Gannett Executives at UBS Global Media and Communications Conference Provide Update on Strong Year
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) executives at the UBS Global Media and Communications Conference today provided an update on the company’s ongoing strategy to position Gannett for continued success in the digital age and highlighted recent progress and growth in each of its business segments.
Gracia Martore, Gannett president and CEO, reflected on the company’s accomplishments since the establishment of its strategic growth plan in early 2012: “About three years ago, we embarked on a transformative journey to uncover new ways to enhance our connections with our audiences and our advertisers in today’s multi-platform media landscape. These efforts have culminated in a more diversified business mix and significantly improved financial results, including estimated reported revenue growth of approximately 16 percent on a company-wide basis in 2014 over 2013.
“The whole of Gannett and each of its parts are firing on all cylinders. At the same time, many of the initiatives we have put into place to strongly position each of our businesses for long-term success are still building momentum, and we expect to see even greater impact as we look toward the future. There is still a great deal of potential for growth ahead and we are on track to execute our separation into two publicly traded companies — one focused on Publishing via multiple platforms, and the other comprising Broadcasting and Digital — in mid-2015.”
Martore also provided an update on the company’s Digital Segment: “We are incredibly excited about the potential of our Digital Segment. We see tremendous opportunities at both CareerBuilder and Cars.com over the near- and long-term to add new customers, expand the solutions that we offer, and to accelerate growth and profitability.”
Dave Lougee, president of Gannett Broadcasting, discussed the performance of the Broadcasting Segment in 2014 and provided an update on the integration of stations acquired from Belo and London Broadcasting in 2013: “Broadcasting will finish 2014 with a record breaking year for both revenue and profitability, as well as strong market share growth across our portfolio. The integration of both Belo and London Broadcasting continues to exceed our expectations, and we are ahead of schedule in achieving the synergies we promised when we announced the transactions.”
Lougee also gave an update on the company’s expectations for Broadcasting revenue for the fourth quarter and full year 2014. Broadcasting revenues on a pro forma basis are projected to be approximately 19 percent above 2013. The percentage increase in fourth quarter Broadcasting revenues is expected to be in the range of 23 to 25 percent compared to the fourth quarter of 2013. In addition, political revenue for the year will be $160 million, which is a 28 percent increase on a pro forma basis over 2012, excluding presidential advertising. Compared to 2010, the previous mid-term election year, Broadcasting’s 2014 political revenue is up 17 percent. Broadcasting also generated more than $40 million in revenue associated with the Winter Olympics in Sochi earlier this year, representing a 65 percent increase over the prior Winter Olympics in 2010.
U.S. Community Publishing
Bob Dickey, president of U.S. Community Publishing (USCP), also presented a strategic update: “2014 has been a year of intense focus on building local relationships in every part of our division. As a result, we continue to gain traction in revenue growth and improve reader satisfaction as our transformation accelerates at an even greater pace. We’ve successfully responded to the expectations of our readers and advertisers, and are broadening our reach, engagement and impact at the local level. We are entering next year with strong momentum and a clear focus, and we expect to further refine our offerings and increase our share of the market in 2015.”
Dickey also discussed the progress of a recently launched program in which an edition of USA TODAY is inserted into 35 of Gannett’s USCP local print editions, which has resulted in meaningful improvements in reader satisfaction and profitability. In addition, the re-launch of its digital platforms continues to drive significant increases in mobile traffic and strengthen consumer engagement, including 63 percent in digital access activations and year-over-year gains in unique visitors.
Victoria Harker, chief financial officer, discussed the company’s expected fourth quarter and 2014 results, its capital allocation program, and certain operating and financial assumptions for 2015. “Based on the trends we currently see, we estimate fourth quarter EPS to be in the range of $1.00 to $1.02,” said Harker.
A replay of the Gannett presentations will be available by webcast for 30 days at www.gannett.com.
Below this press release are Gannett’s operating assumptions for 2015.
