Zacks_Analysts' Blog : Gannett to Shed 1400 - Analyst Blog

Gannett Co. (GCI), the news and information company, has been struggling with plummeting advertising revenue for a long time, which has forced job cuts to control rising operating costs. The advertising revenue dipped 34.1%, whereas circulation revenue plunged 3.1% in the first quarter of 2009.

Recently, on July 2, 2009, the company announced that it would lay off 1,400 employees or about 3% of its headcount this month at its publishing division. Gannett announced that each of its markets will complete its own downsizing plan depending on local conditions.

On July 9, 2009, the Courier-Journal newspaper operating in the Louisville market laid off 44 employees, or 7% of its work force, as part of the company’s downsizing plan. Earlier, 51 employees were laid off in December 2008. The Arizona Republic newspaper operating in Phoenix lowered its headcount by 100.

The company also started executing its plans to eliminate 106 full-time and 19 part-time positions at its six New Jersey newspapers because of the depressed economy. Last year in December, the company reduced more than 200 positions at its New Jersey newspapers. The Cincinnati Enquirer, another newspaper operating in Cincinnati, announced a layoff of 101 employees.

Like Gannett Co., other newspaper companies like Washington Post Company (WPO), E.W. Scripps Company (SSP), McClatchy Company (MNI), Journal Communications (JRN), News Corporation Limited (NWS) and The New York Times Company (NYT) are all struggling to survive in the turbulent economy. The overall industry outlook appears gloomy with no sign of improvement near term as advertising demand worsens and readers migrate to the Internet and alternative media.

The Zacks Rank for GCI stock is #4 (Sell). Yesterday the stock closed at $3.19.