The bad news is obvious. Gannett, which owns the Staunton-based News Leader, is having to lay people off, last week announcing a companywide reduction of 1,400 employees, about 3 percent of its workforce, on top of a move last year that resulted in a 10 percent job cut at the media conglomerate.
The good news – the cuts seem to be working to improve the bottom line. A company press release issued on Tuesday had the company turning a profit in the second quarter of 2009 after suffering a significant loss in the same quarter a year ago. Earnings per diluted share were 30 cents in the second quarter ’09 report, after a net loss per share of $10.03 in the second quarter of 2008.
“The decline in our operating expenses reflects our efforts to achieve efficiencies and further consolidations companywide, furloughs in the current quarter and significantly lower newsprint expense,” Gannett chief financial officer Gracia Martore was quoted in the Tuesday presser.
The release reported that expenses in the publishing division were down 20.3 percent in the second quarter of 2009, with newsprint expenses down 27 percent.
Back to bad news – total operating revenues declined in the second quarter of 2009 from the second quarter of 2008, from $1.7 billion a year ago to $1.4 billion this year, according to the company press release. A key factor there was a 27.2 percent decline in advertising revenue at Gannett’s U.S. papers in the quarter from a year ago, with classified-advertising revenues down 38.5 percent, automotive-advertising revenues down 40.4 percent, real-estate-ad revenues down 48.4 percent and employment-ad revenues down 62.3 percent.
And now to the analysis. This isn’t exactly rocket science, but clearly companies like Gannett can’t survive long term by simply cutting costs. As to how the Gannetts of the world should proceed in the face of the kinds of stark advertising declines that the industry is enduring right now, well …
– Column by Chris Graham
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