Gannett Reports Disastrous Financial Results

Gannett recorded a dismal second quarter financially, the company reported Thursday – important revenues sources down, costs up and a loss of $54 million on revenues of $749 million.

Rick Edmonds at Poynter.org reports strong cost reduction moves are on the way. Media division head Maribel Perez Wadsworth, in a note to staff, warned of impending layoffs. “In the coming days,” she wrote, “we will … be making necessary but painful reductions to staffing, eliminating some open positions and roles that will impact valued colleagues.”

CEO Mike Reed said in a conference call with analysts that the company’s long-term strategy of developing paid digital subscriptions and digital advertising remains sound. But he made no effort to sugarcoat what happened last quarter and is expected for the remainder of 2022.

Among the negative factor he cited:

• Digital advertising fell below expectations as companies reduced their schedules. Programmatic advertising, priced according to digital traffic rather than subscriptions, was a particular trouble spot.
• Both print circulation and print advertising were off more than expected. Reed said that, in effect, losses anticipated in future years have already been pushed forward into 2022. With consumers pinched, the company is seeing some customers dropping print because of how high the subscription price has become.
• On the cost side, labor shortages and expenses are rising, making it increasingly difficult to home deliver print papers. The cost of newsprint is up 31% compared to a year ago. Overall costs showed a small increase year-to-year.
• Inflationary pressures, economic uncertainty and a possible recession are all in prospect for the rest of the year so the short-term operating climate is not expected to improve.

Among positives, Reed cited continued growth in the number of paid digital-only subscriptions and the revenue they generate, both up 35% year-to-year. And Gannett’s Digital Marketing Services subsidiary continues to grow.

The company publishes USA Today and more than 200 regional dailies.