Bellwether Gannett (NYSE: GCI) started the media earnings parade off with a bang today, posting strong numbers across the board. A 15.5% jump in advertising revenues at Gannett's flagship USA Today highlighted a spending rebound that bodes well for rivals New York Times (NYSE: NYT), Dow Jones (NYSE: DJ), and E.W. Scripps (NYSE: SSP), all slated to report earnings later this week.
Most of Gannett's financial measures flirted with double-digit growth. Net income grew 9.3% to $354.4 million ($1.30 share) on a 9.9% rise in revenues to $1.87 billion. Operating cash flow growth clocked in a shade less than 10%, as did revenues in the newspaper segment, which aside from the USA Today include more than 100 daily and 500 non-daily publications. However, broadcasting revenue growth from the firm's 22 TV stations did manage to break double digits by rising 10.3%, bucking the trend as well as my theme.
Newspaper circulation ticked up a modest 1.1%, but the real story was in advertising. After restrained ad spending finally showed signs of life last quarter, Gannett delivered what President and CEO Douglas McCorkindale called "industry-leading ad revenue growth." On a pro-forma basis, local, national, and classified advertising grew 5.9%, 10.4%, and 12.2%, respectively.
While Gannett is best known for the print medium, it has also developed quite a portfolio of online properties. The firm operates 110 domestic websites, including USAToday.com, which saw traffic surge 54% last month and is now the fastest-growing top-tier news site on the Web, according to Nielsen.
Gannett and other media companies will not sit idly by as more and more job seekers focus their search online (though traditional classified employment listings have strengthened). CareerBuilder.com, a collaborative venture between Gannett, Tribune (NYSE: TRB), and Knight-Ridder (NYSE: KRI), is the Internet's largest job network, with more than 16 million unique visitors and 400,000 job postings.
Gannett owes much of its recent success to a buoyant economy, which has created 1.5 million jobs since last August. With that underlying backdrop, Gannett's core operations should continue to prosper. Factor in a growing digital business and a proposed $1 billion stock buyback in the works, and the stock's forward P/E of 16 doesn't seem quite as pricey.
Fool contributor Nathan Slaughter is proud of himself for resisting the urge to include any newspaper puns in this story. He owns none of the companies mentioned.
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