The results for Gannett's
On an absolute basis, the company's revenues were up 7.5% to $2.21 billion in the quarter, with newspaper advertising, which contributes almost 65% of the total, up 3.7%, and broadcasting coming in 30.3% higher at $270.6 million. The difficulty with comparisons here is that the most recent quarter included 14 weeks, while the final quarter of 2005 -- which ended on Dec. 25, 2005 -- consisted of 13 weeks. The difference relates to the company's fiscal year ending on the last Sunday of the calendar year. And so the 7.5% increase in revenues occurred in the face of a quarter that -- at least in the number of weeks it included -- was 7.7% longer than the comparable quarter.
Having established that key difference, you should know that net income for the quarter was $354 million, or $1.51 per share, versus $343 million, or $1.44 per share, in the comparable prior quarter.
The improvements in broadcasting results included both higher political advertising revenues (brought about by the federal elections in November) and contributions from KTVD-TV in Denver, acquired in June 2006, and Atlanta's WATL-TV, purchased in August.
On the newspaper side, total operating revenues were $1.94 billion in the 2006 quarter, an increase of 4.9%. At the same time, newspaper operating expenses increased 8.3%, primarily because of stock-based compensation expenses, along with newsprint costs that increased 6.4%. The company's national newspaper, USA Today, contributed advertising revenues that were 13% higher than in the last quarter of 2005, in large part because of total paid advertising pages that increased 10%.
For the full year, Gannett's diluted per-share earnings declined 3% to $4.90, from the $5.05 in 2005, despite a 5.7% increase in annual revenues. Looking ahead, the company's capable Chief Financial Officer, Gracia Murtore, warned in the conference call that the current quarter will be challenging, based in part on softness in real estate advertising and difficult comparisons with the first quarter of 2006, which included Olympics-related advertising revenues. Further, one needn't be a seer to anticipate that comparisons in subsequent quarters will be affected by a significant reduction in political advertising.
As has been the case with most publishing-broadcasting companies during the past few years -- including New York Times
The difficulty is that these conditions seem likely to persist for about as far as the eye can see. I'll repeat myself: Fools with a bent toward media investing would do well to put their money in other parts of the sector.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your comments or questions.