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Gannett newspaper ad revenue falls in fourth-quarter

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Gannett Co Inc.'s (GCI-N) lower quarterly print advertising revenue marked a setback after modest improvements and signaled that newspapers are still struggling to reverse slides in ad sales and readership.

Investors pushed Gannett shares down, ignoring the newspaper and broadcast company's better-than-expected profit.

Advertising revenue at the publishing division fell almost 6 percent to $722.3 million US from a year earlier, mainly because of weakness at its national newspaper USA Today and the UK newspaper division. Ad revenue in the third quarter slipped 5.1 percent.

"Publishing segment revenue growth is still elusive," Gannett Chief Executive Craig Dubow said on a call with analysts. "We are not where we want to be, but (we're) working to get there."

Gannett, which is the largest U.S. newspaper chain, is a bellwether in the business. Its results followed those of Media General (MEG-N), which also reported a slump in revenue at its publishing division.

The newspaper industry has been struggling to lift its ad revenue as other media, like broadcast, enjoy a rebound in marketing spending.

"In terms of top line, it's pretty much what we expected, but great increases in broadcast and digital revenue still aren't going to mitigate declines in publishing," said Morningstar analyst Joscelyn MacKay. "It's a newspaper company at the end of the day."

At USA Today, paid advertising pages totaled 680, compared with 705 a year earlier. Gains in travel and financial advertising failed to offset other categories, including automotive and telecommunications.

National advertising weighed down on other newspaper companies including the New York Times Co. The New York Times reports earnings on Feb. 3.

"They did beat my number, mainly on the cost side. Quite frankly, the advertising revenue number on the publishing side was a little bit lighter than I had expected," said Gabelli & Co senior analyst Barry Lucas. "I think that may be playing in the stock today."

Gannett's revenue rose 0.4 percent to $1.46 billion, compared with the analysts' average forecast of $1.47 billion, according to Thomson Reuters.

Revenue at Gannett's broadcast stations rose 27 percent to $232.8 million on strong political advertising.

Digital revenue rose 5.2 percent to $165.8 million in the fourth quarter.

Gannett warned that newsprint price increases in the first quarter will be unfavorable, despite lower consumption.

Excluding special items, Gannett reported earnings of 83 cents per share, above the analysts' forecast of 80 cents.

Quarterly net income from continuing operations was $174.1 million, or 72 cents per share, compared with $133.6 million, or 54 cents per share, a year earlier.

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