual papers and stations to buyers who will invest in them and build back their credibility before HQ runs them into the ground. They should at least give it a shot in the name of shareholder value.
ReplyDeleteThe name does too stand for something! What about "It's All Within Reach"? What about that, huh?
ReplyDeleteThe only thing that Gannett's "within reach" of is being delisted from the NYSE.
ReplyDeleteAt least six layoffs today at Cincinnati's Enquirer Media.
ReplyDeleteWhat department? Who?
ReplyDeleteI'm not thrilled with all the moves GCI is making from a journalistic standpoint, and there are still some reasons for apprehension on the financial front. But to say this earnings report "disappointed investors" doesn't make much sense to me, Jim.
ReplyDeleteEarnings per share were 37 cents, which beat estimates. Yeah, the stock dropped 5 percent, but the two days prior it went up almost 5 percent. Seems much more like investors cashing in on their profits to me.
Gannett has a beta of 2.49, which means its more than twice as volatile as the overall market. Paying any attention to its daily gyrations is kind of silly when its statistically guaranteed to have little correlation to the market. I think much more relevant is over the last year, shares are up 50 percent.
I think its great this blog is here to provide some critical analysis for us, but at times, I feel like its a little too eager to be negative instead of giving more sober (and useful) analysis.
That's a fair point.
DeleteThanks. And I do want to re-iterate that appreciate the information this blog provides.
ReplyDelete