Gannett TV Heading To 4Q Record Revenues

After reporting the best 3Q ever for Gannett’s broadcasting operation, the company is already promising Wall Street a record 4Q as well. While that’s due to heated election advertising activity, core business is looking good as well.

In management’s quarterly conference call with analysts, Gannett Broadcasting President David Lougee said there was more than just demand behind the growth in political revenues to $42 million in 3Q from $26 million in 3Q of the previous presidential election year, 2008.

“Our stations have done a tremendous job with both technology and psychology in pricing and managing our inventory correctly,” Lougee explained. “The technology is our centralized traffic operations, along with our inventory yield management software. That’s allowed us to minimize displacement of our core revenues. But like all strong stations in heavy political states, we did have core displacement in September because of the record levels of political demand.”

Looking at the current landscape, Lougee told analysts that “all of those same dynamics are in place, and then some, for a record fourth quarter in political. It’s too early to put a number on it, as the heaviest booking days of the year are still ahead of us, but there’s no question it will be a new high,” he said.

TVNewsCheck found that the record 4Q political take for Gannett Broadcasting, set in 2008, was $58 million.

Analysts wanted to know about pacings post-election, and while Lougee said December is “pretty decent,” he added it is still early and declined to give a pacing number. Another analyst later tried to get more detail from Gannett Co. President-CEO Gracia Martore. “We’re seeing pacings up nicely,” she said of December, “but it’s really early.”

Lougee said the TV division’s year-long “Olympic sales transformation process” paid off in 3Q. “We brought a lot of new local advertisers and partners into the Olympics and are already working with them on packages for the Sochi [Russia] Winter Olympics in 16 months,” he said. Gannett’s NBC affiliates finished the London Summer Olympics with a record $36 million in billings — up 58% from the Beijing Summer Olympics in 2008. Included in that, Lougee noted, was $4 million in political advertising.

The Olympics and political advertising, plus retransmission consent fee growth, combined to push TV revenues up 38% in 3Q to $233 million. Company officials are projecting that 4Q growth will be in “in the very high-20s,” with political accounting for more than a third of spot sales. 4Q TV revenues in 2011, a non-political year, were $192 million.

Gannett officials refused to disclose any details of the recent retrans agreement with Dish Network. Lougee said it was the first time Gannett stations had warned viewers of a possible carriage disruption involving a major distributor. He noted that Gannett has retrans agreements up at the end of this year with two other carriers, whom he did not identify.

Martore and Lougee kept their cards close to their vests when asked about Gannett’s interest in adding to its portfolio of television stations.

“As with any market, as with any potential opportunity, it would be very dependent on what the opportunity was and what price we could pay for that opportunity,” said Martore, adding that Gannett has “an incredibly strong” balance sheet and the company would make use of that balance sheet for acquisitions if it would add strongly to shareholder value. “We like the television business,” she noted, stating that the company will continue to look at M&A opportunities in digital media, broadcasting and other areas.

“We look at everything,” added Lougee, “but we’re obviously a very disciplined company in what we do and don’t do” in acquisitions.

Gannett actually had something to celebrate on the publishing side in 3Q, although revenues were down 3% to $890 million, including a 6.6% ad revenue decline to $553 million. However, circulation revenues were up for the first time since the first quarter of 2007. That 5.6% gain to $277 million was primarily attributed to the newspaper division’s “all access content subscription model.” The online subscription fee-wall has been rolled out in 71 U.S. markets and should be deployed by all of Gannett’s local newspapers by the end of this year.

With TV and standalone digital operations up, while newspapers were down, total operating revenues gained 3% in 3Q for Gannett to $1.31 billion. Operating cash flow increased nearly 10% to $280 million.