• by Ross Fadner , October 12, 2005

TV and publishing giant Gannett Co. Tuesday reported a 4 percent decline in third-quarter income as a result of lower ad revenues. Gannett, publisher of USA Today and owner of 21 TV stations, cited a lack of ad dollars from Olympic, political, and automotive category advertisers--totaling over $50 million in 2004--as the primary cause for the year-over-year decline.

"The absence of these events...unfavorably impacted our broadcasting segment results," Craig Dubow, president and chief executive of Gannett Company, stated in an earnings release.

Gannett's third-quarter net income dropped to $297 million from $310.2 million a year earlier. Ad revenue at its television stations fell 20 percent to $166 million. USA Today, Gannett's flagship company, saw ad revenues decline 2.7 percent in the quarter, also due to the absence of Summer Olympics-related ad demand, the company said.

Overall, year-over-year newspaper revenues rose 7.1 percent to $1.7 billion, although the comparison is not uniform: in August, Gannett Co. and MediaNews Group, a privately held firm, bought Knight Ridder's interest in the Detroit Free Press, which Knight Ridder and Gannett had been running jointly. MediaNews acquired The Detroit News from Gannett as part of the deal. Knight Ridder also took The Idaho Statesman, The Olympian, and The Bellingham Herald in exchange for cash and the Tallahassee Democrat. Had Gannett owned the same properties in both the third quarter of 2004 and 2005, advertising revenues would have risen 1.1 percent. Gannett's third-quarter mixed results come at a time when most major newspaper companies are feeling squeezed by falling circulation, higher costs, and flat ad revenues. So far, shares of Gannett have fallen nearly 18 percent this year--which is more than the average publishing company, whose stock has fallen 11 percent this year according to the Standard & Poors Index, but less than other big newspaper weathervanes like Tribune Company (down 20 percent), and The New York Times Company (down 28 percent).

Despite demonstrations of flagging confidence in the newspaper business from investors and the news media, newspapers continue to turn profits--often impressively. According to Goldman Sachs, Gannett's operating margin last year was 30 percent; The New York Times Company, 16 percent; and Tribune Company, 18 percent.

Gannett's stock rose 3 cents Tuesday to close at $66.22.