Gannett Revenue Sinks

USAToday owner Gannett reported a net loss in the first quarter as the spread of the coronavirus reduced advertising spending from businesses hobbled by the pandemic, but the company turned a profit when factoring out one-time occurrences.

The media company, which owns more than 260 daily publications, posted a net loss of $80.2 million, including $78 million due to depreciation and amortization and $34 million in cash charges tied to the company’s recent merger.

Excluding one-time items, Gannett posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $99.1 million.

And before the impact of one-time issues, revenue fell 10% from a year earlier to about $939 million.

The results reflect the combination of New Media Investment Group and Gannett after their merger in November, a deal that created the largest U.S. media company by print circulation and one of the largest by digital audience.

Before the pandemic hit, Gannett was “actually pacing ahead of expectations for both revenue and EBITDA,” Reed said on a conference call with investors and analysts.

To offset a sudden drop in revenue from the coronavirus fallout, Gannett suspended its dividend on April 1 and announced plans to implement $100 million to $125 million in cost cuts in addition to previously planned savings tied to the merger.

The fresh round of cuts has included furloughs, job cuts, pay reductions for senior managers and the suspension of nonessential travel and spending. Many other news outlets have taken similar steps in recent weeks.

Gannett’s print advertising revenues fell 21.2% to $268 million in the first quarter, compared with the same period a year earlier. Digital advertising and marketing services revenue rose 1.7% to $136 million. Circulation revenue declined 7.5% to $375 million.

The company’s digital business “has definitely held up better” than print advertising, Reed said on the call.

Paid digital subscriptions to the company’s journalism rose 29% from a year earlier to 863,000 in the first quarter. Online subscriptions are viewed as critical to the success of media companies in the digital age as newspaper dollars decline.

Those digital subscriptions accounted for about $60 million in circulation revenue in the first quarter, Reed said, while print subscriptions accounted for $315 million.

Eliminating some newspaper printing and delivery is "not part of our plan today," Reed told USA Today.