Archive for the ‘Earnings’ Category

GCI girds for ’09 newspaper job losses in ‘low teens’

December 10, 2008

CEO Craig Dubow told a Wall Street media conference today that Gannett is prepared to cut more jobs next year, following the recent mass layoff in the troubled newspaper division.

Yet, in a new statement that sounds more definitive, the company says it assumes “headcount” will fall next year in the following business segments, by these percentage amounts:

  • U.S. papers (excluding USA Today): down in the “low teens.”
  • USAT: down in the “mid single digits.”
  • U.K. division Newsquest: down in the “mid teens.”
  • TV division: down in the “mid to high single digits.”

The statement doesn’t say how these reductions would occur: whether by more layoffs, attrition or other means. The recent layoff targeted 10% of the newspaper workforce.

Debating GCI’s intentions
Some readers challenge my interpretation of the statement, and the remarks by Dubow (left).

“Did Dubow say there would be ADDITIONAL job cuts in the ‘low teens’ in 2009?” asks Anonymous@2:12 p.m. “I took a look at the Gannett statement and I think they are saying that the number of employees working in that division at the end of 2009 will be 12%, 13%, 14% (‘low teens’) less than in 2008. Given there have been three or four rounds of cuts in 2008 at most newspapers, I think this really says they are NOT projecting additional job cuts in 2009. The 2008 cuts plus retirements/attrition will probably add up to ‘low teens’ that’s mentioned.”

Dubow: ‘Sizing to revenue’
I suspect Gannett was already planning to reduce newspaper employment again next year — on top of what happened this year — before the economy deep-dived. Now, with a full-on recession, it’s hard to see any other choice. Remember what Dubow told the conference earlier:

“We are always going to size to the revenue that is there,” he said, adding that decisions will be made market-by-market. “We’re going to have to see where and how the economy reacts next year.”

The Associated Press has now moved a story.

Chief Financial Officer Gracia Martore (left) said holiday-related advertising sales are key to what happens next. “The next three weeks are crucial to our results,” she told the conference. In the first two months of the current quarter, she said, total revenue is down about 14% from a year ago.

Their remarks came on the third and final day of the 36th annual media week conference in New York City. I listened to the Webcast (replay here; scroll to Gannett link), but didn’t live-blog quite like I did last year. UBS investment bank was the sponsor.

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

UBS: ’08-’09 ad sales decline to be ‘worst in history’

December 9, 2008

Matthieu Coppet told the 36th annual media conference yesterday that he had revised downward his previous estimates for ad spending this year and in 2009, The New York Times says. The conference is sponsored by investment bank UBS; Gannett appears tomorrow.

Also, the New York Times Co. is in talks with lenders about debt payments coming due in the next two years, Editor & Publisher says — a day after the company disclosed it would borrow $225 million against the value of its new Manhattan headquarters to help repay loans due in May. “There is no doubt that 2009 will be among the most challenging years we have faced and more steps will be needed,” NYT CEO Janet Robinson (inset photo) said today, ahead of her UBS presentation.

UBS’s Coppet had previously forecast an ad spending decline in the United States next year of 5.9% compared with 2008; he changed that to a decline of 8.7%, primarily because local advertising could fall by a “double-digit level,” the NYT story says.

Coppet predicts local newspaper ad spending in 2008 could fall 9% from 2007 and in 2009, it could fall 21% from 2008. For newspapers in general — local and national ads, in America and other regions around the world — the declines Coppet is forecasting are, he wrote in a report, “the worst in the history” of the medium.

For comparison, Gannett’s newspaper ad revenue plunged 17.7% in the third quarter, to $977.1 million, from a year before. Year-to-date, newspaper ad revenue is down 13.8% from last year, the third-quarter earnings report says.

CEO Craig Dubow and his management team are scheduled to speak to the media stock analysts at 10 a.m. ET Wednesday, the conference’s third and final day. (Webcast details.)

[Images: Robinson, NYT; today’s Arizona Republic, Newseum. The Phoenix paper, which vies with USA Today as Gannett’s biggest by revenue, has been especially hard hit by real estate ad losses]

Poynter Online: Profit-layoff comparison ‘bogus’

December 4, 2008

That’s according to Biz Blog author Rick Edmonds, who criticizes a former Gannett employee (and maybe me, too) over those newspaper profit margins and the current round of job cuts. “It’s bogus,” he writes, “to juxtapose some leaked profit margins at Gannett papers for the first three quarters of 2007 — ranging as high as 42% — with this week’s layoffs.” Edmonds explains.

Save the date: Gannett appears Wednesday at UBS

December 3, 2008

Corporate just confirmed that it’s sending a delegation to the big media stock analysts conference sponsored next week in New York City by Swiss investment bank UBS. Gannett’s slot is Wednesday at 10 a.m. ET. “Topics to be discussed will include Gannett’s strategic efforts, particularly its digital segment and content initiatives, and the company’s outlook for 2009,” the company says. Presentations by CEO Craig Dubow and other big dogs will be webcast; details, here.

As Corporate meets, a run-up to UBS conference?

December 3, 2008

CEO Craig Dubow & Co. could use today’s newspaper Corporate staff meeting as a practice session for next week’s big media stock conference in New York. Dubow will likely offer details to the UBS conference about severance costs for the big layoff underway.

