Gannett Predicts Near Record 1993 Earnings, Due To Cost Cutting
Dec. 10, 1993
NEW YORK (AP) _ Executives of Gannett Co., the nation's largest newspaper chain, said Thursday the company will approach record profits of $397.5 million this year despite slow economic growth.
John Curley, chairman of the Arlington, Va.,-based media company, credited cost cutting for the gain and said Gannett expects to do better in 1994.
''We did it this year by cutting expenses. In 1994 we hope to do it the old fashioned way by growing revenues,'' Curley told analysts at the annual PaineWebber media conference.
Gannett owns USA Today, 82 other daily newspapers, 10 television and 11 radio stations and an outdoor advertising business.
If Gannett equals its profit record of $397.5 million, set in 1989, that would represent a 15 percent increase over 1992 earnings, not including charges for required accounting changes that year. In recent years, declining advertising revenue has meant sharply reduced profits for most major media companies. Gannett joined others at this week's conference in giving a more upbeat picture for 1993 and beyond.
While Gannett's operating revenue rose just 4 percent in 1993, operating income was up 13 percent, chief financial officer Doug McCorkindale said.
Lower prices for newsprint, a new contract at newspapers in Detroit that includes cost savings, and reduced debt contributed to the improved profit picture, he said.
Gannett will boost revenue in 1994 partly through advertising rate increases of 4 percent to 5 percent and newspaper price increases of 2 percent to 3 percent. But ad volume and circulation are expected to rise only 1 percent in 1994, the company said.
Like other media companies, Gannett is exploring the use of new technologies to deliver the news, executives said, estimating 1993 spending on those efforts at $20 million.
The company is putting some of its Florida and New York newspapers on Compuserve, an online service for personal computer users, and is offering news, sports scores, stock prices and weather reports by telephone in conjunction with AT&T.
However, executives were unsure when or if such moves will generate significant profits.
''Nobody's sure what the customer will buy or how much he is willing to pay for it,'' Curley said.
McCorkindale said the company will continue to explore new news-delivery systems next year, but will rely on other companies to provide the technology.
''We don't want to own the wires, so you won't see us buying cable companies,'' he said.