Increases in digital and broadcast revenue were not enough to make up for the ongoing decline in Gannett Co.'s newspaper business, leading the publisher of USA Today to report a more than 22 percent drop in its second-quarter net income.
Still, the nation's largest newspaper publisher with more than 80 dailies said its results are showing improvement. To show confidence in its business prospects, Gannett said it is resuming share buybacks and doubled its quarterly dividend.
Gannett said Monday that its net income fell to $151.5 million, or 62 cents per share, in the quarter ended June 26. That's down from $195.5 million, or 81 cents per share, at the same time last year.
Excluding one-time items, Gannett earned 58 cents per share. On this basis analysts polled by FactSet had expected adjusted earnings of 57 cents a share.
Revenue slipped 2 percent to $1.33 billion, close to the $1.34 billion that analysts were expecting.
"Overall, the results reflect the current state of economies here and in the U.K., strength in some sectors while (weakness) in others, a challenging environment for ad demand," Chairman and CEO Craig Dubow said in a conference call.
Gannett said its company-wide digital revenue rose nearly 13 percent compared with a year earlier, to $276.2 million. This consists of standalone digital businesses such as CareerBuilder.com, which Gannett said did well despite the anemic job market. It also includes digital revenue generated by other businesses, such as newspaper websites.
But its publishing division's advertising revenue, which counts both print and digital and makes up about half of the company's total, fell nearly 7 percent to $646.9 million. Print advertising revenue has been shrinking at most major newspaper publishers as advertisers turn to free or cheaper alternatives online.
Revenue at Gannett's broadcasting segment grew slightly to $184.4 million from $184 million. Last year's results were boosted by $11.7 million in political advertising that didn't happen this year.
In a sign of optimism, Gannett doubled its regular quarterly dividend to 8 cents from 4 cents. The company had cut its dividend sharply _ and for the first time ever _ from 40 cents in early 2009.
In June, Gannett announced it is laying off 700 workers to cope with the ongoing advertising slump. This amounts to 2 percent of the company's work force, Gannett's biggest round of cuts in two years. Such ongoing cost cuts have helped the company to stay profitable for shareholders throughout the downturn.
Gracia Martore, Gannett's chief operating officer, said in the conference call that the company currently has "no intentions of looking at further reductions, but obviously that has to be driven by each individual business' prospects and revenue opportunities going forward." That said, she added that the company has been adding staff in key digital areas, as well as its broadcast division.
Gannett's stock fell 47 cents, or 3.5 percent, to close at $13.01 Monday amid a broader market decline. Gannett is based in McLean, Va.