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Net operating revenues from print circulation were up 5.6 percent in the third quarter of 2012 over the same period the year before, Gannett announced Monday morning. Seventy-one of Gannett’s newspapers now have a paywall. The gains nearly offset the decline in print advertising, which was down 6.6 percent. Digital advertising was up 4.7 percent, “due primarily to revenue growth at CareerBuilder,” the earnings report says.
Digital “now represents more than 25 percent of total revenues,” CEO Gracia Martore said in a statement accompanying the earnings release. At USA Today, digital revenue was up 69.7 percent; and unique visitors to USA Today’s mobile sites were up 79 percent in September. Overall, net operating revenues from publishing were down 3 percent.
“The impact of the all access content subscription model as well as an increase in digital advertising and marketing solutions resulted in a 64.6 percent increase in digital publishing revenues,” the company’s release says. “Digital revenues at our local domestic publishing operations were 76.0 percent higher due primarily to the all access content subscription model.”
The company beat analyst expectations for profit per share, though, in large part due to excellent results from its broadcasting division, whose net operating revenue was up 36 percent over the third quarter of 2011. Olympics advertising and political advertising helped drive that growth, Gannett said.
The earnings will be seen as a test of whether paywalls can help replace advertising revenue, Keach Hagey writes in The Wall Street Journal. Gannett announced its “digital subscription” plans in February.
At the time, Gannett projected the paywalls, along with price increases would bring in an additional $100 million in annual operating earnings next year—about 12% of Gannett’s 2011 total. Analysts are likely to be closely watching Monday’s results for clues about whether the projections are being met.
Gannett “is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases,” Derek Hoffman wrote, looking ahead to the earnings announcement. In a presentation to media analysts in June, Gannett said it was seeing strong revenue from its paywalls expected circulation revenue to climb 25 percent by the end of 2013. At that point, 49 of its papers had instituted paywalls.
When Gannett announced its paywall plans in February, it said USA Today’s website would remain free. This earnings report will “reflect the first full quarter overseen by Larry Kramer,” Jim Hopkins writes for Gannett Blog. Kramer was named USA Today’s president and publisher in May.
Gannett will host a conference call to discuss the earnings report at 10 a.m. ET.
Barclays recently upgraded The New York Times Co.’s stock, in part because of the success of its metered paywall.