Gannett Executives Speak at Credit Suisse First Boston Media Conference
NEW YORK, NY – Gannett executives today reported at the Credit Suisse First Boston media conference here that the company’s results for 2001 were the strongest in the industry despite a very difficult economic climate, and that they were cautiously optimistic about 2002.
Douglas H. McCorkindale, chairman, president and CEO, said “We have achieved the best results in our industry” despite very challenging conditions, although “we are never satisfied to report lower earnings.”
In his speech, McCorkindale said the company continues to be comfortable with the low- to mid-end range of most analysts’ estimates. “That translates into a range of $3.09 to $3.12 for the year, or a decline of 14% to 15%,” he said.
McCorkindale noted that because of a change in the accounting rules for goodwill and intangible assets: “Beginning in 2002, the company’s amortization expense for these assets will be reduced by approximately $234 million. Therefore, reported earnings will be higher” by approximately 83 cents per share.
Had the new rules been in place for both 2001 and 2000, earnings would have shown a decline of only 6% to 8% in 2001, a more appropriate comparison, he said.
Looking ahead to 2002, McCorkindale said he believes “the economy will turn in the second half of 2002” but Gannett will continue to operate conservatively and “not spend money we don’t have yet.”
Of the Sept. 11 terrorist attack and its aftermath, McCorkindale said: “We were given a chance to demonstrate – just as we’ve shown at other critical periods in our nation’s history – that the daily newspaper and television news are irreplaceable in a free society.”
Gary Watson, president of the Newspaper Division, said Gannett will continue to be “bullish on newspapers.” The company’s market diversity, seasoned management and quick response to the first signs of a downturn helped produce strong results despite the economy, he said.
Watson noted advertising remained soft in virtually all categories but said circulation post Sept. 11 is “a testimonial to the power of the daily newspaper, especially in times of crisis.” Also, he said, four of the top 11 fastest growing metro newspapers in the nation are Gannett papers, according to the recent Audit Bureau of Circulations FAS-FAX.
Tom Curley, president and publisher of USA TODAY, noted the circulation strength of the newspaper post Sept. 11 and said hotel sales were recovering. “The USA TODAY audience in the latest syndicated research jumped 15 percent. Over time, the gain is beneficial. The audience numbers go a long way to determining which publication gets advertising.”
Craig Dubow, president and CEO of Gannett Broadcasting, said results for his division were constrained by the absence of significant political and Olympic spending in 2001 but would benefit from those events in 2002. Dubow also reported on the company’s success in achieving its goal of being the No.1 or No. 2 station in each of its 19 markets. He stated that the just-released November 2001 ratings book on household rating performance, which covers Gannett’s 12 metered markets, showed Gannett is No.1 or No. 2 in late news in all 12 markets.
Speeches by the Gannett executives will be available by Webcast for 30 days at www.gannett.com.
Attached to this release and posted on the company’s Web site under “On the Street” are Gannett’s operating assumptions for 2002.
Gannett Co., Inc. is an international news and information company that publishes 97 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 300 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. In the United Kingdom, Gannett subsidiary Newsquest plc publishes more than 300 titles, including 15 daily newspapers. Gannett also operates 22 television stations in the United States and is an Internet leader with sites sponsored by most of its TV stations and newspapers including USATODAY.com, one of the most popular news sites on the web.
Certain statements in this press release, including the operating assumptions for 2002, may be forward looking in nature or “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 the major retailers or other events which may adversely affect business operations of major customers and depress the level of local, national or classified advertising; (b) an economic downturn in some or all of the Company’s principal newspaper or television markets leading to decreased circulation or local or national advertising; (c) a decline in general newspaper readership patterns as a result of the competitive alternative media or other factors; (d) an increase in newsprint or syndication programming costs over the levels anticipated; (e) labor disputes which may cause revenue declines or increased labor costs; (f) acquisitions of new businesses or dispositions of existing businesses; (g) a decline in viewership of major networks and local news programming; (h) rapid
technological changes and frequent new product introductions prevalent in electronic publishing; (i) a weakening in the British pound to U.S. dollar exchange rate; (j) general economic and business conditions; and (k) an increase in interest rates. Other risk factors that could cause actual results to differ materially from these forward-looking statements are listed from time to time in the Company’s SEC reports, including but not limited to the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements in this release should be evaluated in light of these important risk factors.
Gannett is not responsible for updating the information contained in the press release beyond the published date, or for changes made to the press release by wire services, Internet service providers or other media.
GANNETT CO., INC.
OPERATING ASSUMPTIONS – 2002
(Based on 52 weeks in 2001 and 2002)
NEWSPAPERS (Excluding USA Today, USA Weekend and Newsquest)
A. Advertising
Ad revenues will be flat to up slightly.
B. Circulation
Circulation revenues will be flattish.
C. Newsprint
1. Consumption on a pro forma basis is expected to be flat to down a few percent.
2. Prices – They are expected to be down 12% to 15% for the year as a whole in 2002.
D. Payroll
1. Approximate rate increase – about 3%.
2. Employment – down low single digits.
NEWSQUEST
A. Advertising revenues are expected to be up low single digits.
B. Circulation revenue is expected to be up low single digits.
USA TODAY
A. Advertising
1. Advertising pages are expected to be up low single digits.
2. Rates will be up in the 1%-2% range.
B. Circulation
1. Volume is expected to be flat to down slightly.
2. There are no plans to increase circulation prices in 2002.
TELEVISION
A. Total revenues expected to be up low to mid-single digits, including Olympic and political ad spending.
B. Costs are expected to be up low single digits.
CONSOLIDATED GANNETT (Including Acquisitions)
A. Capital Expenditures
1. 2002 Plan $300,000,000
2. 2001 Estimate $320,000,000 – $325,000,000
B. Depreciation
1. 2002 Plan $220,000,000
2. 2001 Estimate $205,000,000
C. Amortization of Intangibles (Goodwill and Other)*
1. 2002 Plan $7,000,000
2. 2001 Estimate (Reported) $242,000,000
D. Interest Expense
We expect our debt at the beginning of the year to be $5.1 billion. We have assumed that all of our free cash flow will be used to pay down debt.
E. Tax Rate*
The tax rate for 2002 will be approximately 34.6%. In 2001, our tax rate was 39.4%, but would have been 34.5% if the new goodwill rules had been in place in 2001.
*Reflects change in accounting rules for goodwill and intangible assets in 2002.
FORWARD LOOKING STATEMENTS
The preceding operating assumptions and some of the information provided in the oral presentations of Gannett’s management may be forward looking in nature or “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in these assumptions and the presentations 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, national or classified advertising; (b) an economic downturn in some or all of the Company’s principal newspaper or television markets leading to decreased circulation or local or national advertising; (c) a decline in general newspaper readership patterns as a result of competitive alternative media or other factors; (d) an increase in newsprint or syndication programming costs over the levels anticipated; (e) labor disputes which may cause revenue declines or increased labor costs; (f) acquisitions of new businesses or dispositions of existing businesses; (g) a decline in viewership of major networks and local news programming; (h) rapid technological changes and frequent new product introductions prevalent in electronic publishing; (i) a weakening in the British pound to U.S. dollar exchange rate; (j) general economic, political and business conditions and (k) an increase in interest rates. Other risk factors that could cause actual results to differ materially from these forward-looking statements are listed from time to time in the company’s SEC reports, including but not limited to the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements in this release should be evaluated in light of these important risk factors.
Click here for management’s presentations.