Gannett Reports 3Q Net Loss of $24.2M

Gannett Co., Inc. today reported third quarter 2016 results of operations.

Recent highlights include:

• National digital advertising revenue up 18.5% (16.6% excluding acquisitions).
• Digital-only subscriptions grew 45%; digital-only plus Sunday grew 40%.
• Total third quarter digital revenues (advertising and circulation) of $205 million.
• Initiated incremental cost cutting actions totaling $30 million annually.

Operating revenues for the third quarter were $772.3 million compared to $701.2 million in the prior year third quarter, an increase of $71.1 million or 10.1%. Excluding $14.3 million of unfavorable foreign currency exchange rate changes and $7.4 million of selected exited operations, revenues increased $92.8 million, or 13.2%, compared to the third quarter of 2015.

The increase in revenues was primarily attributable to the acquisitions of Journal Media Group, Inc. ("JMG"), North Jersey Media Group and ReachLocal and continued improvements in national digital advertising revenues. Revenue increases were partially offset by declines in print advertiser demand and a negative impact on classified employment revenues from an unfavorable affiliate agreement change with CareerBuilder. On a same-store basis, excluding the impact on revenues from acquisitions, foreign currency exchange rate changes and selected exited operations, operating revenues decreased 8.6%.

Robert J Dickey

Net loss for the third quarter was $24.2 million primarily due to $31.6 million of after-tax restructuring, acquisition costs, severance and other related items. Adjusted EBITDA for the quarter was $55.3 million compared to $97.0 million in the prior year, a decrease of $41.7 million. Of this decrease, 42.9% or $17.9 million was due to $5.4 million of reduced EBITDA contribution from the August 2015 change to the CareerBuilder affiliate agreement, $3.0 million in unfavorable foreign currency exchange rate changes and $2.8 million related to the cost of certain labor litigation and other matters.

Robert J. Dickey, president and chief executive officer, said, "We have made solid progress integrating our recent acquisitions, which we expect will be strong contributors to our performance as we drive toward a digital future. While we saw signs of improvement late in the third quarter, we were disappointed with our performance, and as we expected, it was our most challenging period in 2016. We have implemented initiatives that will result in $10 million of additional cost savings in the fourth quarter to align our cost structure with the current industry environment. We are taking these actions to ensure we can remain nimble in the face of ongoing industry challenges while we continue our digital transformation."