Gannett to Outsource 485 Back Office Jobs to India

Affected employees will be notified by January 15 and can stay in place until April to train their replacements.

Early next year, Gannett will outsource 485 back office jobs to India, reports Poynter. The jobs to be moved include business processes like bookkeeping, accounting and reporting functions. Though employees have been notified of the change, employees to lose their jobs will be notified by January 15, 2021. They will be allowed to stay on until April to ensure a smooth transition and train their replacements.

“Gannett is undertaking a massive company-wide transformation. To help the company transform quickly, we must remain nimble and focused on the needs of the business, while keeping our operating costs low, our control environment tight and our processes as efficient as possible,” said Gannett of the decision.

Brett Kelman, a health care reporter, for Gannett-owned The Tennessean reacted on Twitter.

Dan Kennedy, who owns Media Nation and reports on the media and is a professor at Northeastern University’s School of Journalism in Boston, also commented on the outsourcing.

Other responses on Twitter indicated outrage and disappointment.

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Third quarter 2020 financials

News of the outsourcing comes about six weeks after Gannett posted its third quarter results for 2020. The company boasted that it surpassed 1 million paid digital-only subscribers and had generated close to $100 million in the sale of assets to pay down debt. Michael Reed, Gannett chairman and CEO, was pleased with the quarterly financials.

“Our third quarter results showed a significant and rapid rebound from the second quarter impact of the COVID pandemic and economic shut down,” Reed said in a November 3 news release. “Our same store revenue trend, though down 19.6% year over year, improved meaningfully over our second quarter trend of down 28.0% year over year. Third quarter adjusted EBITDA was $88 million, up from $78 million in the second quarter. The results are particularly encouraging given the seasonal drag that we usually experience in the third quarter.”

“We also reached a major milestone in our digital subscription growth, surpassing 1 million digital subscriptions during the quarter, thanks to continued strong growth of more than 31% year over year. As we continue to focus on transitioning to a subscription-led business model, we expect to leverage this important milestone to accelerate growth in 2021 and beyond,” Reed added.

By the third quarter, Gannett had implemented cost savings measures that will cumulatively result in annualized savings of $218 million, including $54.5 million in savings during the quarter. By the end of the fourth quarter, they expect to have achieved $240 million in annualized savings. The cost savings realized from the outsourcing of jobs won’t be seen until 2021.

2019 acquisition by New Media Investment Group

Gannett was officially acquired by New Media Investment Group’s GateHouse Media on November 19, 2019 in a cash and stock deal worth approximately $1.4 billion. The combined company operates under the name Gannett Co., Inc. and is now traded on the New York Stock Exchange under the GCI ticker. During the merger talks, the companies estimated they could achieve about $300 million a year in synergies across their 263 daily media organizations and USA Today. The two organizations combined are now the largest U.S. newspaper group by circulation.

Poynter reported that, in October, Gannett had offered voluntary buyouts to all employees. About 600 employees applied for the buyouts and 500 were accepted. The company has a total of 21,000 employees across its papers and approximately 5,000 of them are journalists. In addition to these buyouts, Gannett laid off and furloughed staff this spring and late last year, just after the merger.

Insider Take

What can we say? This is not really a surprise, based on how New Media Investment Group’s GateHouse Media has handled past acquisitions. They move in, cut costs, clean house and leave nothing but the bare bones. This is just more of the same. Gannett, which was once a respected journalism organization, will soon be nothing but a graveyard, failing to adequately serve the local communities where they have papers. While their digital subscriptions are on the rise now, if they fail to provide quality content, they will lose staff and subscribers.