Gannett Reports Drop in Earnings

Gannett Co., the nation’s biggest newspaper publisher, reported an 11.5% decline in fiscal first-quarter earnings Wednesday as softer advertising and stock expenses weighed down results.

Also, Gannett’s chairman, Douglas McCorkindale, said in a conference call that the company wasn’t participating in the auction of 12 newspapers owned by Knight Ridder Inc. that were being sold by Knight Ridder’s buyer, Sacramento-based McClatchy Co.

Gannett, which publishes USA Today and 89 local newspapers in the U.S., had net income of $235.3 million, or 99 cents a share, in the period ended March 26. The results were down from $265.7 million, or $1.05, in the same period a year ago, which included 2 cents a share in profit from discontinued operations.

The most recent results were in line with forecasts of analysts surveyed by Thomson Financial and include a noncash expense of 3 cents a share from stock option costs, which the company began recording in the first quarter.

Advertising revenue from newspapers fell 1.8% in the quarter, assuming Gannett owned the same newspapers in both periods, as softer demand for ads and an unfavorable shift in currency rates pulled down results in the company’s British newspapers.

Advertising revenue at USA Today fell 4.2% as paid ad pages declined 7.4% compared with the same period a year ago.

Edward Atorino, an analyst at Benchmark Co., said that Gannett “took a big hit in the U.K.” and that “USA Today had a tough quarter as well.”

Gannett’s revenue increased 6.5% to $1.88 billion from $1.77 billion in the same period a year ago.

The increase was mainly from the consolidation of the Detroit Free Press, which it acquired from Knight Ridder in August and then combined into a partnership with the Detroit News, which Denver-based MediaNews Group Inc. bought from Gannett.

Excluding the Detroit transaction and other newspaper deals, Gannett’s revenue would have edged down 0.5% in the quarter from the same period a year ago.

Revenue from broadcasting rose 10.9% in the quarter as demand increased for advertising on Gannett’s NBC affiliated stations during the Winter Olympics.

Gannett shares fell $1.06 to $57.76.