Gannett Co. beat expectations by reporting a second-quarter profit Wednesday of $70.5 million, or 30 cents a share, from a second-quarter 2008 loss of $2.29 billion, or $10.03 a share, that included a huge impairment charge.
The nation’s largest newspaper publisher said ad revenue at its U.S. papers fell 27.2 percent in the quarter, driven by continuing big drops in all categories, but especially in classified. The fall was a slight improvement over the first quarter of this year.
Classified ad revenue at U.S. papers, including USA Today, plunged 38.5 percent, with more precipitous drops in some categories.
Revenue from the help-wanted category, for example, dropped 60.1 percent from the year-ago period. Real estate was down 39.1 percent, and automotive off 35.8 percent.
U.S. retail fell 22.1 percent while the national category was down 21.8 percent.
Gannett said telecommunications and pharmaceutical categories “showed strong growth in the quarter,” but it was not enough to offset declines in entertainment, travel and automotive.
At USA Today, ad pages totaled 602 for the quarter compared to 831 in the year-ago period.
Reporting just days after completing another round of mass layoffs, this one cutting 1,400 jobs, Gannett said its publishing segment operating expenses in the quarter fell 72.3 percent from the year-ago period. Also helping bring down expenses was lower newsprint expenses and the mandatory unpaid furloughs the chain ordered at the beginning of the year.
CFO Gracia Martore, who is the company’s top executive while Chairman and CEO Craig Dubow is on medical leave, pointed to the company’s digital segment, where pro forma profits rose nearly 84 percent to $225 million, as a hopeful sign. There was less reason for optimism in publishing.
“In our publishing segment, while advertising revenue comparisons remain difficult, second quarter year-over-year comparisons improved versus first quarter comparisons and June was our best comparison month thus far this year,” Martore said.
Overall Gannett revenue, including its British papers, broadcast and outdoor advertising, slumped to $1.4 billion from $1.7 billion a year ago.
Second-quarter 2009 results included such special items as a pre-tax gain on its debt exchange, a charge related to workforce reduction and plant consolidations, and $47.4 million in non-cash charges related to asset impairment in its publishing segment. In the 2008 quarter, special items included an impairment charge of $2.8 billion.
Without the special items, earnings for the quarter were 46 cents a share, compared to earnings of $1.04 in the year-ago period.
MarketWatch reported that analysts polled by FactSet Research had expected a profit of 35 cents a share.