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Q3-2014; Gannett broadcasting segment doubles revenue, Operating income; company moots split

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BENGALURU:  International media and marketing solutions company and diverse local content provider Gannett reported 15.2 per cent growth in its Total Net Operating Revenues (TNOR) to $ 1443.14 million for the 13 week period ended 28 September 2014 (Q3-2014). TNOR for the corresponding period ended 29 September 2013 (Q3-2013, current quarter) was $ 1252.89 million.  TNOR grew at 13.5 per cent for the 39 week period ended 28 September 2014 (9M-2014) to $ 4307.21 million from $ 3793.32 million during the 39 week period ended 29 September 2013 (9M-2013).

The company’s operating income (OI) attributable to Gannett Co grew 48.6 per cent to $ 118.52 million in Q3-2014 from $ 79.75 million in Q3-2013. OI for 9M-2014 grew 29.6 per cent to $ 386.14 million from $ 297.93 million in 9M-2013

Segment and sub-segment results

Broadcasting segment

The company’s broadcast segment reported more than doubling (2.05 times) of net operating revenue in the current quarter to $ 416.51 million from $ 203.36 million in Q3-2013. Further, Operating revenue for the segment almost doubled (1.97 times) in 9M-2014 to $ 1197.04 million from $ 606.91 million in 9M-2013.

OI from this segment more than doubled (2.12 times) to $ 177.97 million in the current quarter from $ 83.81 million in Q3-2013. For 9M-2013, OI from broadcasting segment went up 90 per cent to $ 503.84 million from $ 265.58 million in Q3-2013.

Publishing segment

The company’s publishing segment has three sub-segments-publishing advertising, publishing circulation and all other publishing. Publishing segment reported a 3.6 drop in operating revenue to $ 826.82 million in Q3-2014 from the $ 858.09 million in Q3-2014. OI from this segment fell by half a per cent to $ 62.42 million in 9M-2014 from $ 62.74 million in 9M-2013.

All other publishing saw the steepest fall in operating revenue of 12.4 per cent to $ 55.1 million in Q3-2014 from $ 62.89 million in the corresponding period of the previous year. During 9M-2014, operating income at $ 173.12 million was 5.8 per cent lower than the $ 183.75 million in Q3-2013.

Publishing advertising operating revenue also dropped 4.9 per cent to $ 494.9 million from $ 520.19 million in Q3-2013. Operating revenue fall in 9M-2014 was even steeper at 5.1 per cent and $ 1526.28 million from $1609.16 million in 9M-2013.

Publishing revenue operating income rose fractionally by 0.7 per cent to $ 276.83 million in Q3-2014 from $ 275 million in Q3-2013. 9M-2014 operation revenue from this segment however fell half a per cent to $ 836.76 million from $ 840.63 million in 9M-2013.

Digital segment

Digital segment saw operating revenue grow 4.4 per cent to $ 199.8 million in Q3-2014 from $ 191.45 million in Q3-2013. Operating revenue in 9M-2014 grew 3.8 per cent to $ 573.92 million from $ 552.88 million in 9M-2013.

OI from Gannett’s publishing segment in Q3-2014 was 15 per cent to $ 48.34 million from $ 42.05 million in Q3-2013. 9M-2014 OI  rose 6.9 per cent to $ 107.86 million from $ 100.93 million in 9M-2013.

Company split mooted

On 5 August 2014, Gannett announced plans to create two publicly traded companies: one exclusively focused on its broadcasting and digital businesses, and the other on its publishing business. The planned separation of the publishing business will be implemented through a tax-free distribution to Gannet’s shareholders of shares of a new entity formed to hold its publishing assets.

Gannett says that it expects to complete the transaction in mid-2015, subject to a number of conditions. There can be no assurance regarding the ultimate timing of the proposed transaction or that it will be completed, cautions the company.

On 1 October 2014, Gannet completed the acquisition of the remaining 73 per cent interest in Classified Ventures LLC, which owns Cars.com, for $ 1.8 billion cash.

About Gannett’s businesses

Gannett’s broadcasting segment currently includes 46 television stations that it either owns or services through shared service agreements. Excluding owner-operators, Gannett claims that it is the no 1 NBC affiliate group; no 1 CBS affiliate group; and the no 4 ABC affiliate group. These stations cover almost a third of the U.S. population in markets with approximately 35 million households.  It claims to be the largest independent television station group of major network affiliates in the top 25 U.S. markets.

The primary categories of Gannett’s broadcasting segment revenue are: 1) core advertising which includes local and national non-political advertising; 2) political advertising revenues which are seasonal with peaks occurring in even years (e.g., 2014 and 2012) and particularly in the fourth quarter of those years; 3) retransmission revenues representing fees paid by satellite and cable networks and telecommunications companies to carry Gannett’s television signals on their network; 4) digital revenues generated through advertising on the stations’ web, tablet and mobile products; and 5) other revenues, which consist of payments by advertisers to television stations for other services, such as producing advertising material.

Within its publishing segment, Gannett says that it provides content through 82 loca

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