Q2 seen improving for Gannett


After digesting Gannett’s Q1 results and current pacings for Q2, Wells Fargo Securities bond analyst Bishop Cheen is of the view that things are getting better for the nation’s largest newspaper company. Of course, it has the TV division to thank for most of the positive momentum.

“We believe Gannett is positioned for a somewhat better Q2 ahead, as broadcast sales should benefit from an improving core (ex-political, pacing up mid-single digits), and the
publishing business could get a boost from the late Easter holiday timing. Expenses should continue to be negatively affected by newsprint pricing. For 2011, we are currently

Revenue: We project $5.26 billion in 2011 sales, down 3.7% year-over-year. Although we hope to see publishing revenues come back to the ‘line of scrimmage’ sometime this year, we are currently forecasting moderating declines throughout 2011 (we adjusted our forecast slightly downward to -5.3% for the year). In addition, broadcasting sales are likely to be down year-over-year in second half 2011 with the absence of political (down 4.6%, as retrans growth and core ad sales upside could help offset this loss).

EBITDA: We forecast $1.144 billion in EBITDA for 2011, down 10.1% year-over-year, primarily due to the low-single-digit top-line decline, higher newsprint prices and modestly higher expenses in the digital and broadcast segments.”

Cheen noted that Gannett management said Q2 for TV was pacing up mid-single digits, excluding political. The newspaper side is still struggling, with the exit from negative revenue numbers not expected to materialize, in the analyst’s view, until sometime in 2012.

RBR-TVBR observation: Unlike Journal Communications, Gannett can’t hope for its broadcast operations to overtake the newspaper division in size and drive growth for the company. Being the biggest newspaper company there is means that Gannett is pretty much tied to the fate of the newspaper business – and that’s not likely to be a happy fate for many years to come.