Inside Gannett's Q2 Profit: Don't Get Too Excited
McLean-based Gannett, the nation's largest publisher of newspapers -- including USA Today -- surprised Wall Street this morning with better-than-expected second-quarter earnings that showed a profit, after a massive loss in the second quarter of last year.
But if you thought Gannett's profit means the newspaper industry is back on track, you'd be wrong.
Gannett's big second-quarter loss in 2008 was driven by a $2.8 billion write-down in the value of its assets it had to record because, frankly, newspapers are worth less and less every day. And that includes The Washington Post.
Gannett's surprise profit in the second-quarter of 2009 came not from rising ad revenue but deep, deep cost-cutting, including hundreds of job cuts. Excluding the big write-down last year, Gannett managed to cut costs 19.7 percent between the second quarter of this year and last, which is a lot.
If you've any doubt, just look at Gannett's second-quarter revenue from its individual business units:
- Publishing (the newspapers): Down 25.8 percent (advertising was down 32 percent).
- Broadcasting (the TV stations): Down 19.7 percent
- Digital (CareerBuilder jobs-search site, other digital properties): Up substantially, from $33 million to $286 million, but still a relatively small piece of the revenue pie.
- All other divisions (Gannett's various business partnerships and ad ventures): Down 20.9 percent.
- Total for the company: Down 17.8 percent, from $1.7 billion to $1.4 billion.
In the second quarter of this year, Gannett shut down the print operations of its Tuscon (Ariz.) Citizen newspaper to save money.
Gannett told its papers earlier this month that it would cut about 1,400 jobs across the company's 80-some papers, less than a year after it cut 10 percent of its workforce.
The company also has imposed furloughs and wage freezes.
July 15, 2009; 10:59 AM ET
Categories: The Ticker | Tags: Gannett
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