US Publishing Giant Warns on Profits

24 June 2005

The biggest US newspaper publisher, Gannett Company, has warned that a "choppy" advertising market will result in lower than expected earnings for the second quarter.

The company says earnings growth for the current period will be consistent with the first quarter, when profits per share rose 5%. Wall Street analysts had been predicting growth of around 8.5%.

However, outgoing ceo Douglas McCorkindale is confident of improvement in the second half of the year and cited strong growth in the online divisions.

Virginia-headquartered Gannett publishes 102 daily newspapers across the US, including the top-selling national title USA Today. It owns 21 TV stations and controls dozens of internet sites sponsored by its television and press interests. It is also the second largest newspaper company in the UK.

Factors in the advertising slump include fewer entertainment ads, sagging car sales and fears about the effects of big retail mergers, such as Sears and Kmart.

Rival publisher Knight Ridder, based in California, has also suffered from the auto-makers' troubles. It reported declines in classified auto advertising through May in regional papers across the country, including an 11% drop in San Jose, a 10% fall in Philadelphia, and a 9.7% slide in Kansas City.

But ceo Tony Ridder also expects national advertising to pick up in the second half.

Data sourced from Financial Times Online; additional content by WARC staff