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Newspapers Post Strong 3Q Profits

Magazine article Editor & Publisher

Newspapers Post Strong 3Q Profits

Article excerpt

Newspaper profits in the third quarter advanced strongly even as the pace of growth slowed sharply. Publicly traded newspaper companies reported hefty profit hikes from newspapers, while broadcast earnings declined.

"I've been pretty impressed," said Michael Beebe, Goldman Sachs analyst.

"It's not an easy operating environment right now," Beebe said. "Yet newspaper segments performed particularly well given the fact that growth is slowing. They've managed to control costs."

Nonetheless, newspaper stock prices may slide further -- despite earnings gains -- because, Beebe said, "The market's more focused on whether there's going to be a recession next year. Investors aren't looking in the rearview minor."


Gannett, the nation's largest newspaper company, reported net earnings of $176.5 million in the third quarter, up 15.8%, on $1.2 billion in revenues.

The company's 75 newspapers posted operating income of $248.7 million, up 14.2%, on revenues of just over $1 billion. Advertising revenue jumped 5%, as ad volume increased 7%.

The company said strong classified demand enhanced newspaper earnings. Gannett's newspaper operating margin was 24.6%.

At USA Today, ad volume slipped a hair, but revenues were up 4%.

Gannett's broadcast operations declined modestly in the quarter. The company cited the strike at General Motors for eating into TV advertising revenues.


The New York Times Co. posted record third-quarter net income of $55 million, up 18.9% from 1997. Revenues were down a fraction to $682.7 million, but, excluding divestitures, revenues inched up 1.9%.

Times Co. newspapers earned $98.1 million, up 13%, on revenues of $615.2 million -- lifting the profit margin to 15.9%. Losses at new ventures -- including newspaper Web sites -- rose 66% to $3.1 million.

Daily circulation rose a hair at the flagship New York Times, but Sunday circulation fell by 2.3%. Boston Globe circulation slipped daily and Sunday.

Times ad revenues rose 4.6% daily, nearly 8% Sunday. Globe ad revenue edged up a mite daily, 2.9% Sunday.

The 21 regional papers reported ad revenues increased 4.6% daily, and 6.1% Sunday.

The company reported softening September advertising at its metro papers: linage down 4. …

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