Gannett Releases July Statistical Report
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that total pro forma operating revenues for the seventh period ended July 31, 2005 were 0.7 percent higher, resulting from increased advertising demand at the company’s local, domestic newspapers offset by revenue declines in its Broadcasting and UK operations. Broadcasting revenues declined 11.1 percent reflecting, primarily, significantly lower political ad spending. For comparison purposes, the drop in the exchange rate of Sterling year-over-year affected the company’s results. If the exchange rate had remained constant year-over-year, total pro forma operating revenues would have increased 1.4 percent for the period.
Pro forma (assuming that all properties presently owned were owned in both periods) newspaper advertising revenues in July rose 2.6 percent compared with the seventh period in 2004 on a 2.6 percent decrease in ROP volume. If the exchange rate had remained constant year-over-year, total newspaper advertising revenues would have increased 3.4 percent for the period.
Pro forma local advertising revenues were up 4.7 percent on a 2.5 percent decline in ROP ad volume in July. The performance of the company’s small and medium-sized advertisers in its domestic newspapers outpaced the revenue performance of its largest advertisers. In the U.S., across all products, local ad revenue gains were achieved in the department store, health and telecommunications categories while the furniture, financial and restaurant categories lagged last year’s comparable period results. On a constant currency basis, pro forma local advertising would have advanced 5.1 percent.
Pro forma classified revenues increased 1.8 percent in the seventh period on a 2.7 percent decline in ROP ad volume. On a constant currency basis, classified revenues would have been
3.1 percent higher. Employment revenues were up 2.7 percent, real estate revenues rose
2.1 percent while automotive revenues were 8.9 percent lower compared to last year’s seventh period. Overall, the company’s domestic classified results were stronger than its UK results. In the U.S. employment revenues rose 14.1 percent and real estate revenues were up 5.4 percent. On a constant currency basis, employment revenues would have been up 4.2 percent, real estate revenues would have increased 3.6 percent and automotive revenues would have declined
8.2 percent.
Pro forma national advertising revenues in July declined less than 1 percent on flat ad volume. National volume at the company’s local domestic newspapers was slightly higher in the period. At USA TODAY, advertising revenues were 1.2 percent lower on a 9.1 percent decline in paid ad pages to 355 from 391. For comparison purposes, USA TODAY’s ad revenues were up 14 percent in July of 2004. For the seventh period, at USA TODAY, the automotive, technology,
financial and home and building categories were positive while the travel, retail and advocacy categories declined compared to Period 7 in 2004. For the year-to-date, USA TODAY’s advertising revenues increased 1.1 percent while paid advertising pages totaled 2,648 versus 2,757 last year.
Pro forma broadcasting revenues, which include Captivate, decreased 11.1 percent in the period. Television revenues were 11.6 percent lower reflecting significantly lower political advertising. Local revenues declined 3.3 percent while national revenues were 23.7 percent lower.
Based on July’s results and current pacings for the remainder of the quarter, television revenues for the third quarter of 2005 would be below last year’s comparable period in the high teens. This is due, in part, to the absence of over $50 million of political and Olympic advertising that benefited the third quarter of 2004.
In addition to the revenue and statistical summary, attached is a chart which shows the consolidated Gannett Online audience share from Nielsen//Net Ratings. In July, Gannett’s consolidated domestic Internet audience share totaled almost 21 million unique visitors reaching approximately 14 percent of the Internet audience.
On August 3, 2005, the company and MediaNews Group announced the reorganization of the Detroit Newspaper Agency. As part of the transaction, Knight Ridder sold its newspaper interests in Detroit to Gannett and MediaNews Group and the two newspaper publishers formed the Detroit Newspaper Partnership, L.P. MediaNews Group acquired The Detroit News from Gannett and Gannett acquired the Detroit Free Press. Beginning in Period 8, Detroit’s results will be fully consolidated in the financial statements of Gannett along with a minority interest charge to operations for MediaNews Group’s interest.
In a separate transaction, the company announced an exchange of assets with Knight Ridder, Inc. in which Knight Ridder will receive from Gannett The (Boise) Idaho Statesman, and two newspapers in the state of Washington: The (Olympia) Olympian, and The Bellingham Herald. In return, Gannett will receive the Tallahassee (FL) Democrat and cash consideration. The transaction is subject to regulatory approval and is expected to close in early September. After closing, all previously reported results for the former Gannett properties will be reclassified to income from discontinued operations. In addition, a gain resulting from the exchange will be included in discontinued operations.
