Signs of a turnaround in Q2 are highly unlikely for the Gannett Co., wrote J.P. Morgan analysts Alexia Quadrani and Monica DiCenso in a note issued this afternoon.
The analysts are anticipating another "weak quarter" for the McLean, Va.-based company when it releases its earnings on July 15. J.P. Morgan forecasts that newspaper advertising revenue at Gannett fell 32% in Q2. "Severe revenue declines" are expected at USA Today."
Advertisers and local media operators that we spoke with remain very cautious on the outlook for local ad spending, in spite of easing comps, leading us to believe that we may not have reached a bottom yet in the market," Quadrani and DiCenso wrote.
Despite Gannett's efforts at cost cutting, the analysts said that ad revenues are dropping at such a rapid pace it won't alleviate margin pressure. Consolidated EBITDA is forecasted to decline to $247.5 million in Q2 or a margin of 17%. In the same period in the prior year, Gannett's EBITA margin was 25%, according to J.P. Morgan.
McClatchy's second quarter earnings conference call is July 21st.