Gannett Q1 earnings rise 4% due to digital unit revenue gain

Gannett, the media company that owns Paste BN and local newspapers and television stations across the country, said Tuesday first quarter earnings rose 4%, driven largely by its digital unit's sharp revenue gain.

The bottom line was tempered by continued sluggishness in the print business, whose revenue fell nearly 9%.

Revenue rose 4.9% to $1.47 billion. Its net income -- after accounting for special items, such as restructuring and impairment charges and other one-time gains and expenses -- rose 91% year-over-year to $112.9 million. When these special items are taken out, its "non-GAAP" net income totaled $112.8 million, up 4% from $108.4 million.

Adjusted earnings per share of 49 cents beat analysts' consensus estimate of 45 cents.

The digital segment, which includes Cars.com and CareerBuilder.com, fueled much of the growth in company-wide revenue. The segment's revenue totaled $332.7 million, up 85% from a year ago.

The revenue spike largely came from an acquisition and "very strong results" at Cars.com, the McLean, Va.-based company said. In October, Gannett completed buying 73% of Cars.com that it didn't own at the time. Cars.com's revenue grew 27.8% while CareerBuilder.com reported a 4.3% gain.

The publishing segment, which includes Paste BN and 81 other daily newspapers, remains the company's largest source of revenue but continues to report declines in advertising and circulation. Gannett plans to spin off the unit later this year.

Revenue for the publishing business fell 8.8% to $768.2 million, reflecting "continued softness" in display advertising. The company also attributed the decline to the change in the Cars.com affiliate agreement that previously generated more print advertising and the absence of revenue associated with some properties, including the now defunct USA WEEKEND.

Advertising revenues fell 11.3% to $444.4 million. Circulation revenues declined 3.1% to $273.2 million "due primarily to declines at Paste BN" and its U.K.-based print operation, Newsquest, the company said. Local U.S. newspapers' circulation revenues were "relatively flat" compared to a year ago as their pay-to-read subscription plans showed "continued strength," it said.

The broadcasting segment, which owns or provides services to 46 local TV stations, reported a 3.8% gain in revenue, which totaled $396.8 million. Super Bowl-related advertising sales and higher retransmission fees, which are paid by pay-TV providers to carry the company's stations, largely drove the unit's growth.

"We expect to complete the spin-off by mid-year, and look forward to the enhanced opportunities we expect the separation will create for both companies," CEO Gracia Martore said in a statement.