In its fourth-quarter earnings report, Gannett Co., Inc. tried to focus on the positive and downplay the negative. On the positive side, the company reported that their digital-only paid subscribers had grown to more than 1.6 million, a 49% increase year-over-year. Digital-only circulation revenue was $27.6 million, a 25.5% increase compared to the prior-year period. For the full year 2021, digital-only circulation revenue surpassed $100 million, representing 33.5% growth over 2020 results.
Chairman and CEO comments
“During 2021 we made excellent progress executing on our strategy to evolve our business. We continued to make meaningful progress against our key operating pillars and we expect to carry this momentum forward,” said Michael Reed, Gannett chairman and CEO, in a February 24, 2022 news release. “We achieved several key milestones in 2021, including total digital revenues surpassing $1 billion with growth exceeding 9% year-over-year and 11% on a same store basis year-over-year.”
Reed also said that part of Gannett’s growth strategy involved “better visibility,” doubling free cash flow in 2022. The newspaper company set goals to surpass 2 million digital-only paid subscribers this year and 6 million digital-only paid subscribers by the end of 2025. In addition, the company plans to invest $80 million in content, marketing, data, product, and digital marketing solutions sales and support operations this year.
Gannett shared the following highlights for the fourth quarter of 2021:
- Total revenue was $826.5 million, a 5.6% decrease year-over-year.
- Total digital revenue was $272.6 million, a 5% increase year-over-year. Digital revenue represents 33% of total revenue.
- Gannett reported a net loss attributable of Gannett of $22.4 million and margin loss of 2.7%.
- Loss per share attributable to Gannett was $(0.17).
- Adjusted net income was $42.8 million.
- The company repaid $57.5 million of debt.
- At the end of the year, the company had cash and cash equivalents of $130.8 million.
- In the fourth quarter, the company attracted 183 million average monthly unique visitors across USA TODAY NETWORK and the company’s U.K. digital properties.
- In 2021, the company sold 70 smaller publications, including weeklies, according to Poynter.
Eliminating Saturday print editions in 136 markets
Earlier this year, Gannett notified employees that they planned to introduce “a new Saturday experience” in 136 markets. In other words, they are eliminating the Saturday print edition and focusing on a digital-only editions for Saturdays. Dan Kennedy of Media Nation reported on the news.
“Committing to our digital future ensures our resources are laser-focused on delivering unlimited access to the premium news, sports, events, and information our loyal subscribers value most. A number of markets will not be included in this transition based on specific market data,” wrote four Gannett executives (Mayur Gupta, chief marketing and strategy officer; Maribel Perez Wadsworth, president/news at Gannett & Publisher/USA TODAY; Kevin Gentzel, chief revenue officer; and Bernie Szachara, president of U.S. Publishing) in a staff memo.
USA TODAY paywalls
Last summer, Gannett put USA TODAY’s premium content behind a paywall for the first time. Perez Wadsworth and Nicole Carroll, USA TODAY editor-in-chief, made the announcement to readers in July.
“We’ve become part of your daily news habit, and we’re honored to serve you. Now we’re asking our readers to help support premium journalism,” said Perez Wadsworth and Carroll. “Much of the content on USA TODAY will still be free. But you’ll find a selection of stories each day marked ‘subscriber only.’ These will be exclusive investigations, sophisticated visual explainers, thought-provoking takes on the news and immersive storytelling.”
“This is a big change; our digital news has always been free. But USA TODAY was founded on boldness. Your subscription is an investment in quality journalism that’s worth paying for, journalism that strengthens our communities and our nation. And we’ve got big plans,” Perez Wadsworth and Carroll added.
In September, USA TODAY added to its premium content offerings by launching Sports+ subscriptions.
“Gannett is betting big on sports. We are well positioned to reach our sports audience of over 53 million sports fans and capitalize on our large network of over 500 dedicated sports journalists, offering access and local perspective that is unrivaled,” said Reed in a September 7, 2021 news release.
Investors were not impressed with Gannett’s earnings report. The day before results were released, the company’s stock was valued at $5.31 per share. As of 5:31 p.m. Eastern yesterday, it was down to $4.65 per share, a 12.4% decrease.
Since being acquired by New Media Investment Group in November 2019, the new Gannett organization has made many strategic changes, including cost cutting measures, selling off assets, new revenue streams (EFTs, sports betting, USA TODAY subscriptions), and growth in digital-only paid subscribers, but revenue is decreasing rather than increasing. This is particularly concerning because the company now has more revenue streams and new subscription products, but its revenue does not reflect this. Decreasing losses and debt help the bottom line, but Gannett has a long way to go to reach its subscriber goals and to see a growth in revenue.