What Earnings Reports have revealed about Ads

Associated Press

Here are highlights of recent quarterly earnings reports from selected Internet, media and advertising companies and what they say about the state of spending on advertising:

Oct. 14: Google Inc. says its average cost per click rose 3 percent from a year ago, meaning companies paid more to place ads. People clicked on ads 16 percent more than they did in the same period last year. Executives also indicate that display advertising accounted for nearly 10 percent of ad revenue in the quarter, and mobile advertising was almost 4 percent. Those figures helped justify two of Google's biggest acquisitions - of DoubleClick Inc. and AdMob.

Oct. 15: Gannett Co. reports a 37 percent rise in third-quarter earnings on Friday, helped by a jump in broadcasting revenue. A recovering auto industry and political campaigns heading into midterm elections poured money into Gannett's 23 television stations. That, plus an increase in advertising on the company's websites, helped the biggest U.S. newspaper publisher halt declining revenue for the first time since 2006.

Tuesday: The New York Times Co. and McClatchy Co. both report that print advertising fell compared with a year ago, when ad sales had already taken a big plunge from 2008 levels. And neither company was able to draw enough new business from its digital operations to make up for the losses in print.

Yahoo Inc. says search advertising revenue fell 7 percent from last year to $331 million. But Yahoo generated slightly more revenue from each search in the third quarter, the first time that has happened in two years. The company fared much better in its stronghold, the "display" advertising category that covers banner and full-screen ads, sometimes featuring video. Revenue in this segment climbed 17 percent to $465 million.

Gannett Experimenting With Online Pay Walls In Three Markets

The Wall Street Journal

Chief Executive Craig Dubow said Friday the publishing company is experimenting with subscription models for online news content in three local markets in the U.S.

Dubow said on a conference call with analysts following its second-quarter earnings results that Gannett has launched experiments with "paid content" on its newspaper sites in Greenville, S.C., Talahassee, Fla. and St. George, Utah.

The tests come as a conviction grows in the newspaper industry that online advertising revenue alone can't support substantial newsgathering operations in the digital age, and several major news publishers are moving towards online subscription models to generate a new revenue stream from online readers, who have grown accustomed to getting news online for free.

The New York Times Co. (NYT) has said it will begin charging readers for access to some articles on its website next year, and News Corp. (NWS, NWSA) Chief Executive Rupert Murdoch has said subscription payments will become a much larger part of the company's digital strategy.

News Corp., which owns this newswire as well as The Wall Street Journal, recently announced two investments that reflect its efforts to wrest consumer payments for its news properties on the Web. It acquired a stake in Journalism Online LLC, a venture that helps publishers set up a payment system and business strategies to charge readers for online news and information.

It also acquired Skiff LLC, an electronic-reading technology firm that handles the behind-the-scenes workings of publishing on mobile devices, such as converting files to digital formats and setting up ways to serve up advertisements.

Many publishers view the proliferation of mobile reading devices as a new opportunity to set up subscription models for electronic distribution of news. Dubow said Friday that USA Today's iPhone application would remain a free, ad-supported service at least through the third quarter.

The Wall Street Journal is one of the few examples of newspapers that have maintained a healthy online subscription business as its business and investment-oriented audience has shown a willingness to pay online for its content. Its rival The Financial Times also has a thriving online subscription business, but more general news sites have struggled with the prospect of getting their readers to begin paying online. The New York Times has twice launched online subscription offerings, only to remove them after their results were disappointing.

Dubow said Gannett's experiments will allow the company to gain insights into the willingness of consumers to pay for local, online news content without disrupting its broader publishing business by launching a larger subscription offering.

Gannett Chief Operating Officer Gracia Martore said the company is beefing up its local content offerings in each test market in areas of particular interest to each community, and it is trying different price points in an effort to see what works.

Martore said in three to six months, Gannett should be "much better informed about what business models are sustainable."

Gannett's Posts 51% Profit Leap

USA Today

NEW YORK (AP) — Gannett, the largest U.S. newspaper publisher and publisher of USA TODAY, said Friday its first-quarter profit jumped 51%.

Cost cutting and a less severe drop in advertising revenue boosted the results.

Gannett (GCI) earned $117.2 million, or 49 cents a share, compared with $77.4 million, or 34 cents a share, a year earlier.

Taking out a $2.2 million tax charge related to the recent U.S. health care overhaul, the company said it would have earned 50 cents a share. Analysts, who typically exclude such one-time items, expected 41 cents a share, according to Thomson Reuters.

Gannett, which is based in McLean, Via., publishes more than 80 daily newspapers. It is the first major publisher to report earnings for the January-March period and could offer a preview of what will come next week from McClatchy, Lee Enterprises and The New York Times Co.

As expected, Gannett reported its smallest ad revenue decline in more than a year, although the comparison is being made against a period in 2009 when advertising spending was plunging in the recession.

Gannett's overall revenue fell 4% from the same period of 2009 to $1.3 billion, matching forecasts. Ad revenue in its publishing division — which accounts for most of the company's income — fell 8%. That was a significant improvement from the decline of 18% that Gannett had in the last quarter of 2009 from the same period a year earlier.

The continued decline in newspaper ads was offset by a 15% rise in TV broadcasting revenue from the prior year. Gannett benefited from advertising tied to the Winter Olympics.

Its stock hit a a 52-week high.