Gannett Drops as Second-Quarter Results Fall Short of EstimatesBy
Acquisitions bolster revenue, while rising costs hit earnings
Journal Media purchase, national digital ads deliver growth
Gannett Co., the largest U.S. newspaper publisher, fell the most since February after second-quarter results missed analysts’ estimates as higher costs outweighed revenue gains from acquisitions and national advertising.
The McLean, Virginia-based publisher of USA Today and dozens of other newspapers posted profit of 30 cents a share, excluding some items, according to a statement Wednesday. Analysts had projected 33 cents, the average of estimates compiled by Bloomberg. Revenue rose 3 percent to $748.8 million, missing estimates of $775.8 million.
Gannett fell 8.3 percent to $13.17 at 11:55 a.m. in New York after dropping as low as $13.13. That was the biggest intraday decline in more than five months.
The publisher is trying to boost digital revenue as readers move online and old sources of revenue, like print ads, disappear. A key piece of Gannett’s strategy is to buy more newspapers to dominate local ad markets. During the quarter, Gannett completed the acquisition of Journal Media Group, which published the Milwaukee Journal Sentinel and 14 other daily newspapers. It agreed to buy the North Jersey Media Group, owner of the Record in Bergen County, and ReachLocal, a digital marketing firm that serves local businesses, for $156 million.
Gannett has said it will forge ahead with its hostile takeover bid for Tronc Inc., the owner of the Chicago Tribune and Los Angeles Times. Gannett made two offers -- one in April for $12.25 a share and a second in May for $15 a share. Both included the assumption of debt, which was $385 million as of March 27. Tronc’s board rejected the bids as too low and not in shareholders’ best interests.
Net income for the quarter fell to $12.3 million, or 10 cents a share, from $53.3 million, or 46 cents, a year earlier. Results included $23.9 million in restructuring and severance costs.