Gannett and the New York Times Co. closed the books on 2014 with mixed results in earnings reports this morning.
For Gannett, strong growth in broadcast and its digital businesses more than offset revenue declines in both circulation and advertising at its newspapers, which will be spun-off into a separate company later this year.
At the New York Times Co., whose only business is its flagship paper and its digital and international extensions, continued growth in circulation revenues offset a small decline in advertising making for overall revenue growth of 0.7 percent for the year.
Net income fell to $30.3 million, about half the profit in 2013, on revenues of $1.59 billion. That is a margin of roughly 2 percent. CEO Mark Thompson said in a press release the company chose investments in digital expansion over maximizing profit but will “bear down on costs” in 2015 to improve results.
The Times finished the year with 910,000 paid digital subscribers.
At Gannett, a boom year in political advertising, an expanded roster of stations and retransmission fees from cable providers caused broadcast revenues to more than double compared to 2013. Digital businesses like Cars.com and CareerBuilder grew 22.8 percent for the year.
Publishing was a less happy story. Declines in ciruclation revenue at USA Today and its British newspapers outweighed gains at the company’s 80 community papers for an overall decline of 0.9 percent year to year.
Advertising revenues in publishing were down 5.8 percent for the year. National advertising was a particularly weak spot down 20.8 percent for the fourth quarter and 13.2 percent for the year.
Update: Here are highlights from conference calls with analysts for the two companies.
Gannett:
- G/O Digital, which sells marketing services to local businesses, is performing strongly. Revenues were up 52 percent year-to-year in the fourth quarter. CEO Gracia Martore said that she foresees “much more to come in the next 12 to 24 months.”
- USA Today content, already placed in Gannett’s 35 largest community papers, has now also been sold to the Richmond Times-Dispatch and the Arlington Daily Herald in suburban Chicago. Martore expects this too will be a growth area.
- A recovering economy is boosting classifieds, especially in auto and real estate. Gannett is projecting that “locally controlled” advertising will be positive in 2015. National is another story. That “has been the big challenge for us,” Martore said, “and for everyone else I’ve talked with.”
- Total publishing revenues are expected to show quarter to quarter improvement “by a couple of percentage points,” Martore said, in the first quarter of 2015.
New York Times
- The company had 19 percent growth in digital advertising in the fourth quarter compared to the previous year. Thompson said that was driven by expansion of the “Paid Posts” native advertising program and video. Both are expected to continue robust growth in 2015.
- Print advertising did not see a rally at the end of the fourth quarter “as we did at the end of the third.” Thompson said. “We expect continuing headwinds in 2015.”
- Thompson said that the failure of the NYT Now mobile news summary app was caused by inadequate advance testing with target audiences and marketing confusion as several new products were introduced at the same time. The company is moving more slowly in the next round of digital launches.
- Several analysts asked if the Paid Posts and growing fashion and luxury living content was diluting the Times’ level of journalistic quality. Thompson said the company is “incredibly conscious” of the need for excellence and can achieve it, even after a cut of more than 100 newsroom job last quarter.
