Advertising revenue fell 6.5% year-on-year at Britain's second largest regional newspaper company, Newsquest, which publishes 215 regional and local newspapers. The implications of that fact, embedded in the full year results for its US parent, Gannett, have attracted little attention this week.
Yet the continuing slide in Newsquest revenue, exacerbated by falling circulation income, is significant. It could lead to a further round of cost-cutting. It could even persuade Gannett's multi-tasking supremo Craig Dubow - he is the company's chairman, president and ceo - to pull out of Britain altogether.
That may seem far-fetched, but Gannett - the largest newspaper publisher in the States - is facing a tough time. Its poor results were greeted by a downgrading by Bear Stearns from "outperform" to "peer perform". In a note to investors, its analyst Alexia Quadrani raised concerns about Gannett's overall fall-off in ad revenue. Gannett went from an average ad revenue decline of 4.6% in October and November to a decline of 14.5% in December. January's results are expected to be similar to December's.
She also pointed out that trends at Gannett's flagship daily, USA Today, are troubling. Its ad revenue fell 12.7% in the fourth quarter compared to the same period the year before.
Another analyst, Craig Huber of Lehman Brothers, also considers Gannett's stock to be unappealing due to ad revenue concerns and circulation declines. Like Quadrani, he cut back on the stock price target. Gannett's shares are already trading at well below their 52-week high of $63.50, at about $35.42.
Though the presentation of the figures does not reveal the exact contribution of the Britain division, I'd guess that it stands up pretty well compared to the profits of the American papers. But I would also imagine that Dubow and his team are wondering just what to do with a business that shows no sign of revival. Watch this space.
.jpg?w=600)
