Gannet Discusses CareerBuilder and Digital Media

Includes: GCI, MWW
by: David Jackson

On Gannett's (NYSE:GCI) conference call, CEO Craig Dubow and CFO Gracia Martore discussed the company's push into digital media. Online growth is a key issue for the newspaper companies as they try to compensate for declining print readership, so their comments are of interest to investors in newspaper stocks generally, such as Dow Jones (DJ), Knight-Ridder (KRI), New York Times (NYSE:NYT), Tribune Group (TRB), Journal Communications (NYSE:JRN), and The Washington Post Co. (WPO); and his comments about online jobs site CareerBuilder are directly relevant to competitor Monster Worldwide, Inc. (NASDAQ:MNST):

On the digital front, we are rolling out Planet Discover, our provider of local search technology, across all of our domestic community newspapers. Linking useful search technology to our local knowledge translates to outstanding opportunities for us, as a more effective local search connects consumers to more and better content and advertisers.

Increasing our stakes in CareerBuilder,, and also solidifies our commitment to the digital space. CareerBuilder in particular has expanded its position in online recruitment and leads the industry in jobs postings, traffic, and revenue.

Most recently, we affiliated with revenue science to provide us with behavioral targeting technology for advertising on a national, regional and local basis -- a key element in growing our online advertising.

Creating duopolies with the acquisitions of WATL in Atlanta and KTVD in Denver enhances our core, as did the expansion of the California newspapers partnership. These moves helped generate profitable revenue growth while providing valuable local content.

...Growing our digital business quickly and profitably, which is the other prong of our strategy, is reflected in a 25% growth rate for online revenues company-wide for the quarter. Online revenue at domestic community newspapers was up about 21%, and Newsquest, it was up about 38%. Online and broadcasting jumped 48%, and was up 24%.

Our latest monthly numbers for September show our domestic websites had about 24 million unique users and reached over 15% of the Internet audience. In the U.K., Newsquest’s online audience totaled 3.6 million unique visitors, with 51 million page impressions.

Again, pointing to the strengthening of our digital business, we continue to see robust growth from CareerBuilder, with CareerBuilder network revenue up 29% compared with the third quarter of 2005. Traffic for the network increased 22% and averaged approximately 22 million for the third quarter.

And later in the Q&A:

Lauren Fine - Merrill Lynch

Thank you. A couple of questions. CareerBuilder growth rate seems to have slowed. I am wondering if you could give us a sense if you think that is temporary or if it is what we should expect prospectively.

Then, I am wondering if you could comment on just how bad things are in Detroit.

Gracia C. Martore

With regard to the CareerBuilder growth rate, Lauren, I think that Matt Ferguson, in a press release that they issued with regard to job prospects, indicated that if you look at the bureau of labor statistics numbers on job growth, that the numbers had flowed from the first quarter to the third quarter. I think in the first quarter, BLF numbers were something like 176,000, and that had slowed to about 123,000 or so. Do not hold me to the exact numbers.

I think that the job sites, as well as our own results, reflect some of that slowing that we saw over the summer, which I think in part reflects some of the uncertainty that folks felt with rates increasing and fuel cost increasing, the uncertainties surrounding the war in Iraq and other factors. I think we are just going to have to see how all of those things play out. Certainly interest rates and fuel prices have moderated, which may make companies a little bit more comfortable going forward on the hiring front, but we will just have to see how that plays out.

CareerBuilder will continue to do the great job they have been doing there, and they are the number one site across the board in every metric, so we feel very good about their future prospects, both domestically as well as overseas.

...John Janedis - Wachovia Securities

Thank you. Can you give us your thoughts at as it relates to display advertising and rates? I guess I would ask, what have been your typical rate increases and, as others offer similar rates, is there a potential for CPM increases to flatten over time? Then, do you think you may be losing some share to Monster on the help wanted front? Thank you.

Gracia C. Martore

It is a little bit difficult for us to project out what is going to happen with CPMs. I think we continue to see very good growth at They just had a very strong quarter for us, and it is really difficult for us to project out where the CPM side of it would be. We are anticipating that, that they are going to have another strong quarter in the next quarter, but a little difficult for us to at this point speculate on that.

John Janedis - Wachovia Securities

Historically, has it been double-digits?

Gracia C. Martore

In terms of?

John Janedis - Wachovia Securities

CPM growth at

Gracia C. Martore

You know, historically that is a little difficult to say because pre the dotcom meltdown, the numbers were roaring, and you could charge any price pretty much that the market would bear. The dotcom meltdown came and obviously they were impacted terrifically by the national side of things, but now we have built that back up. So it is a little hard to say, but we will try to get a little bit more color on that if we can and get back to you.

John Janedis - Wachovia Securities

Okay, thanks, and anything on the Monster, in terms of CareerBuilder? Do you think it is just a slowdown or do you think you may be losing share?

Gracia C. Martore

No, if anything, we are increasing share against the number two job site. We feel very good about where CareerBuilder is headed. They are a clear number one, and it is not that we are losing market share in any way, shape, or form. In fact, if anything, we believe that we are continuing to pick up market share here in North America. You have to be careful of comparing apples to apples. They are North America to North America.

Quick further point of interest: Look at this comment about real estate advertising -- sounds like a rebound in real estate ads:

Classified advertising company wide, and for our domestic properties, declined about 2% for the quarter. Real estate was positive for the quarter, while employment and auto continued soft. Real estate advertising for the entire company was up over 8%.

The full Gannett conference call transcript, including discussion of USA Today, is here.