MediaFile

Gannett's Detroit newspapers

For a handful of years now,  several newspaper companies have attempted to re-brand themselves into something — anything! — that doesn’t associate them with newspapers. Gannett is one of the latest examples trying to put some distance between itself and the industry despite the fact that it is still the largest newspaper chain by circulation in the U.S.,  it still derives the heft of its revenue from ink on paper, and it still is  a bellwether for other companies that count big iron as an asset.

The USA Today publisher  trips all over itself with its description.  Here is part of the boiler plate the publisher and broadcaster uses:

“Gannett Co., Inc. is an international media and marketing solutions company that informs and engages more than 100 million people every month through its powerful network of broadcast, digital, mobile and publishing properties.”

The Street isn’t buying it at least today.  Shares of Gannett fell about 9 percent so far after the company announced its Q1 results. It’s EPS beat Wall Street’s view by a long-shot. Its revenue was pretty much in line with expectations. So what gives? It’s the company’s  slide in advertising revenue, specifically at its publishing division where it declined a little more than 8 percent, that accounts for the beating.

In fairness, Gannett’s CEO Gracia Martore said it is going to take some time for the company to start reaping results from the plan it rolled out to investors in February that included a pay model at its newspaper properties. On a call with analysts this morning about Gannett’s results, Martore said Gannett is “working to stabilize our Publishing business,”  but that  the effort is not a ” quick fix.”

When Media General reported its quarterly results this week, the company made sure to highlight that its increased digital revenue — up 8 percent — was due in part to its relationship with Yahoo.

“It’s one of the few game-changing partnerships we have had,” Media General digital media president Kirk Read said in an earlier interview.

The publisher of The Tampa Tribune and Richmond Times-Dispatch is part of the 800 or so newspapers that appointed Yahoo to be one of its digital sherpas. The partnership involves ad serving technology, content sharing and, until the sale of Yahoo’s Hot Jobs to Monster, online recruitment. Since the Internet giant launched its ad platform known as APT 18 months ago, the alliance has sold $100 million in Yahoo inventory.

For those following Gannett Co.  second quarter earnings on Friday, a familiar name might be popping in on the line. Douglas Arthur — the sharp analyst late of Morgan Stanley known for such hits as “Knight Ridder: A Scenario Analysis”– is back covering the sector again.  Or something akin to it.

Arthur initiated coverage of Gannett for Evercore Partners last week,  stamping Gannett with an “overweight” rating and a price target of $18. It’s likely his report sent shares in the newspaper and broadcasting company soaring about 6% to$14.16 on July 7 close.

Newspaper companies used to be covered by a boatload of analysts until around 2008 when they started dropping like flies.  Maybe if a few more come back into the fold we’ll be looking at an upward trend.

Take heed and rejoice, you hard-working newspaper elves. Someone on Wall Street thinks that some newspaper companies aren’t dancing quite as close to the abyss as conventional wisdom says.

Wells Fargo analyst John Janedis, never known for going too easy on newspaper stocks, raised his rating on USA Today publisher Gannett to “outperform” and his rating on The New York Times to “market perform.”

His explanation: “After years of downward revenue estimate revisions, it appears as though the newspaper ad market is improving more quickly than we previously anticipated, particularly in December. Given current trends, we now expect approx. high single digit decline in overall newspaper advertising in 2010.”

We had a hard time finding the good news in Monday’s report that U.S. newspaper circulation has fallen more than 10 percent, based on an analysis of 379 daily papers. Thank goodness for the newspapers whose publishers helped them understand why losing hundreds or thousands of paying readers is good.

Most papers acknowledged deep declines in circulation, but explained it in one of the following ways:

We had to clear out all the bulk copies sold at discount. (I’m still not sure how this one works because I recall publishers saying this a couple of years ago. How many deadwood readers are there?) We shrank our coverage area so of course we lost some circulation. It tells advertisers that they’re getting a BETTER quality of reader. We’re charging more for the paper so circulation revenue has risen, and anyway, who wants to rely on a business as fickle as advertising (the one that lined our owners’ pockets for the past 150 years.)? Readership is rising on the Internet. At least we didn’t get whacked as bad as the next guy.

