Lower broadcasting revenue hurts Gannett

Gannett Co., the largest newspaper publisher in the United States, said Friday its fourth-quarter profit dropped 31 percent on a decline in broadcasting revenue and weak newspaper ad sales.

But Wall Street had expected slightly lower earnings per share, and Gannett shares edged up.

The McLean, Va.-based publisher of USA Today said earnings sagged to $245.3 million, or $1.06 per share, for the three months ended Dec. 31 from $353.5 million, or $1.51 per share, a year ago.

Excluding a non-cash impairment charge, profit declined to $1.28 per share from $1.47 per share a year earlier.

Analysts polled by Thomson Financial expected net income of $1.27 per share — a penny below adjusted expectations.

Gannett said its 2007 earnings also were down compared to a year ago because the 2006 fiscal year and fiscal fourth quarter were both one week longer.

Quarterly revenue fell 12 percent to $1.9 billion from $2.2 billion in the 2006 fourth quarter. The company blamed the fall on lower advertising revenue, including a significant drop political advertising during the non-election year of 2007. Analysts expected sales of $1.98 billion.

Gannett's newspaper revenue was $1.7 billion. Advertising revenue was $1.2 billion, down 12 percent from $1.4 billion a year ago. The flagship USA Today newspaper saw advertising revenue fall 16.7 percent in the fourth quarter. Overall newspaper circulation revenue declined 7 percent to $313.2 million.

The drop in political advertising revenue was especially pronounced in the broadcasting unit, where it fell 22 percent to $212 million.

"In the fourth quarter, we faced a challenging advertising environment, tough comparisons, which included an extra week in 2006 and the relative absence of election-related advertising in broadcasting," Chairman, President, and Chief Executive Craig Dubow said in a statement.

For all of 2007, Gannett earned $1.06 billion, or $4.52 per share, down from $1.16 billion, or $4.90 a share, in 2006. Revenue fell to $7.4 billion from $7.85 billion in 2006.

Gannett, like other media companies, has suffered a downward slide as advertising wanes, especially real estate and job ads that have slowed with the housing slump and decelerating economy. In November, the company said it would trim 45 jobs at USA Today, or almost 9 percent of the newsroom staff.

In December, Gannett announced plans to print a lifestyle magazine geared toward wealthy readers four times a year. It also announced a joint venture with Tribune Co. in October to expand a network of local entertainment Web sites.

Aside from USA Today, Gannett publishes 85 other daily newspapers and nearly 1,000 other publications.

Gannett shares rose 12 cents to $37.05 in late morning trading Friday.