The pro forma advertising and circulation revenue statistics include the results for Mint Magazine (acquired in July 2005), HomeTown Communications (acquired in late March 2005), Captivate (acquired in April 2004) and NurseWeek (acquired in February 2004). The pro forma other revenue statistics include the results for PointRoll, Inc. (acquired in June 2005). Ad linage for Newsquest, Clipper and NurseWeek are not included in the ad volume statistics. Circulation volume numbers for Newsquest’s paid daily newspapers are included in the enclosed statistics, but volume from unpaid daily and non-daily publications is not included in the circulation volume statistics.
Included with this release are revised operating assumptions for the second half of 2005. They are in line with the outlook the company provided at the Mid-Year Media Review.
Gannett Co., Inc. is a leading international news and information company that publishes 101 daily newspapers in the USA, including USA TODAY, the nation’s largest-selling daily newspaper. The company also owns more than 900 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 21 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 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 are subject to a number of risks, trends and uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in the company’s SEC reports, including the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. 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 this press release beyond the published date, or for changes made to this press release by wire services, Internet service providers or other media.
Contact:
Jeff Heinz
Director, Investor Relations
703-854-6917
jheinz@gannett.com
GANNETT CO., INC.
REVENUE & STATISTICAL SUMMARY
Period 7 (June 27, 2005 - July 31, 2005)
%
2005 2004 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 176,296,000 $ 168,435,000 $ 7,861,000 4.7
National 59,469,000 59,914,000 (445,000) (0.7)
Classified 188,364,000 185,003,000 3,361,000 1.8
-------------- -------------- -------------- ----
Total Advertising $ 424,129,000 $ 413,352,000 $ 10,777,000 2.6
Circulation 110,290,000 110,143,000 147,000 0.1
Other revenue 36,475,000 35,531,000 944,000 2.7
Broadcasting 58,343,000 65,660,000 (7,317,000) (11.1)
-------------- -------------- -------------- ----
Total Revenue $ 629,237,000 $ 624,686,000 $ 4,551,000 0.7
============== ============== ============== ====
VOLUME:
Newspaper Inches:
Local 3,158,311 3,238,691 (80,380) (2.5)
National 322,671 324,034 (1,363) (0.4)
Classified 5,708,235 5,868,021 (159,786) (2.7)
-------------- -------------- -------------- ----
Total ROP 9,189,217 9,430,746 (241,529) (2.6)
============== ============== ============== ====
Preprint Distribution
(in thousands) 925,327 922,108 3,219 0.3
============== ============== ============== ====
NET PAID CIRCULATION:
Morning (w/USAT) 6,706,360 6,886,825 (180,465) (2.6)
Evening 1,136,257 1,180,726 (44,469) (3.8)
-------------- -------------- -------------- ----
Total Daily 7,842,617 8,067,551 (224,934) (2.8)
============== ============== ============== ====
Sunday 6,481,148 6,703,513 (222,365) (3.3)
============== ============== ============== ====
Year-to-Date through July 31, 2005
%
2005 2004 CHANGE CHANGE
REVENUES:
Advertising:
Local $1,243,039,000 $1,192,885,000 $ 50,154,000 4.2
National 452,660,000 446,012,000 6,648,000 1.5
Classified 1,282,139,000 1,230,919,000 51,220,000 4.2
-------------- -------------- -------------- ----
Total Advertising $2,977,838,000 $2,869,816,000 $ 108,022,000 3.8
Circulation 740,589,000 733,316,000 7,273,000 1.0
Other revenue 251,771,000 234,633,000 17,138,000 7.3
Television 420,788,000 450,297,000 (29,509,000) (6.6)
-------------- -------------- -------------- ----
Total Revenue $4,390,986,000 $4,288,062,000 $ 102,924,000 2.4
============== ============== ============== ====
VOLUME:
Newspaper Inches:
Local 21,288,569 21,755,457 (466,888) (2.1)
National 2,272,419 2,441,691 (169,272) (6.9)
Classified 35,407,902 36,023,324 (615,422) (1.7)
-------------- -------------- -------------- ----
Total ROP 58,968,890 60,220,472 (1,251,582) (2.1)
============== ============== ============== ====
Preprint Distribution
(in thousands) 6,576,730 6,393,134 183,596 2.9
============== ============== ============== ====
NET PAID CIRCULATION:
Morning (w/USAT) 6,963,399 7,127,770 (164,371) (2.3)
Evening 1,171,410 1,219,469 (48,059) (3.9)
-------------- -------------- -------------- ----
Total Daily 8,134,809 8,347,239 (212,430) (2.5)
============== ============== ============== ====
Sunday 6,703,796 6,912,893 (209,097) (3.0)
============== ============== ============== ====
Note: The operating results from the company’s newspapers participating in joint operating agencies, and which are accounted for under the equity method of accounting, are reported as a single amount in other operating revenues.
