Wednesday, February 02, 2011

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:

"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.


  1. Take a look at the Daily, Murdoch's new product which is crafted for the Internet, and not just a retread of the print product. I think it has a future, and shows where digital has to go.

  2. Given reported management upheaval at PointRoll, it's interesting that Martore focused so much on the role it played in slower digital growth during Q4. Supports the idea that PointRoll is the tail wagging the digital dog.

  3. Pointroll 2010 Revenue= $80 million
    Pointroll 2010 EBITDa= $40 million

    Pointroll had a bad Q4 2010 (missed big time).
    Pointroll is off to a bad start in January 2011 (according to Stacy Cunningham)

    Jason Tafler has been asked to leave.
    Sandy Dondici is battling it out with Vikram Sharma for the top post as CEO of Pointroll.

    Pointroll has had 10 people quit in last week.
    Gracia Martore and Craig Dubow are trying to downplay the departures of Tafler. They are worried he is joining Saridakis at GSI Commerce.

  4. on its own as a completely separate entity, Gannett Digital wouldn't be too bad off as a company. But as one of the only things keeping afloat the bloated albatross of Gannett as a whole, its not doing so hot. If Gannett could ever decide what kind of company it is, there could be hope for some of its parts, but in the end, they may end up having to "divide the empire" for any of it to survive at all.

  5. There are three employees that are trying to resign, but the management team at Pointroll is not returning phone calls or emails. They have basically told everyone to wait until next week when they are back from Mexico to have any calls or meetings with any of the management team.

    This place is getting worse by the minute. Everyone in Conshohocken have basically not shown up for meetings or important client calls.

    Ms. Martore or Mt. Dubow...Are you reading this? What are you doing about this?


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