Leading media and marketing company Gannett Co. (NYSE:GCI) reported earnings for its first quarter that were lower than the previous year due to slower advertising activity and expenditure on strategic investments, although the Broadcasting and Digital segments delivered good growth in revenues, according to the company’s statement.
Net income was $68.2 million ($0.28 per share) compared to $90.5 million ($0.37 per share) in the same quarter last year. Total operating revenues were down 2.6 percent to $1.22 billion, compared to $1.25 billion a year earlier.
Gracia Martore, president and chief executive officer, said:
“We are pleased with the progress we are making on the strategic initiatives underway across the company that will position Gannett for success in the digital age. Key highlights from the first quarter include launching a new all-access, all-platform content subscription model in six markets, rolling out Digital Marketing Services in our top markets and paving the way for important new advertising and marketing revenue opportunities through the expansion of our USA TODAY Sports Media Group.”
Gannett completed approximately $20 million of the $65 million of planned 2012 strategic initiative investments, according to Martore. The company expects to see returns on strategic investments as the year progresses, “and for many years to come,” she added. “We are squarely focused on leveraging the iconic brands, local connections and financial strength that differentiate our business to implement our growth plan while returning $1.3 billion to investors by 2015.”
First quarter results, according to Martore, were impacted by spending on strategic investments and “advertising softness,” particularly during January’s industry-wide slowdown. Advertising activity reportedly picked up in February and March.
Martore said both the company’s Broadcasting and Digital segments “delivered strong growth” of 8 percent and 7 percent, respectively. “Digital revenue growth of 13 percent in our Publishing segment underscored the success we are achieving in establishing the robust content and advertising platforms that will power our renewed growth.”
Total operating cash flow of the company was $204 million, not including special items, while free cash flow was $148 million. The company incurred special charges for facility consolidations and workforce restructuring in addition to investments in strategic initiatives.
On a segment-wise basis, publishing advertising revenues fell 8.4 percent, publishing circulation revenues were down 1.8 percent, while broadcasting revenues were up 7.5 percent. Digital revenues posted a growth of 6.8 percent.