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 2003 were among the strongest in the industry despite the difficult advertising environment. The executives said the company continues to be cautiously optimistic about 2004.
Douglas H. McCorkindale, chairman, president and CEO, said: “For Gannett, 2003 will go down as another year of record revenues, earnings and operating cash flow despite the absence of political and Olympic ad spending that enhanced our results in 2002. We have succeeded this year even with a backdrop of a subdued and uncertain advertising environment, continued help wanted short falls and challenging retail environment.”
“Through all this,” he said, “we have delivered some of the best ad revenue growth in the industry. This strong performance has been reflected in our stock price which has been an outperformer over the last three years.”
Looking ahead to 2004, McCorkindale said: “It appears the economy is showing some signs of pickup.”
Gary Watson, president of the Newspaper Division, said all advertising segments, including all products except classified, will finish 2003 in positive territory. Employment also now appears to be heading in the right direction. For the last three months, our combined U.S. print and online employment revenues have generated positive year-over-year gains, with CareerBuilder a positive addition to the mix.
Online operations at Gannett’s community newspapers continue to perform well, Watson said, with revenues expected to be up about 50 percent over last year.
“We’ve seen consistent growth in our non-daily publications – launching more than 300 new products in the past 18 months,” Watson said. “We continue to focus on the younger readers in our non-daily growth strategy. We have launched a number of free distribution weeklies in recent weeks and we are in the planning stages in a number of markets.”
Appealing to readers is the thinking behind “Real Life, Real News,” the content enhancement initiative introduced to the community newspapers this fall: “The heart of ‘Real Life, Real News’ is the recognition that readers are looking to their local – and I want to emphasize local – newspapers to make a stronger connection with how they and their families live their lives everyday,” Watson said.
Craig Dubow, president and CEO of Gannett Broadcasting, said: “2003 was a strong year for Gannett Broadcasting despite tough year-over-year comparisons and a soft economy.”
The just-released November 2003 ratings book on household rating performance covering Gannett’s 13 metered markets shows Gannett is No.1 or No. 2 in late news in all 13 markets and No.1 or No. 2 in morning news in 11 of the 13 markets. “As we head into another election year, being No. 1 or No. 2 in each of our markets in local news will once again be a key advantage,” Dubow said.
Craig Moon, president and publisher of USA TODAY, said advertising revenues at the national newspaper “continue to improve and build momentum as we close out 2003.”
Sports Weekly continued to perform well under its new name – both advertising and circulation revenue improved over 2002 results, he said.
Also, Moon said, “USATODAY.com had a solid year as revenue growth outpaced the industry.” In addition, the combined unduplicated audience for USA TODAY and USATODAY.com is 6.5 million per day, according to MRI. USA TODAY remains the national newspaper with the largest “network” audience.
Gracia Martore, senior vice president and chief financial officer, said the company continues to expect fourth quarter earnings to be consistent with most analysts’ estimates. Earnings per diluted share for the fourth quarter will be in the range of $1.27 to $1.32, she said.
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 Investor Relations are Gannett’s operating assumptions for 2004.
Gannett Co., Inc. is a leading international news and information company that publishes 100 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 500 non-daily publications in the USA and USA WEEKEND, a weekly newspaper magazine. Gannett subsidiary Newsquest is the United Kingdom’s second largest regional newspaper company. Newsquest publishes more than 300 titles, including 17 daily newspapers, and a network of prize-winning Web sites. Gannett also operates 22 television stations in the United States and is an Internet leader with sites sponsored by 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 2004, 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 the results predicted in the operating assumptions
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) a continued 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 sterling 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 disclosed from time to time in the Company’s current and periodic SEC reports. 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.
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GANNETT CO., INC.
OPERATING ASSUMPTIONS – 2004
(Based on 52 weeks in 2003 and 2004)
NEWSPAPERS (Excluding USA Today, USA Weekend and Newsquest)
Ad revenues will be up mid single digits.
Circulation revenues will be up low single digits.
1. Consumption is expected to be flat to up slightly.
2. Prices – They are budgeted to be up in the low teens.
D. Other Expenses
1. Total head count will be up slightly with the addition of employees in revenue producing areas.
2. Pension expense will be flat with 2003.
3. Health care costs will be up in the low teens.
4. All other costs will increase modestly.
A. Advertising revenues are expected to be up mid single digits.
B. Circulation revenue is expected to be up low single digits.
1. Advertising pages are expected to be up low single digits.
2. Rates will be up in the mid single digit range.
1. Volume is expected to be up low single digits.
2. There are no current plans to increase circulation prices in 2004.
A. Revenues expected to be up in the mid teens, including Olympic and political ad spending in 2004.
B. Costs are expected to be up modestly.
CONSOLIDATED GANNETT (Including Acquisitions)
A. Capital Expenditures
1. 2004 Plan $280,000,000 2. 2003 Estimate $275,000,000 - $280,000,000
1. 2004 Plan $230,000,000 2. 2003 Estimate $225,000,000
C. Amortization of Intangibles (Goodwill and Other)
1. 2004 Plan $8,700,000 2. 2003 Estimate $8,300,000
D. Interest Expense
We expect our debt at the beginning of the year to be about $4 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 2004 will be approximately 34.2% which is the same as it was in 2003.
CERTAIN FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
Certain statements in the company’s 2002 Annual Report to Shareholders, its Annual Report on Form 10-K, and in Quarterly Reports contain forward-looking information. The words “expect”, “intend”, “believe”, “anticipate”, “likely”, “will” and similar expressions generally identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated in the forward-looking statements. Potential risks and uncertainties which could adversely affect the company’s ability to obtain these results include, 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 continued economic downturn in some or all of the company’s principal newspaper or television markets leading to decreased circulation or local, national or classified 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) an increase in interest rates; (j) a weakening in the British Sterling to U.S. dollar exchange rate; and (k) general economic, political and business conditions.
* To hear an archived version of Gannett’s presentation at the Credit Suisse First Boston conference, click here.