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Gannett Co., Inc. (GCI - Analyst Report) is repositioning itself to diversify its business model by adding new revenue streams in an effort to make it less susceptible to economic conditions. The company is also adapting to the changing face of the multiplatform media universe, currently including Internet, mobile, tablet, social media networks and outdoor video advertising in its portfolio, which augurs well for its growth prospects.

Gannett remains well positioned to harness the opportunities of rapidly changing business model such as digitalization in order to keep itself on the growth path. The company recently provided update of its growth initiatives and stated that its long-term objective is to attain annual revenue growth of 2% to 4%.

To achieve this, the company is focusing on its subscription based model and Digital Marketing Services products. Management expects U.S. Community Publishing division’s subscription revenue to increase 25% by the end of 2013, which would translate into a contribution of approximately $100 million to operating profit.

Gannett said that it has successfully deployed subscription based model in 78 local publishing markets, and is so far eyeing 21% increase in subscription revenue.

For 2012, company-wide digital revenue is projected to come in at $1.3 billion, up 19% from 2011, whereas retransmission revenue is expected to reach $96 million, an increase of 20% from the prior year. Retransmission consent fees for 2013 are expected between $135 million and $140 million, reflecting over 40% jump from 2012 level.

Management remains optimistic about the performance of its Broadcasting division and hinted of generating robust revenue and profit for 2012, propelled by record political advertising. Political revenue came in at $150 million. Gannett’s CareerBuilder is growing leaps and bounds, and its acquisition of Economic Modeling Specialists Intl. has proved to be a game changer for this online job portal.

Based on above, Gannett now forecasts a total revenue growth of over 5% and earnings in the range of 87 cents to 88 cents for the fourth quarter of 2012. The current Zacks Consensus Estimate for the quarter is 86 cents a share that dovetails with management’s guidance range.

Currently, we have a long-term “Neutral” recommendation on the stock. Gannett, which primarily competes with The New York Times Company (NYT - Analyst Report), holds Zacks #1 Rank (Strong Buy), and well defines the company’s growth prospects and initiatives undertaken to achieve those.

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