Gannett Slips by Harm in Chiquita Settlement
Hyman, Julie, The Washington Times (Washington, DC)
Media giant Gannett Co. Inc. of Arlington may be drawing journalistic controversy, but the company - with its many newspaper, television and radio holdings - has seen no financial impact from a multimillion dollar settlement last month with Chiquita Brands International Inc.
After the Gannett-owned Cincinnati Enquirer ran a story condemning Chiquita for questionable business practices, Chiquita accused reporters on the story of illegal fact-gathering. Gannett ended by paying the produce wholesaler at least $10 million in an out-of-court settlement.
While the story and settlement may be debate fodder in newsrooms, Gannett received no calls from investors concerned about the event, said Gracia Martore, the company's treasurer and vice president of investor relations
"It's more an industry issue than an equity market issue. It's such a small piece of their business," said Goldman Sachs analyst Michael Beebe of the Enquirer payoff.
Peter Appert, an analyst with BT Alex Brown, said that investors are generally concerned with the ethics of businesses because "the profitability of a company is related to the quality of the product it provides." In the case of Gannett, however, the Enquirer event is an "aberration," he said, and he still rates the company as a buy.
Gannett's stock fell last week - closing Friday at $68.06, down from Monday's close of $72.19 - after the owner of USA Today released its second quarter earnings. The company reported a 14 percent increase in net income for its second quarter ended June 28, to $222 million from $194 million for the same period last year. Revenues rose 9.7 percent to $1.3 billion from $1.1 billion a year ago.
"The earnings numbers basically are in line with expectations, but they're not ahead of expectations" for the first time in a year, said Mr. …