Gannett's Q2 income rises 2.3% on lower costs as revenue falls

Gannett (GCI), the new media company that was spun off from TEGNA (TGNA) last month, said Wednesday its second quarter net income rose 2.3% from a year ago to $53.3 million after it cut operating expenses.

Revenue was down 8.7% to $727.1 million as advertising sales and circulation revenue fell. About $178 million of total revenue came from digital products and services, the company said. Diluted earnings per share totaled 46 cents.

Shares of Gannett rose 1.1% Wednesday morning to $13.46.

Gannett, which publishes USA TODAY, 92 other newspapers and their online properties, was created when its former parent -- which used to be called Gannett but changed its name to TEGNA -- spun it off on June 29 to focus on broadcasting and digital businesses. Gannett and TEGNA have some shared services agreements, but they are independent. Shares of both companies are traded publicly.

TEGNA, which shares its headquarters building with Gannett in McLean, Va., reported second quarter earnings last week and disclosed the financial performance of its former publishing division, which is now Gannett. But Gannett released its own earnings report Wednesday as if it were an independent company during the second quarter to reveal more details about its operations.

TEGNA publishing division's figures were different from what was disclosed in Gannett's report Wednesday because TEGNA kept several publishing properties at spin-off, including coupon provider Clipper Magazine and a division that publishes government-related publications like Army Times, Navy Times and Air Force Times.

Gannett's advertising sales in the second quarter fell 12% year-over-year to $410.5 million. Circulation revenue -- its local newspapers' websites now charge readers for content -- dipped 3.5% to $266 million. Gannett said it had 92 million "unique domestic digital visitors," a 16% jump.

The company plans to buy back its shares up to $150 million and declared first-ever dividend of 16 cents per share for shareholders of record as of Sept. 4.

Gannett also reported special charges of $20.5 million, most of them for expenses related to job cuts and buyouts. It has "identified an additional $10 million of efficiency opportunities that will be put in place in the second half of 2015," said Gannett CEO Robert Dickey in a statement. That raises its cost cut estimate to $67 million from $57 million.

"We are aggressively taking actions to improve the efficiency of our operations," he said. "This is an ongoing effort to help offset the declines the industry is experiencing in print advertising revenues, improve earnings and cash flows and continue to leverage faster growing parts of our business, particularly digital."