But don’t be surprised if he squeezes in a plug for One Gannett, or whatever GCI is calling the digital news and information network now being salvaged from the newspapers and TV stations. There are at least two big parts to the concept to pitch — one old (selling ads across all the websites); and one new (better organizing all the editorial content online).

How Phoenix is dragging down Gannett revenue

November 29, 2008

The Arizona Republic was one of the company’s biggest revenue and profit gainers, as the state’s especially frothy housing boom drove millions of dollars in new advertising to the Phoenix paper — until the bubble collapsed last year.

The Republic‘s total ad sales rose to $498.1 million in 2006, up 7% from $467.1 million in 2005, internal Gannett documents show. As a result, the paper’s share of all company newspaper ad sales grew to 9.3%. And its profit margin stood at 29.76% at the end of 2006.

But through the first three quarters of last year, Republic ad sales fell 13%, to $319.2 million vs. $367.6 million during the same period the year before, the documents show. Meanwhile, the paper’s profit margin dived to 25.43%.

I don’t have current data for 2008. We know, however, that the Republic was hit even harder this year as the real estate bust intensified — joining papers in Florida, California and Nevada, now pulling down Gannett’s overall revenue and earnings.

Please post your thoughts in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: yesterday’s front page, Newseum]

Jetcapade: Why GCI set a Dec. 3 layoff deadline

November 24, 2008

[Hyatt Grand hotel, seen in background, is likely venue for Gannett’s big layoff announcement in two weeks. But will Corporate risk bad publicity by flying there aboard the company jet?]

Gannett is almost certain to send a delegation to a high-profile Wall Street media stock analysts meeting, scheduled to start two weeks from today at the glittering Grand Hyatt hotel in New York. CEO Craig Dubow (left) and other top executives will tell influential analysts there how much Gannett expects to save as a result of the mass layoff now underway across the company. The more savings Dubow can report, the more likely analysts will boost GCI’s stock price.

Chief Financial Officer Gracia Martore alluded to this meeting during the third-quarter earnings conference call. But I didn’t find details until today, when the sponsor — Swiss investment bank UBS — published a schedule for the event. (Gannett participated in last year’s conference, which I live-blogged.)

The three-day Annual Global Media Conference is scheduled to start Dec. 8 — five days after the Dec. 3 deadline by which Gannett hopes to have finished laying off up to 3,000 newspaper division employees.

By private jet — or commercial coach?
Surely Corporate noticed what happened after the Big Three automakers flew their CEOs to Washington aboard private jets, seeking taxpayer bailouts last week. Didn’t work out so well, did it? The same devastatingly bad press coverage awaits Corporate and other media kingpins traveling to New York by jet and limousine for the UBS event.

Indeed, I was told Dubow & Co. plan to visit The Indianapolis Star on Dec. 4 — theoretically, the day after most of the layoffs there and elsewhere have been executed. (Have the painters started touching up the Star‘s lobby yet?)

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Photo: Gannett’s 1998 Dassault Falcon 2000, in a photo taken April 8, 2006. Since then, however, Corporate may have dumped it from the fleet, which is now down to a single jet]

Downgrade II: S&P cuts ratings on GCI debt

November 11, 2008

Standard & Poor’s said the ratings downgrade reflects a worsening pace of decline in advertising revenue at the company’s newspaper publications, MarketWatch says. In particular, S&P said it worried Gannett’s revenue could fall 10% and earnings 20% through 2009.

S&P’s move followed a similar downgrade announced yesterday by Moody’s. Downgrades threaten to increase GCI’s borrowing costs, or limit financing availability, at a time when the credit markets are already in turmoil. Gannett needs more options, not fewer.

Moody’s downgrades nearly $3 billion in GCI debt

November 10, 2008

Moody’s Investor’s Service downgraded $2.9 billion of Gannett’s debt today to a “Baa2” rating from “A3.” “It is still above junk bond level, but Baa2 indicates that bondholders should consider it ‘lower medium grade’ debt,” Reuters says in this story.

“Moody’s expects that Gannett’s ongoing efforts to reduce costs and debt will not fully offset what is likely to be a deeper revenue decline in 2009 than in 2008,” analyst John Puchalla wrote, according to Reuters.

Lower debt ratings often increase borrowing costs — not something GCI needs right now. The Moody’s decision follows a similar move by rival Standard & Poor’s early last month. Reuters notes that ratings agencies have soured on the debts of several publishers, including the New York Times Co., as their ad revenue declines.

In quarterly SEC report, a retirement plan warning

November 6, 2008

I’ve just breezed through Gannett’s third-quarter 10-Q report, filed earlier today with the U.S. Securities and Exchange Commission. Two items jumped out; I’m repeating the text word for word:

  • For 2009, the company’s expenses for its qualified retirement plans may increase substantially as the market value of plan assets has declined as a direct consequence of the recent financial market disruption. The impact of changes in plan asset values will not be precisely known, however, until the end of 2008.
  • The company has further plans to significantly reduce company wide expense levels in the face of these economic factors and the competitive pressures facing its businesses.

SEC 101
Gannett and other companies whose stock is owned by the public must file a 10-Q to formally report quarterly revenue and earnings; the company already made its informal disclosure last month.

What did I miss? Please post replies in the comments section, below. E-mail confidentially via gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.