After releasing their second-quarter earnings report last month, Gannett made staff cuts, but the media organization had not confirmed where or how many employees would be affected. Last week, Gannett chairman and CEO Mike Reed announced they had laid off about 400 employees, or 3% of the company’s U.S. workforce, according to Poynter. Reed shared the news in a companywide meeting. Gannett did not, however, confirm details about the layoffs or if Gannett had additional layoffs planned.
In addition to the layoffs, CFO Doug Horne said Gannett has chosen not to fill 400 open positions. Gannett has also made significant cost reductions to their marketing budget, cut other non-payroll related expenses, and eliminated three of Gannett’s 10-member executive team as part of a companywide restructuring. Gannett announced the restructuring in June, dividing the company into two distinct units: Gannett Media and Digital Marketing Solutions.
“This reorganization ensures our consumer and B2B businesses are strategically optimized for our next stage of growth with incredibly experienced leadership at the helm while championing our culture of inclusion and driving our long-term goals for sustainable revenue and cash flow growth,” said Michael Reed, Gannett Chairman and CEO, in a June 1, 2022 news release. “Improving the efficiency of our operations will enable the acceleration of Gannett’s digital future as a data and technology subscription-led business.”
During Gannett’s August 4, 2022 earnings call, Reed hinted at significant cost-cutting measures, including cuts on the print side of the house and other “transformative cost reductions.”
“We are not satisfied with our overall performance in the second quarter and have quickly responded to this rapidly deteriorating economic environment by implementing a significant cost reduction program that we believe will better position the company to realize its long-term growth goals, with a lower and more variable cost structure. The changes and reductions to our cost structure are focused primarily on our legacy print business,” Reed said in an August 4 news release.
“While the current operating environment is challenging, we believe we can achieve our longer-term transformational digital growth goals. This current downturn is pulling forward print revenue losses anticipated in future periods, and more quickly requiring changes to our operations and cost structure which we believe will benefit us over time,” Reed added. “We believe our subscription-led business model, robust balance sheet, and experienced management team put us in a solid position to weather this economic downturn and deliver long-term value to shareholders.”
The staff reductions, corporate restructuring and other cost reductions are an attempt to turn things around. For the second quarter of 2022, Gannett reported total revenue of $748.7 million, a 6.9% decrease year-over-year. Total digital revenues were up, however, at $261.8 million, a 35% increase year-over-year. The company’s total net loss for the period was $53.7 million with a margin loss of 7.2%.
Gannett Media revenue made up the majority of total revenue at $664.8 million, Digital Marketing Solutions revenue was $118.0 million, and corporate and other revenue was $1.4 million.
Revised full-year guidance
In Gannett’s second-quarter earnings report, the company updated its guidance for the full year from what it originally reported at the end of the first quarter.
|Updated Guidance||Guidance at end of Q1 2022|
|Revenue||$2.95B to $3.0B||$3.1B to $3.2B|
|Net income/loss attributable to Gannett||$(70) million to $(60) million||$50M to $70M|
|Cash from operating activities||$45 million and $65 million||$205M to $225M|
|Digital-only subscribers at year end||2.0 million and 2.2 million||2.0 to 2.2 million|
*At the end of the second quarter, Gannett had 1.87 million digital-only paid subscribers.
Headquartered in McLean, Virginia, Gannett is the largest newspaper chain in the country. They own more than 250 newspapers in 46 states across the U.S., including flagship newspaper USA TODAY. Gannett also owns Newsquest which operates 120 media brands in the U.K., as well as ReachLocal, UpCurve and WordStream.
At the close of trading on September 2, Gannett stock was valued at $2.29 per share, only $0.13 above the company’s 52-week low.
Poynter reports that Reed bought $1.2 million in Gannett stock just prior to the layoffs. Reed said he bought the shares to show that he believed in the company and its employees.
NewsGuild response – #LocalNewsLunchOut
Unionized Gannett employees did not take the layoffs lying down. On August 11, hundreds of newsroom employees staged a walkout they called #LocalNewsLunchOut. Some of the newsrooms participating in the walkout include AZCentral, the Arizona Republic, the (NJ) Bergen Record, Indy Star, the Palm Beach Post, and the Milwaukee Journal Sentinel. The NewsGuild-CWA, which represents over 50 Gannett newsrooms across the country, spoke out.
“Gannett continues to show that it puts investors and executives before journalists,” said NewsGuild-CWA President Jon Schleuss. “In contrast, local journalists are organizing all across the country because of their deep commitment to their work, their communities and their newsrooms. Well-staffed and fully functional newsrooms are a critical component of democracy, especially in an election year. Gannett — or any company — cannot do layoffs at newly unionized newsrooms without proving economic exigency, which can’t exist when executives and shareholders are pocketing millions.”
One way NewsGuild helped share their message was on Twitter.
As we said last month, Gannett is trying to balance payday (for employees) over profit. Economically, the company has to do something to stop the nearly $54 million loss, but cutting its most valuable resource is a painful way to do it. Ultimately, this hurts everyone. Gannett may save money in the short-term, but once-valued employees are losing their livelihoods, and communities of all sizes are losing valuable local news coverage. Gannett is trying to do more with less, which is the MO of parent company New Media Investment Group who merged with Gannett in November 2019. Gannett may save the company money, but the cost may be greater than they realize.