The owner of newspapers and television stations said on Monday that third-quarter revenue rose 3.4 percent to $1.31 billion. Analysts expected revenue of $1.29 billion, according to Thomson Reuters I/B/E/S.

Net income increased to $133.1 million, or 56 cents per share, from $99.8 million, or 41 cents per share, in the same quarter last year. Analysts expected earnings per share of 53 cents.

Still, investors sent shares down 3.6 percent to $17.25 in early trading on Monday despite the positive numbers.

Evercore analyst Doug Arthur thinks investors were looking for a bigger upside. "The stock has done awfully well," he said about the 26 percent run-up over the past three months.

A record for third-quarter revenues at its broadcasting division and a moderating decline at its U.S. newspapers suggested the momentum will continue into the fourth quarter, said Benchmark Co. analyst Edward Atorino.

"Political (advertising) is going off the chart, and newspapers are on track, which is encouraging," he said.

Gannett, the largest U.S. newspaper chain with 82 properties including USA Today, implemented a plan unveiled earlier this year to reduce its dependence on advertising at its newspapers and to capitalize on broadcast TV.

As a result of a digital pay model rolled out to 71 markets, circulation revenue rose 10 percent at its U.S. newspapers.

Even the pace of advertising declines has begun to slow. Advertising revenue at its publishing division fell 6.6 percent, compared with an 8 percent decline in the second quarter.

Gannett also owns a group of newspapers in Great Britain.

Total publishing revenue dropped 3 percent to $890.2 million, while broadcasting revenue increased 36 percent to $237.0 million.

Digital revenue increased almost 5 percent to $182.0 million, contributing more than 25 percent of total revenue.