Gannett Co., Inc. (NYSE: GCI) is an international media and marketing solutions company that informs and engages more than 110 million people every month through its powerful network of broadcast, digital, mobile and publishing properties. Our portfolio of trusted brands offers marketers unmatched local-to-national reach and customizable, innovative marketing solutions across any platform. Gannett is committed to connecting people – and the companies who want to reach them – with their interests and communities. For more information, visit www.gannett.com.
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GANNETT CO., INC. OPERATING ASSUMPTIONS – 2015
December 10, 2014
A. Acquisitions Cars.com is expected to be accretive to free cash flow by approximately $0.43 per share and neutral to EPS in 2015, growing thereafter.
B. Retransmission Revenue 2015 Plan $440,000,000 - $445,000,000 2014 Estimate $365,000,000
C. Capital Expenditures 2015 Plan $135,000,000 - $140,000,000 2014 Estimate $160,000,000 - $170,000,000
D. Depreciation 2015 Plan $210,000,000 - $215,000,000 2014 Estimate $190,000,000
E. Amortization of Intangibles 2015 Plan $135,000,000 - $140,000,000 2014 Estimate $77,000,000
F. Benefit Costs Pension expense will be up in 2015 due to the impact of new corporate pension requirements based on revised mortality rate projections. Health care costs will be up high single digits above 2014.
G. Debt We expect our debt at the beginning of 2015 to be in the range of $4.6 - $4.7 billion. For modeling purposes only, we have assumed that the preponderance of our free cash flow, after dividends and potential share repurchases, will likely be used to pay down debt.
H. Tax Rate The tax rate for 2015 will be approximately 33.0%, depending on the mix of earnings.
Certain factors affecting forward-looking statements
Certain statements in this press release, including the operating assumptions for 2015, may be deemed “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this press release, including the operating assumptions, are subject to a number of risks and uncertainties that could adversely affect the company’s ability to obtain these results including, without limitation, the following factors: (a) increased consolidation among major retailers or other events which may adversely affect business operations of major customers and depress the level of local and national advertising; (b) a potential increase in competition for our Digital Segment businesses; (c) a decline in viewership of major networks and local news programming resulting from increased competition, including alternative forms of media, or other factors; (d) a continuance of the generally soft economic conditions in the U.S. and the U.K. or a further economic downturn leading to a continuing or accelerated decrease in circulation or local, national or classified advertising; (e) a further decline in general print readership and/or advertiser patterns as a result of competitive alternative media or other factors; (f) an increase in newsprint or syndication programming costs over the levels anticipated; (g) labor disputes which may cause revenue declines or increased labor costs; (h) acquisitions of new businesses or dispositions of existing businesses; (i) rapid technological changes and frequent new product introductions prevalent in electronic publishing and digital businesses; (j) an increase in interest rates; (k) a weakening in the British pound to U.S. dollar exchange rate; (l) volatility in financial and credit markets which could affect the value of retirement plan assets and our ability to raise funds through debt or equity issuances; (m) changes in the regulatory environment could encumber or impede our efforts to improve operating results or the value of assets; (n) credit rating downgrades, which could affect the availability and cost of future financing; (o) adverse outcomes in proceedings with governmental authorities or administrative agencies; (p) cyber security breaches; (q) the proposed separation of our Publishing business from our Broadcasting and Digital businesses may not be completed on the terms or timeline currently contemplated, if at all; (r) general economic, political and business conditions; and (s) an other than temporary decline in operating results and enterprise value that could lead to non-cash goodwill, other intangible asset, investment or property, plant and equipment impairment charges. We continue to monitor the uneven economic recovery in the U.S. and U.K., as well as new and developing competition and technological change, to evaluate whether any indicators of impairment exist, particularly for those reporting units where fair value is closer to carrying value. Other risk factors that could cause actual results to differ materially from these forward-looking statements are disclosed from time to time in the Company’s current and periodic SEC reports. Any forward-looking statements in this press release should be evaluated in light of these important risk factors.
Gannett is not responsible for updating the information contained in these assumptions beyond the published date, or for changes made to the assumptions by wire services, Internet service providers or other media.