Gannett Executives Provide Update on Growth at UBS Global Media and Communications Conference
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) executives at the UBS Global Media and Communications Conference today provided updates on each of the company’s business segments and provided highlights of how the company continues to position itself for growth in the digital era.
Gracia Martore, Gannett president and CEO, discussed the substantial progress made on the company’s new business strategy and capital allocation plan that is designed to put Gannett on a growth trajectory.
“We are transforming the company by harnessing our powerful local brands, national scale and financial strength and are on the offensive to further enhance our position in the rapidly evolving digital world,” said Martore. “Our plan is bold, ambitious and doable, with our goal to return Gannett to sustainable revenue growth, increase profitability and deliver greater shareholder value. We have moved ahead quickly on many fronts and are making excellent progress in positioning Gannett to deliver an annual revenue growth rate in the range of 2 to 4 percent over the long term.”
To accomplish its goals, the company launched a series of initiatives, which included rolling out a new content subscription model in the company’s local domestic publishing markets and a suite of Digital Marketing Services products in the company’s top publishing and broadcast markets.
Bob Dickey, president of U.S. Community Publishing (USCP), said the full-access content subscription model is now fully deployed in 78 local publishing markets, giving subscribers access to content across a variety of digital and print platforms. “Early results indicate we are solidly on the right track,” said Dickey.
Thus far, USCP is seeing subscription revenue growth of 21 percent on average, depending on timing of launch. The division expects subscription revenue increases of about 25 percent by the end of 2013, compared to pre-launch levels, and a contribution of $100 million to operating income.
Dave Lougee, president of Gannett Broadcasting, said the division will have a record-breaking year in 2012 with strong revenues and profits, along with significant share growth. On the revenue side, the Broadcasting division put a yearlong sales transformation process in place and finished the Olympics with a record $37 million in Olympic billing, up 58 percent from the Beijing Olympics in 2008.
Gannett Broadcasting also had a record year in political advertising, with a total of $150 million in political revenue. In addition, retransmission consent fees are expected to increase to $135 million to $140 million in 2013, up over 40 percent from 2012. Retransmission revenue in 2012 will finish at $96 million, 20 percent above 2011. While the increase in retransmission revenue in 2013 will be significant, it is not expected to completely offset record 2012 political and Olympic revenue.
In the digital segment, CareerBuilder continues to perform exceptionally well, delivering strong results and expanding market share in a tepid employment environment. Matt Ferguson, CEO of CareerBuilder, and his team have built CareerBuilder into the industry leader and are moving quickly on many fronts to ensure leadership in North America and in a number of international markets. CareerBuilder made a game-changing move in online recruitment by acquiring Economic Modeling Specialists Intl., which specializes in employment data and labor market analysis.
Company wide digital revenues are expected to reach $1.3 billion this year, a 19 percent increase from 2011.
Victoria Harker, chief financial officer, reviewed progress during the year toward the company’s goals and some key operating assumptions for 2013.
“All told, across all segments, we expect total revenues to be up over 5 percent in the fourth quarter, continuing the upward trend we have experienced all year, with accelerating pace. This reinforces the investment return expectations we had previously projected,” said Harker.
“As a reminder, our results for the fourth quarter will be impacted by an extra week. The First Call consensus of earnings per share estimates is 85 cents which includes the extra week. Based on current trends, we now expect earnings to be 87 to 88 cents, including the extra week, which will contribute about 2 to 3 cents to EPS in the fourth quarter,” said Harker.
A replay of the Gannett presentations will be available by webcast for 30 days at www.gannett.com.
Attached to the press release and posted on the company’s web site under Investor Relations are Gannett’s operating assumptions for 2013.
Gannett Co., Inc. (NYSE: GCI) is an international media and marketing solutions company that informs and engages more than 100 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 – 2013
(excluding 53rd week in 2012)
Expenses Total expenses are projected to increase slightly in 2013 on a same 52 week comparison. CONSOLIDATED GANNETT (Including Acquisitions) A. Capital Expenditures 1. 2013 Plan $110,000,000 2. 2012 Estimate $90,000,000 - $100,000,000 B. Depreciation 1. 2013 Plan $160,000,000 2. 2012 Estimate $161,000,000 C. Amortization of Intangibles 1. 2013 Plan $32,000,000 2. 2012 Estimate $33,000,000 D. Benefit Costs 1. Pension expense will be in line with 2012 depending on the final return on assets for 2012. 2. Health care costs will be slightly above 2012. E. Interest Expense We expect our debt at the beginning of 2013 to be in the range of $1.5 - $1.55 billion.
For budget purposes only, we have assumed that all of our free cash flow, after
dividends and share repurchases, will be used to pay down debt. F. Tax Rate The tax rate for 2013 will be approximately 33.0%, depending on the mix of earnings
and audit settlements.
Certain factors affecting forward-looking statements
Certain statements in this press release, including the operating assumptions for 2013, 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 the Company’s digital segment businesses; (c) a decline in viewership of major networks and local news programming resulting from increased competition or other factors; (d) a continuance of the generally soft economic conditions in the U.S. and the UK 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; (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 the Company’s ability to raise funds through debt or equity issuances; (m) changes in the regulatory environment; (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) general economic, political and business conditions; and (q) 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. The Company continues to monitor the uneven economic recovery in the U.S., 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.