Gannett Co., the owner of 82 daily newspapers and 23 television stations, reported a jump in third-quarter profit as a decline in publishing revenue was offset by political and Olympics television ad spending.
Net income rose 33 percent to $133.1 million, or 56 cents a share, from $99.8 million, or 41 cents, a year earlier, the McLean, Virginia-based company said today in a statement. Analysts had estimated 53 cents on average, according to data compiled by Bloomberg.
Chief Executive Officer Gracia Martore is trying to get more customers to pay for its online services to stem a decline in print advertising revenue, which fell 6.6 percent during the period and contributed to a 3 percent decrease in overall publishing sales. That was offset by a 38 percent gain in TV advertising spending spurred by the U.S. presidential election and the London Olympics.
“It wasn’t what I call a standout quarter, but it was OK,” Ed Atorino, a New York-based analyst with Benchmark Co. in New York, said in an interview. “Digital was a little bit disappointing but the stock still has terrific value,” said Atorino, who recommends buying the shares.
The shares declined 0.3 percent to $17.85 at the New York close. The stock has gained 34 percent this year.
Digital sales were up 4.7 percent to $182 million, due primarily to revenue growth at jobs website CareerBuilder.com, according to the statement. Total sales rose 3.4 percent to $1.31 billion. Analysts had estimated $1.29 billion on average.
The company’s digital strategy has helped offset declines in print advertising. Gannett has started to charge readers to access its articles online, improving circulation revenue 5.6 percent in the most recent quarter.
The company has converted about half of its titles to the so-called paywall, which Martore said should boost circulation sales 25 percent to $100 million next year.
“We are seeing early successes and making great progress in positioning Gannett for growth in the digital era,” Martore said on a call with analysts today.
Gannett’s flagship newspaper, USA Today, has employed a different strategy, relying on a free model online. The publication, led by publisher Lawrence Kramer, recently underwent a design change in print and online that has attracted criticism.
Spending on newspaper advertising declined almost 8 percent in the second quarter of this year, while online ad dollars increased 2.9 percent, according to the most recent data from the Newspaper Association of America.