Gannett Profit Falls 8.9% As Ad Revenue Declines

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By Frank Ahrens

Washington Post Staff Writer
Tuesday, April 22, 2008; Page D04

Gannett, owner of 85 daily newspapers including USA Today, said yesterday that its first-quarter profit dropped nearly 9 percent from the year before, as the newspaper industry continues to struggle with declining advertising revenue and circulation.

Gannett reported a profit of $192 million (84 cents per share) on $1.68 billion in revenue, compared with $211 million (88 cents) profit on $1.83 billion in revenue for the comparable period in 2007.

The results included a one-time pretax gain of $26 million from a sale of land next to the company's McLean headquarters.

"Gannett is in the midst of a deep transformation to meet head-on the fundamental changes in the way people consume news and information," Gannett President Craig A. Dubow said during an investors call yesterday.

"We are changing our culture and focusing on customers in ways we never have before."

The housing crisis has particularly hurt real estate advertising at Gannett papers, Dubow said. Retail advertising revenue was down 8 percent for the quarter while classifieds were off 16 percent.

However, ad revenue at USA Today, the nation's largest-circulating newspaper, was up 2 percent for the quarter.

The company reported a 19-percent decline in newsprint costs.

At Gannett's 23 television stations, revenue was off 7 percent for the quarter, leading to 10 percent decline in television operating income.

Dubow said that Internet-related revenue across the company was up 7 percent.

At CareerBuilder.com, a jobs Web site that Gannett owns with Tribune Co., McClatchy and Microsoft, North American revenue was up 3 percent in the first quarter.