LTF, I dont think the Moody's downgrade means too much, even they said it was for technical reasons,.....some of their turned to unsecured as per their terms.
However, their publising biz is losing revenue at a rate that seems to be above (maybe far) industry averages. I guess a bunch of their USA Today supply contracts with hotels, hospitals, etc., arent being renewed...leading to lower ciruculation and ad rates. Large chunks of this biz are being lost, and if it continues, the bottom line will be hit hard.
On the positive side, they have other business' that are doing much better. This is best evidenced in your revenue comparison to LEE. LEE has been able to have a far better than industry revenue loss percent recently, and the oppositite for GCI. But if you just look at the final total numbers, GCI's total revenue declined 2.6% this past quarter, while LEE's declined 3.6%. Thats because GCI has a far more diverse and modern (digital) revenue base than any of their competitors.
GCI break out their Rev #'s into three segments. Total revewas $1218.6 mil for the quarter.
Publishing = 874 mil = 71.7% Digital = 168 mil = 13.8% Broadcasting = 176 mil = 14.5%
But GCI's 'Digital' is their ownership of the CareerBuilders Job site, not for instance, what LEE would call their publishing related digital revenues. If you break it out to four segments, you get a better view of GCI's diversity:
Publishing = $759 mil, 62.3% Digital related to publising = $115 mil, 9.4% Digital (Careerbldrs) = $168 mil, 13.8% Broadcast = 176 mil, 14.4%
So, 37.7% of GCI's business is not old school publishing and its growing. This compoares to, for instance, LEE's split of 90.9% old school, and 9.1% digital.
Also, of course, GCI pays a 5% dividend...although some would prefer it going to pay down their debt since cash flow should decrease going forward if their publishing biz continues to deteriorate. Even with this divvy payment, GCI was able to pay their debt down $95 million this quarter. So they have what, about $1.67 million in long term debt and $150 million in cash? Not that bad for the industry and GCI's size.
Anyway, I dont own GCI (although it starting to look more intereting), and really dont love the newspaper group. I own some LEE...but its a swing trade position for me. In general my thinking is, if the overall newspaper read rate continues to decline, all players will be hit eventually, regarless of best in breed management. I mean whats to stop the decline? Technological advances in media is very tough competitor.