Gannett reports net income of $23 million, beating Wall Street estimates
Gannett, the media company that owns Paste BN and 109 local news properties, said Thursday increasing digital revenue and higher digital advertising prices helped drive third-quarter net income that surpassed Wall Street expectations.
The McLean, Va.-based company reported net income of $23 million, compared to a net loss of $23.9 million in the same period a year ago.
On an adjusted basis, Gannett reported a profit of 16 cents, beating the 11 cents expected by analysts polled by S&P Global Market Intelligence.
Gannett's stock rose nearly 3%, or 25 cents, to $8.86 in morning trading.
Total operating revenue of $744.3 million fell 3.6%, from $772.3 million in the prior-year quarter, and fell short of Wall Street expectations of $763 million. Revenue included a $1.4 million negative impact from hurricanes Harvey and Irma, the company said.
The results included a $20.1 million tax benefit, which was partially offset by $15.4 million in after-tax severance, and other costs for acquisition, asset impairment and facility consolidation, the company said.
“We delivered strong year-over-year earnings growth in the third quarter, despite challenging print advertising trends," said Gannett president and CEO Robert Dickey in a statement accompanying the company's earnings release. "Profitability gains were driven by improved digital performance, most notably at ReachLocal, as well as the continued realization of synergies from our 2016 local market acquisitions and other cost-saving initiatives.”
Revenue from ReachLocal, a local online marketing firm acquired by Gannett in a deal that closed in August 2016, contributed revenue of $93.8 million, up 9% from the previous quarter. Digital advertising revenue, which rose 4.1% to $102.9 million, partially offset declining print advertising and circulation revenue.
Total publishing revenue fell 10.3% to $660.3 million as print advertising revenue declined 18% to $244.8 million, compared to the year-ago quarter.
Circulation revenue fell 7.4% to $264.4 million. Digital-only subscriptions rose 60% compared to the previous year, totaling about 312,000.
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Last month, Gannett became a majority investor in Grateful Ventures, a Phoenix-based media company specializing in food websites and blogs. Upcoming planned cross-promotion efforts throughout the Paste BN NETWORK aim to increase holiday traffic to Grateful Ventures' holiday food site Thanksgiving.com and its other sites.
That investment, Dickey said, "provides us with an increased presence in attractive lifestyle categories.”
Founded in 2014, Grateful Ventures draws an online monthly audience of about 8.5 million to its sites, FoodBlogs.com social media hub, and Food Blog Stars network (sites include Budget Bytes and Divas Can Cook).
Grateful Ventures is expected to expand into new lifestyle content including beauty, health and fitness, and parenting, with a goal of leading to increased advertising opportunities and event sponsorships.
And, on Monday, the Paste BN Network initiated a network-wide brand refresh, bringing a new look to print and digital products with the aim of creating a visual connection across its local and national brands.
Separately, John Zidich said Thursday he plans to retire April 3, 2018, as president of domestic publishing and publisher of Paste BN. Zidich's role at Gannett has involved oversight of the company’s 109 local media properties and Paste BN.
“John’s career has been full of many outstanding accomplishments because he always believed in our purpose and that our customers and employees come first," Dickey said. "A number of us owe John a great deal for his wise counsel and mentoring over the years."
Zidich will work with the company over the next several months to ensure a smooth transition, according to Dickey.
Follow Paste BN reporter Mike Snider on Twitter: @MikeSnider.