Gracia Martore, the president and chief operating officer of Newsquest‘s parent company, said the UK regional publisher was making a considerable amount of money – at a time when it was cutting jobs, benefits and had frozen the pay of its employees.
During a conference call between executives at US media giant Gannett and Wall Street analysts on Friday, (as reported on the Gannett Blog) Martore said she wanted to dispel the myth that its UK wing was not making any money.
Martore said: “Let me once and for all dispel the myth that Newsquest doesn’t make money.
‘Newsquest makes a lot of money. In fact, their margin as I have said a couple times is consistent with the margin that our local US Community Publishing operations generate.
‘So their margins are in the high teens to low 20s and they have consistently made money throughout the years.”
Martore was speaking as Gannett revealed its third quarter financial results which showed that Newsquest’s ad revenue had declined around seven per cent year on year in the three months – a greater decline than across the group’s US businesses.
Martore said the UK remained ‘a more challenging economic environment’as a result of uncertainty around the spending cuts agenda of the new government, which, she said, ‘had an impact on results there, particularly in the retail and classified categories”.
Classified advertising adjusted for currency was about four per cent lower in the quarter but better than the previous quarter as a result of an increase of almost seven per cent in motoring classified ads – Martore did not reveal the exact figures.
During the Q&A session of the conference call, Martore praised the work of Newsquest chief executive Paul Davidson saying that despite a difficult economic backdrop both he and Rob Dickey had done an ‘extraordinary job’in controlling cost and looking at initiatives to drive revenue growth into the future.
She then said that Gannett felt ‘very good about the performance of all of these assets’but added that it might consider selling off its UK publishing wing if a rival was to offer the US company ‘a price that we felt was extremely attractive”.
At this chief executive Craig Dubow told analysts that despite several rumours about a likely sell off of assets, Gannett remained ‘very happy with the position that we have”.
Earlier this month figures filed at Companies House revealed that Gannett UK achieved profits before tax of £88.5m for 2009 on turnover down 25.4 per cent to £365.6m.
Operating profit for Newsquest was reported to be £71.7m for 2009, compared with an operating loss of £462,000 in 2008.
The figures also revealed that Newsquest cut more than 300 editorial jobs in 2009, reducing the number from 1,936 to 1,609.
And they also revealed that pay for the top earning director, who is not named but is understood to be Davidson, increased from £501,234 to £609,385. Payments to his pension scheme increased from £38,536 to £94,986.