All these statements are true, and they all are good business moves. What I can’t find among the numbers is what percent of print decline at many of these papers is because of the other reasons that you hear from people. Some are legitimate, some aren’t and some are just silly. All say one thing: Many people don’t pay for the paper anymore, which means there’s less money to keep them in business. (Don’t believe us? Ask the Rocky Mountain News and the Seattle Post-Intelligencer):

Earlier this week I brought you the brewing circulation tussle between USA Today and The Wall Street Journal, and which paper will be able to claim to be the largest one in terms of circulation. You can read that here, but for the recap, here are the main points:

Editor & Publisher reports: USA Today was set to report that circulation fell “17% to 1.88 million for the six months ending September 2009, a drop of about 390,000 copies. The decline could also threaten USA Today’s position as the No. 1 newspaper in the country by circulation.” The Wall Street Journal and The Associated Press report that the Journal would be the largest paper by circulation, according to the Journal. USA Today responds, “We are confident that even with this latest economic impact, USA TODAY will remain the nation’s number one newspaper in total print circulation when the ABC statements are released October 26th.”

As I wrote at the time, it seems that the Journal is counting print and online subscriptions together, and why not? Both are made up of paying subscribers. USA Today, of course, is counting printed newspapers.

We won’t know until their circulation numbers are published on October 26 what the final, comparable figures would be. But today, the Journal revealed its latest numbers:

USA Today and The Wall Street Journal aren’t waiting for Oct. 26, the day North American newspapers report their latest circulation numbers, to begin tussling over which one has the biggest paper.

Editor & Publisher made the first move on Friday when Jennifer Saba reported that USA Today was set to report that circulation fell “17% to 1.88 million for the six months ending September 2009, a drop of about 390,000 copies. The decline could also threaten USA Today’s position as the No. 1 newspaper in the country by circulation.” The news came in a memo from USA Today Publisher, David Hunke, to his workers.

Spicy stuff, considering that when we write about its owner, Gannett, we say it is the largest U.S. newspaper publisher that publishes USA Today, the largest newspaper by circulation.

Here are some of the day’s stories about the media industry:

Recession sends Americans to the Internet (Reuters)
S. John Tilak writes: “More than two-thirds of American adults — or 88 percent of U.S. Internet users — went online for help with recession-induced personal economic issues and to gather information on national economic problems, a study released on Wednesday said.”

BBC and Government Fall Out Over Financing Plan (NYT)
“The BBC and Britain’s Labour government, which has a history of support for the “Beeb,” have fallen out over a government plan to share some of the broadcaster’s £3.6 billion in public funding with its commercial television rivals,” writes Eric Pfanner. Weisberg: Big news orgs have a stake in web-only papers not working (Economist.com|Romenesko) “Web advertising may well end up supporting big newsrooms if they can escape some of their legacy costs,” says Slate’s Jacob Weisberg. “The test I’d most like to see is of a well-financed, for-profit, web-only ‘newspaper’ with no printed version. The problem is that the leading news organizations have a stake in web-only newspapers not working because they will accelerate the decline of the large, if faltering businesses that revolve around print.”

USA Today introduces Newsdeck site for top headlines (Editors Weblogs)
“To give visitors another way to view the news, USA Today has introduced a site it calls Newsdeck that compiles the top headlines in an easy-to-read format. Users can scroll through stories in eight categories, including News, Money and Sports, with the ability to switch back and forth between the latest news and the most popular articles.,” writes Liz Webber.

News about the media industry:

Netflix looks to future but still going strong with DVD rentals (USA Today)
“Netflix CEO and co-founder Reed Hastings doesn’t think his 58 distribution centers are in immediate danger of becoming obsolete, but he knows that day will come. He believes DVD rentals have four to nine years to keep growing, despite inroads in Internet delivery of movies to set-top TV boxes and other video-on-demand options,” writes Jefferson Graham.

Is the bell tolling for Clear Channel? (San Antonio Express-News)
David Hendricks writes: “Analysts believe Clear Channel, now with about $22 billion in total debts, will have trouble making scheduled payments later this year. The company, already down to about 800 stations from its peak of about 1,200 stations, either will have to start selling stations itself or go into bankruptcy, where lenders will put stations up for sale.”

Foes No More, Ad Agencies Unite With Internet Firms (NYT)
Eric Pfanner writes: “With consumers spending more and more time online, analysts say Internet companies and ad agencies have no choice but to work together to develop ways to make money from digital media.”

Gannett Co Inc has not been too generous lately with making its executives available to media reporters. And why would it? Few newspaper publishers have because there’s little good to say about the business.

Ad sales are tanking, as usual. Debt is looming (what else does it ever do?). Lots of self-styled media experts can’t let a day go by without writing a few blog posts telling publishers that they brought it on themselves and they deserve to die.

With that merry backdrop, I was surprised to get invited to a press conference and an interview with Gannett’s latest picks for editor (John Hillkirk) and publisher (Former Detroit Free Press Publisher David Hunke) of USA Today. Gannett brought them to New York to meet the insular Manhattan media world, which is responsible for writing all those obituaries that you’ve been reading about newspapers lately.