Gannett Executives Speak at Credit Suisse First Boston Media Week Conference
NEW YORK, N.Y. – Gannett executives today reported at the Credit Suisse First Boston Media Week Conference here that the company’s results for 2002 were among the strongest in the industry despite the difficult advertising environment, and that they are “optimistic but cautious” about 2003.
Douglas H. McCorkindale, chairman, president and CEO, said, “For Gannett, 2002 will go down as another successful year – a year when our employees and managers delivered strong results. … We delivered some of the best numbers – on the top line and the bottom line – in the industry.”
In his speech, McCorkindale said the company continues to expect fourth-quarter earnings to be consistent with most analysts’ estimates. He said earnings per diluted share for the fourth quarter will be in the range of $1.26 to $1.28.
“Gannett has achieved strong growth in a very subdued advertising environment,” McCorkindale said.
Looking ahead to 2003, McCorkindale said: “We expect the economy to continue to grow next year barring external factors. But, as we’ve said before, we believe the recovery will be uneven. We’ll plan conservatively at this point, as we have done in the past,” McCorkindale said. “If the economy is stronger than we anticipate, then our earnings will be better than planned.”
Gary Watson, president of the Newspaper Division, said all of the advertising segments Gannett tracks, except classified, will finish 2002 in positive territory. And based on preliminary 2003 budget projections of employment classifieds, “We expect to see consistent year-over-year gains beginning in the next couple of months,” he said.
Online operations at Gannett’s community newspapers continue “rolling along,” Watson said, with revenues up about 30 percent over last year.
Exciting new publications are being introduced, Watson said. “One of our priorities next year will be to target specific demographic and geographic groups with product extensions” such as the newly launched free, weekly publications in Boise and Lansing, MI.
Craig Dubow, president and CEO of Gannett Broadcasting, said, “2002 was an exceptional year for Gannett Broadcasting.” Olympics and political advertising, as well as new business development, were the main factors in the division’s performance.
Dubow said the company’s success in achieving its goal of being the No.1 or No. 2 station in each of its markets is a key to its political advertising strength. He stated that the just-released November 2002 ratings book on household rating performance, which covers Gannett’s 13 metered markets, showed 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.
Tom Curley, president and publisher of USA TODAY, said advertising at the national newspaper “improved with each quarter.”
In general, he said, products under the USA TODAY brand fared well in 2002. He pointed to new circulation opportunities for the newspaper, the popular conversion of Baseball Weekly to Sports Weekly and the licensing of content to third parties.
Also, Curley said, “USATODAY.com had a positive year. It reclaimed the top spot in audience among print publishers and advertising grew by low single digits.” The combined, unduplicated audience for USA TODAY and USATODAY.com is 7.3 million per day, according to MRI. “By far, the tops in the field,” he 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 2003.
Gannett Co., Inc. is a leading international news and information company that publishes 94 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns in excess of 400 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 15 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 2003, 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 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 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 – 2003
(Based on 52 weeks in 2002 and 2003)
NEWSPAPERS (Excluding USA TODAY, USA WEEKEND and Newsquest)
Ad revenues will be up mid single digits.
Circulation revenues will be up low single digits including impact of circulation prices
implemented in the last half of 2002 and early in 2003.
1. Consumption is expected to be flat to down a few percent.
2. Prices – They are budgeted to be up at most 10% for the year as a whole in 2003.
D. Other Expenses
Total head count will be down low single digits even with the addition of employees in
revenue producing areas; all other costs will increase very 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 1%-2% range.
1. Volume is expected to be up low single digits.
2. There are no current plans to increase circulation prices in 2003.
A. Total revenues expected to be down low single digits, including Olympic and political ad spending in 2002.
B. Costs are expected to be flat to down slightly.
CONSOLIDATED GANNETT (Including Acquisitions)
A. Capital Expenditures
1. 2003 Plan $270,000,000 - $280,000,000
2. 2002 Estimate $270,000,000 - $280,000,000
1. 2003 Plan $220,000,000
2. 2002 Estimate $215,000,000
C. Amortization of Intangibles (Goodwill and Other)
1. 2003 Plan $7,000,000
2. 2002 Estimate $7,000,000
D. Interest Expense
We expect our debt at the beginning of the year to be $4.45 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 2003 will be approximately 34.4%. In 2002, our tax rate was 34.4%.