Gannett Reports July Statistical Report and Updates Budget Assumptions
McLEAN, VA – Gannett Co., Inc. (NYSE: GCI) reported today that total pro forma operating revenues for the seventh period ended August 3, 2003 increased 1 percent.
Pro forma (assuming that all properties presently owned were owned in both periods) newspaper advertising revenues in July were up 2 percent compared with the same period in 2002 on a 2 percent increase in ROP volume and a 4 percent advance in preprint distribution.
Pro forma classified revenues advanced 3 percent in the July period on a 3 percent increase in ad volume. Employment revenues declined 8 percent from the same period last year. Classified real estate revenues advanced 11 percent, and automotive increased 3 percent. Overall, the company’s classified results from Newsquest were stronger than its domestic results.
Pro forma local advertising revenues rose 1 percent in the seventh period on a 1 percent decline in ad volume. 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., newspaper gains were achieved in the telecommunications, financial and home improvement categories while there was softness in department stores, consumer electronics, furniture and entertainment ad spending.
Pro forma national advertising revenues increased 5 percent on a 4 percent increase in ad volume. National volume at the company’s local domestic newspapers rose 7 percent in the period compared with the same interval in 2002. At USA TODAY, advertising revenues were 1 percent higher on a 3 percent decrease in paid ad pages to 369 from 380. For the month, automotive, telecommunications, retail and credit card advertising were strong but soft travel and technology advertising partially offset these gains. For the year-to-date, USA TODAY’s paid pages numbered 2,684 versus 2,794 last year while ad revenues were slightly ahead of last year.
Television revenues declined 4 percent in the period. Local revenues rose 2 percent while national revenues declined 14 percent. For comparison purposes, television revenues increased 16 percent in July of 2002. At this point, pacings for the remainder of the third quarter are trailing last year’s results.
Also attached are updated budget assumptions for the remainder of 2003. We anticipate USA TODAY’s and television’s results for the last six months will be a little softer than we anticipated last December, while newsprint will be more favorable.
In addition to the revenue and statistical summary, attached is a chart which shows the consolidated Gannett Online audience share for June from Nielsen//Net Ratings. In June, Gannett’s domestic Websites had almost 13 million unique visitors reaching about 10 percent of the Internet audience.
The pro forma advertising and circulation revenue statistics include the results of the SMG (Newsquest’s Scottish Media Group) publishing business and Texas-New Mexico Newspapers Partnership as if they had been owned in both years. Ad linage for Newsquest is 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.
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 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 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 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:
Gracia Martore
Senior Vice President and Chief Financial Officer
703-854-6918
gmartore@gannett.com
GANNETT CO., INC.
REVENUE & STATISTICAL SUMMARY
Period 7 (June 30, 2003 - August 3, 2003)
%
2003 2002 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 145,523,000 $ 144,645,000 $ 878,000 1
National 55,306,000 52,506,000 2,800,000 5
Classified 162,120,000 156,988,000 5,132,000 3
------------- ------------- ------------ ----
Total Advertising $ 362,949,000 $ 354,139,000 $ 8,810,000 2
Circulation 108,593,000 108,876,000 (283,000) (0)
Other revenue 28,905,000 28,291,000 614,000 2
Television 57,934,000 60,487,000 (2,553,000) (4)
------------- ------------- ------------ ----
Total Revenue $ 558,381,000 $ 551,793,000 $ 6,588,000 1
============= ============= ============ ====
VOLUME:
Newspaper Inches:
Local 3,233,578 3,251,702 (18,124) (1)
National 326,468 312,416 14,052 4
Classified 5,637,060 5,476,018 161,042 3
------------- ------------- ------------ ----
Total ROP 9,197,106 9,040,136 156,970 2
============= ============= ============ ====
Preprint Distribution
(in thousands) 874,985 838,918 36,067 4
============= ============= ============ ====
NET PAID CIRCULATION:
Morning (w/USAT) 6,795,732 6,877,101 (81,369) (1)
Evening 1,238,315 1,285,622 (47,307) (4)
------------- ------------- ------------ ----
Total Daily 8,034,047 8,162,723 (128,676) (2)