Advertising linage statistics from these newspapers are not included above,
however, circulation volume statistics for these newspapers are included above.
The above revenue amounts and statistics have been restated to include all
companies presently owned, including Mint Magazine (acquired in July 2005),
PointRoll, Inc. (acquired in June 2005), HomeTown Communications (acquired in
late March 2005), Captivate (acquired in April 2004) and NurseWeek (acquired in
February 2004). PointRoll is a marketing services company with a suite of media
products that delivers enhanced online marketing opportunities for advertisers,
agencies and online publishers. PointRoll is included above in Other revenue.
HomeTown is a community publishing company with one daily newspaper, 62
non-daily community newspapers, 24 community telephone directories and other
specialty and niche publications. Captivate is a national news and entertainment network that delivers programming and full motion video advertising through wireless digital video screens in elevators of premier office towers. Captivate is included above in Broadcasting revenue. NurseWeek is a multimedia company with print publications focused on the recruitment, recognition and education of nurses.
Newsquest is a regional newspaper publisher in the United Kingdom with more than 300 titles, including paid and unpaid daily and non-daily products. Circulation volume statistics for Newsquest’s 17 paid daily newspapers are included above. Circulation volume statistics for Sunday Herald are included above in the Sunday statistics. Circulation volume statistics for Newsquest’s unpaid daily and non-daily publications are not reflected above. Advertising linage for Newsquest publications is not reflected above.
Circulation volume and advertising linage statistics for non-daily products,
including NurseWeek and Clipper Magazine are not reflected above.
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Gannett Online Internet Audience July 2005Nielsen//NetRatings Home/Work Panel Combined Unique Visitors Percentage Reach of Per Month Internet Audience Gannett Online 20,840,000 13.8% --------------------------------------------------------------------------
GANNETT CO., INC. OPERATING ASSUMPTIONS - Last Six Months 2005 (Excluding Impact of Detroit and Swap Transactions) NEWSPAPERS (Excluding USA Today, USA Weekend and Newsquest) A. Advertising Ad revenues will be up mid single digits. B. Circulation Circulation revenues are expected to be flat to down slightly. C. Newsprint 1. Consumption is expected to be down a few percent. 2. Prices - budgeted to be up in the ten percent range. D. Other Expenses 1. Total head count will be flat to down slightly with the addition of employees in revenue producing areas. 2. Pension expense will be up from 2004 but less than 2003. 3. Health care costs will be up in the mid single digits. 4. All other costs will increase modestly. NEWSQUEST (in Sterling) A. Advertising revenues are expected to be down in the mid single digits. B. Circulation revenue is expected to be up in the low single digits. USA TODAY A. Advertising 1. Advertising revenues are expected to be up in the mid single digit range. B. Circulation 1. Volume is expected to be down slightly. 2. The Fall 2004 single copy increase will cycle in early September. BROADCAST (Ex. Captivate) A. Revenues expected to be down in the mid teens because of the Olympic and political ad spending in 2004. B. Costs are expected to be down in the low single digits. CONSOLIDATED GANNETT - Full Year A. Capital Expenditures: $280,000,000 B. Depreciation: $255,000,000 C. Amortization of Intangibles (Goodwill and Other): $20,000,000 D. Tax Rate The tax rate for 2005 will be approximately 33.4%.
Certain factors affecting forward-looking statements
Certain statements in this press release 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 which 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) an 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-pound-to-U.S. dollar exchange rate; and (k) general economic, political and business conditions.
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.