With the improvement in the economic environment, murmurs about advertisers returning to the market are gaining ground. Gannett Co. Inc. (GCI), the diversified media conglomerate, is expected to benefit from positive trends that are emerging in both print and digital advertising with the advertisers’ spending gaining pace.
The rate of fall in publishing advertising revenue has been decelerating since fiscal 2009, and continues to shrink in fiscal 2010 as advertising demand firms. After plunging 7.9% in first-quarter 2010, publishing advertising revenue dropped 5.7% to $692.2 million in the second quarter, the smallest drop since mid-2007.
Encouragingly, the broadcasting division is strong and benefits from significant political advertising. Management expects television advertising revenue to climb in the mid-twenties for third-quarter 2010.
Gannett, in order to lessen its dependency on traditional advertising, is now transmuting its business model by adding diverse revenue streams to hedge against economic cycles. The company is also adapting to the changing face of the multiplatform media universe, which currently includes Internet, mobile, social media networks and outdoor video advertising in its fold.
Currently, we have an Outperform rating on the stock. Gannett holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
Gannett is expected to post its third-quarter 2010 results on October 18, 2010. The current Zacks Consensus Estimate for third-quarter 2010 is 48 cents. As per the company’s earnings surprise history, Gannett has outperformed the Zacks Consensus Estimate in the last four quarters in the range of 14.3% to 22% with the average being 17.3%. Given past trends we believe that the company may post better-than-expected results.
The rate of fall in publishing advertising revenue has been decelerating since fiscal 2009, and continues to shrink in fiscal 2010 as advertising demand firms. After plunging 7.9% in first-quarter 2010, publishing advertising revenue dropped 5.7% to $692.2 million in the second quarter, the smallest drop since mid-2007.
Encouragingly, the broadcasting division is strong and benefits from significant political advertising. Management expects television advertising revenue to climb in the mid-twenties for third-quarter 2010.
Gannett, in order to lessen its dependency on traditional advertising, is now transmuting its business model by adding diverse revenue streams to hedge against economic cycles. The company is also adapting to the changing face of the multiplatform media universe, which currently includes Internet, mobile, social media networks and outdoor video advertising in its fold.
Currently, we have an Outperform rating on the stock. Gannett holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
Gannett is expected to post its third-quarter 2010 results on October 18, 2010. The current Zacks Consensus Estimate for third-quarter 2010 is 48 cents. As per the company’s earnings surprise history, Gannett has outperformed the Zacks Consensus Estimate in the last four quarters in the range of 14.3% to 22% with the average being 17.3%. Given past trends we believe that the company may post better-than-expected results.
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