Gannett Profit Falls 36% as USA Today Ad Sales Plunge

Sarah Rabil
Bloomberg
Thursday, July 17, 2008

Gannett Co., the largest U.S. newspaper publisher, said second-quarter profit declined 36 percent after advertising sales at USA Today plunged. The stock dropped to its lowest level since 1985.

USA Today's ad sales fell 27 percent in June, the steepest monthly decline this year and worse than the 16 percent drop reported for all Gannett publications. During the quarter, the company's national advertising slid 14 percent to $168.9 million because of cutbacks by retailers and carmakers.

``The weakening economy had a dramatic impact on our results,'' Chief Executive Craig Dubow said in the statement.

Earnings fell to $232.7 million, or $1.02 a share, from $365.7 million, or $1.56, a year earlier, McLean, Virginia-based Gannett said today in a statement. Sales dropped 10 percent to $1.72 billion, hurt by the print ad decline as well as lower revenue from the company's 23 television stations.

The results are preliminary and don't include a writedown of as much as $2.7 billion that reflects a drop in Gannett's stock price and an industrywide slump in ad sales.

Gannett fell $2.24, or 13 percent, to $15.11 at 9:54 a.m. in New York Stock Exchange composite trading after earlier falling as much as 16 percent. The stock had dropped 56 percent this year before today.

The earnings were in line with a forecast range of $1.01 to $1.03 a share that Gannett gave in June.

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