Gannett Earnings Still Newsworthy

In broadcasting, Gannett has 23 TV stations in 15 states and the District of Columbia that reach 21 million households, or about 18% of US population. Revenue from this segment jumped 11.4% for the quarter, to $205.4 million. Despite generating just 15.7% of total revenue for the quarter, the broadcasting segment accounted for nearly 44% of operating income.

The company's digital unit, which includes CareerBuilder, and 120 web sites that are associated with local publishing and television markets where Gannett has a presence, saw revenue increase 4.5% for the quarter to $181.3 million. Combined, the broadcasting and digital segments accounted for 29.6% of total company revenue, but more than 60% of operating income. There's more to Gannett than those pesky old newspapers.

For the quarter, the company generated $140 million in free cash flow, and by my calculation has generated about $1.95 a share in free cash flow in the trailing twelve months. That's more than enough to support the company's 20-cents quarterly dividend, which provides a solid 5.6% yield. There's probably room to increase that dividend further.

In addition, the company is also buying back shares, including 3.4 million shares during the quarter, at an average cost of about $13.38.

It may take more time in order for investors to get comfortable with Gannett and with the fact that despite the challenges faced in the newspaper business, the company still generates significant operating income from that segment.

As a kicker, the digital and broadcasting segments are solid. Furthermore, debt, which currently stands at $1.66 billion, and was $5.2 billion at the end of 2006, is no longer the threat it once was.

I'm happy to collect the nice, fat dividend while I wait, sipping another Coke.

At the time of publication, the author had a position in GCI.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.