Gannett Co Earnings Call Insights: Obamacare Revenue and All Access Plan

Gannett Co Inc (NYSE:GCI) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Obamacare Revenue

John Janedis – UBS: Gracia, can you talk a little bit about what you’re seeing in TV, there is obviously a lot of movement with political and Olympics, but can you really just cut through it for us and tell us what you’re seeing among the top categories and are you seeing much from Obamacare revenue spend?

Gracia C. Martore – President and CEO: Just to kind of recap the numbers. We are blessed with the fact that in 2012 we over achieved and generated about $75 million of political and Olympic revenues. Then obviously the next year you have to compare against that. But you know what, I’ll take that overachievement every time. But if you set aside that high margin — those dollars and exclude it, we’re actually looking at, I think in our guidance we said total television revenues up in the mid-teens. Now what we are seeing is continued strength in auto and you’ve actually hit on something very interesting on the Obamacare side because we actually led by Dave Lougee who is also here with me and I’ll ask him to pipe in here a moment. We actually are very focused on that. We see that as potentially a big opportunity for us in the coming quarters as more spending has to take place around the various exchanges and other issues surrounding healthcare. But Dave, do want to jump in on that?

David T. Lougee – President – Gannett Broadcasting: Yeah, I will. John, good question on Obamacare because as the exchanges come to market and it’s going to be a state-by-state situation and bigger opportunity than others, but there is clearly some tremendous media buys and frankly opportunities for business development in the part of our stations. It would appear to be a beginning in the fourth quarter, really looks like it’s going to start being October event. I’m not sure we’re going to see much of it in September. Also just add-on to your question about core billing, which it’s always difficult as Gracia said on the apples-to-apples side, but we think actually September is going to finish stronger than the quarter has started. Frankly, when we look at our local revenues if you go back to 2011 and where we think we’re going to estimate right now, just on the local side is we’ll probably finish almost 10% over 2011 in local core revenues…

Gracia C. Martore – President and CEO: And then lastly on obviously the retran side, we had another great quarter that’s kind of annuity like thing and that will obviously continue until the end of the year when we have another opportunity at one of our major cable or satellite MSOs to have another conversation with them to further align value with what we provide.

John Janedis – UBS: Maybe on a different note. On national advertising and print, I think was your best quarter maybe in about three years and I’m wondering is there anything to call out there and if you view that maybe as a potential leading indicator for the segment in terms of broader advertising?

Gracia C. Martore – President and CEO: I think there is a couple of things to call out there number one. I think that the strong team that we’ve put in place over the last year at USA TODAY where obviously the vast majority of our national Publishing revenue resides. I think it’s just doing a terrific job in really presenting the values that USA TODAY brings across all platforms, but especially the continuing value of our print product there. So we feel very good about the progress we’ve made on the national front. Obviously, will have to see – there is going to be a lot of things that are frankly impacted by what second half of the year and beyond look like from an economy standpoint. And there is a lot of question marks around whether the Fed is going to tighten not tighten what healthcare cost is going to look like and the psychology frankly of CEOs of companies and how they feel about spending is going to be especially at the national level is going to be have an important impact on things, but I feel extremely pleased with the good progress that USA TODAY is making and the team that we now have in place there to lead even further innovation and further opportunities both on the print as well as even as importantly, the Digital side.

All Access Plan

William Bird – Lazard: Gracia, on the all access plan. Is your goal still 250,000 to 300,000 paying Digital subs by year-end? I guess along the same lines what needs to happen to hit the target?

Gracia C. Martore – President and CEO: I think we ended the second quarter around 65,000 level or so. We also have, obviously – there is 11,000 subscribers that started as digital-only that we fortunately were able to also participate in a home delivery as well, so they are no longer digital-only subscribers. I think there is – as I alluded to in my remarks, there is a number of things frankly that we’re working on in terms of enhancements, additional Digital platforms and potentially fairly exciting add to the consumer experience by blending some assets that Gannett is uniquely positioned to do. I can’t say more about that, but that’s something as I alluded to in my remarks that we are going to be looking at very, very carefully over the next few months and expect to have some news on, probably in the late fall. So, while we are obviously continue to be very focused on new Digital subscribers we are really pleased with the beginnings of some of the new college programs that we are bringing on and expect to see more of that. We are focused more on the totality of the effort. The other thing I’d say, Bill, because I think sometimes folks compare apples-to-oranges vis-a-vis our numbers I think the New York Times has done just a fabulous job on their strategy, and what they’ve done and they talk about 700,000 paying Digital subscribers and we’ve got a couple of metrics and the one I think it is the most comparable to that several hundred thousand is the one that Victoria shared, which is that we have 1,300,000 all access subscribers that have activated their digital part of their subscription that they are obviously paying. So the apples-to-apples number with the New York Times, several hundred thousand, which is phenomenal, is a 1,300,000 for us. We then added that additional metric of simply brand new digital-only subs, an important additional metric, but we focus on the totality of it, we focus on that 1,300,000 that have activated, and frankly that’s right on track with what we had planned and we expect that number to continue to grow over the next few quarters.

William Bird – Lazard: And separately, you mentioned some successes with the Digital marketing services program, could you give us a sense of what the approximate annual revenue run rate is?

Gracia C. Martore – President and CEO: I think that’s obviously a work in progress. I don’t want to be too specific about that at this point, other than to say, it is achieving the kind of growth rates that we all hope for. I think the most important thing to focus thereon is the fact that we are seeing even more demand than we thought we were going to see when we started that program or launched that initiative back in February of 2011, so another 90% growth rate on the local side of our Digital marketing services business. So, what I can tell you is that we are nicely on-track – ahead of track of what we expect. I don’t want to get into the quarterly focus on numbers because I think we have too much of that. Suffice it to say, we are well along on the path of growth and with the addition of the Belo sites, particularly where there are literally millions of small and medium-sized businesses, this is an initiative that I believe ultimately will be another stool for the Gannett Company’s revenue, growth, and revenue prospects.

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