Gannett Co. Inc. on Monday reported a better-than-expected rise in quarterly revenue on strong advertising sales at its television stations and as more subscribers paid to read its newspapers online.
Gannett, the largest newspaper chain in the United States, posted revenue of $1.52-billion (U.S.) versus $1.38-billion in the year-earlier period, and topped analysts' expectations of $1.49-billion, according to Thomson Reuters I/B/E/S.
Part of the increase in revenue had to do with an extra week in the quarter, compared to the same period last year.
Investors sent shares down 5.3 per cent at $18.79 in morning trading, likely stripping out the extra week and seasonal political advertising from the results.
"It was not like they blew out expectations," said Evercore analyst Doug Arthur. "It's a little bit of a mixed bag with an extra week."
Morningstar analyst Jocelyn Mackay pointed to Gannett's publishing assets as a potential culprit for the selloff.
Even with an extra week, which allows the company to sell more advertising, ad revenue at its newspapers fell 2 per cent. "That is a concern," said Ms. Mackay.
The industry has suffered through several years of punishing ad declines, with no reversal in sight.
Gannett said publishing ad revenue fell 5.6 per cent in October, 7.4 per cent in November and 6.7 per cent in December.
Like many newspapers, Gannett is getting more of its readers to pay for news to help defray a severe loss in advertising revenue. It started charging readers to gain access to some of its content online, a trend that is now commonplace among newspapers.
At its 82 U.S. newspapers, which include USA Today, The Arizona Republic and The Des Moines Register, circulation revenue jumped 24 per cent, including contributions from digital.
At its 23 TV stations, revenue climbed 46 per cent to $280.2-million because of an influx of $91.2-million in political advertising.
Net income totalled $103-million, or 44 cents per share, compared with $116-million, or 49 cents, for the same period last year.
Excluding special items, earnings came to 89 cents per share compared with 72 cents in the same period last year. Analysts were expecting EPS of 88 cents.