Gannett Co. expects to take goodwill and impairment charges totaling as much as $5.2 billion, in stunning testimony to the wreckage wrought on the newspaper industry by the global financial meltdown.
The nation’s largest newspaper company, reporting its fourth-quarter results Friday, said the non-cash charges are expected to total in the range of $5.1 billion to $5.9 billion on a pre-tax basis and $4.5 billion to $5.2 billion on an after-tax basis.
“Our anticipated non-cash impairment charges stem from recessions in the U.S. and (Britain) and the resultant impact on business conditions and the broad-based downward pressure on equity share values,” Gannett Chairman, CEO and President Craig Dubow said. “The impairment charges, while significant, will not impact operating cash flow, our ability to pay down debt or the way we will operate the company going forward.”
In reporting its preliminary Q4 results without the expected write-down, Gannett said its profits slid 36 percent to $158 million, or 69 cents a share, for the quarter ended Dec. 28. That compares with a profit of $245.3 million, or $1.06 a share, in the year-ago quarter.
Total operating revenue fell to $1.7 billion in the fourth quarter compared to $1.9 billion a year earlier on “significant pullback in advertising demand as the quarter progressed across our publishing and broadcast businesses.” Strong presidential election year political advertising was not enough to offset the decline.
Newspapers and other businesses in Gannett’s publishing segment accounted for $1.4 billion of operating revenue — an 18.6 percent fall-off from the year-earlier quarter.
Ad revenue of $963 million plunged 22.7 percent from Q4 2007.
The ad revenue decline was driven by a 17.7 percent decline in U.S. publishing properties, and a 29.3 percent decline, measured in pounds, in its British chain, Newsquest.
At its U.S. Community Publishing business, classified ad revenue plummeted 30.7 percent.
The big three categories fell steeply: real estate by 32.9 percent, help-wanted by 46.5 percent, and automotive by 25.7 percent.
At USA Today, ad revenue was 18.5 percent lower in the fourth quarter compared to last year. Paid advertising pages totaled 788 compared with 1,045 in the same quarter of 2007
Total publishing operating expenses were fell 10.9 percent to $1.2 billion on cost controls that were somewhat offset by higher severance expenses. Newsprint expenses were 2 percent higher in the quarter, with 26.2 percent increase in prices more than offsetting a 19.2 percent decline in consumption.
“Our results for the quarter reflect the unprecedented turmoil in the economies of both the U.S. and Britain, and in the financial markets,” Dubow said.