============= ============= ============ ====
Sunday 6,824,749 6,869,245 (44,496) (1)
============= ============= ============ ====
Year-to-Date through August 3, 2003
%
2003 2002 CHANGE CHANGE
REVENUES:
Advertising:
Local $ 1,029,756,000 $ 997,673,000 $ 32,083,000 3
National 404,651,000 392,104,000 12,547,000 3
Classified 1,074,796,000 1,029,967,000 44,829,000 4
-------------- -------------- ------------- ----
Total Advertising $ 2,509,203,000 $ 2,419,744,000 $ 89,459,000 4
Circulation 722,517,000 718,037,000 4,480,000 1
Other revenue 212,451,000 197,866,000 14,585,000 7
Television 408,837,000 418,972,000 (10,135,000) (2)
-------------- -------------- ------------- ----
Total Revenue $ 3,853,008,000 $ 3,754,619,000 $ 98,389,000 3
============== ============== ============= ====
VOLUME:
Newspaper Inches:
Local 21,543,948 21,839,450 (295,502) (1)
National 2,332,564 2,166,341 166,223 8
Classified 34,566,277 33,466,390 1,099,887 3
-------------- -------------- ------------- ----
Total ROP 58,442,789 57,472,181 970,608 2
============== ============== ============= ====
Preprint Distribution
(in thousands) 6,246,069 5,675,638 570,431 10
============== ============== ============= ====
NET PAID CIRCULATION:
Morning (w/USAT) 7,062,290 7,099,670 (37,380) (1)
Evening 1,270,533 1,308,826 (38,293) (3)
-------------- -------------- ------------- ----
Total Daily 8,332,823 8,408,496 (75,673) (1)
============== ============== ============= ====
Sunday 6,986,068 7,038,725 (52,657) (1)
============== ============== ============= ====
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 SMG Publishing (acquired in April 2003). SMG Publishing consists of three Scottish newspapers: The Herald, Sunday Herald and Evening Times; eleven specialty consumer and business-to-business magazine titles; and an online advertising and content business.
Newsquest (which includes SMG Publishing) 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 seventeen paid daily newspapers are included above. 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.
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Gannett Online Internet Audience June 2003Nielsen//NetRatings Home/Work Panel Combined Unique Visitors Percentage Reach of Per Month Internet Audience Gannett Online 12,887,000 10%
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GANNETT CO., INC.
OPERATING ASSUMPTIONS
2003 LAST SIX MONTHS
NEWSPAPERS (Excluding USA TODAY, USA WEEKEND and Newsquest)
A. Advertising
Ad revenues will be up mid single digits.
Similar to the first six months, the mix of ad revenues is such that a higher proportion of the gain is coming from lower margin commercial printing and non-daily revenue.
B. Circulation
Circulation revenues will be up low single digits including impact of circulation prices implemented in the last half of 2002 and early in 2003.
C. Newsprint
1. Consumption is expected to be flat to down a few percent.
2. Prices – After declining slightly in the first six months, we expect newsprint prices for the year to be up mid single digits.
D. Other Expenses
Total head count will be flat to down slightly; all other costs will increase very modestly.
As previously detailed, healthcare costs will be up in the low to mid teens and pension expense will increase over $50 million in 2003.
NEWSQUEST
A. Advertising revenues are expected to be up mid single digits.
B. Circulation revenue is expected to be up low single digits.
USA TODAY
A. Advertising
1. Advertising pages are expected to be flat to down slightly.
2. Rates will be up in the range of the first six months.
B. Circulation
1. Volume is expected to be up low single digits.
2. There are no current plans to increase circulation prices in the last half of 2003.
TELEVISION
A. Total revenues expected to be down high single digits, including Political ad spending in 2002.
B. Costs are expected to be flat to down low single digits.
CONSOLIDATED GANNETT (Including Acquisitions) — for the full year
A. Capital Expenditures (Year)
1. 2003 Plan $280,000,000
2. 2002 Actual $275,000,000
B. Depreciation
1. 2003 Plan $223,000,000 2. 2002 Actual $215,000,000
C. Amortization of Intangibles (Goodwill and Other)
1. 2003 Plan $8,000,000
2. 2002 Actual $7,000,000
D. Interest Expense
We expect to end the year with $4.0 billion of debt. 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 34.2.
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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 the Quarterly Report 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 Sterling to U.S. dollar exchange rate; and (k) general economic, political and business conditions.