Gannett logo on a building

Gannett Passes 2M Milestone in Digital-Only Paid Subscribers

But revenue is down more than 10% year-over-year and the company had a net loss of $54.1 million

When Gannett reported its third-quarter financials earlier this month, the media organization highlighted digital-only paid subscriber growth of 28.5% year-over-year. As of September 30, 2022, Gannett reported 1.98 million paid subscribers. In October, the company crossed the 2 million digital-only paid subscriber threshold.

During the third quarter, the company had 178 million average monthly unique visitors with 126 million coming from the USA TODAY Network, according to a September 2022 Comscore report, and 52 million from Gannett’s digital properties in the U.K.

The financials were not all positive, however. For the third quarter, Gannett had total revenue of $717.9 million, a 10.3% decrease year-over-year.

“The Company continues to respond decisively to the ongoing macroeconomic volatility and inflationary pressures. We continue to execute on $200 million to $240 million in annualized cost savings through the implementation of temporary and permanent actions that are expected to give us near-term flexibility and allow us to continue forward towards the Company’s digital transformation,” said Michael Reed, Gannett Chairman and CEO, in a November 3, 2022 news release.

“While the operating environment remains challenging, we are confident we have the right plans in place to navigate the backdrop successfully. Our financial results for the third quarter reflect continued progress on our strategy, as well as early progress on our new costs initiatives implemented to combat the current inflationary environment,” Reed said on the earnings call.

“Transformations such as ours are rarely a straight path. And while the unforeseen economic backdrop has impacted us negatively in the near-term, we believe in our strategy and remain committed to leveraging our data, scale and content to evolve with urgency as a predominantly digital business with growing revenue and free cash flows,” added Reed.

Quarterly highlights

Other highlights for the third quarter include the following:

  • Total digital revenue was $256.4 million, representing 35.7% of total revenue, and a 2.3% decrease year-over-year. Gannett attributed the decrease to “weakness in digital media year-over-year.”
  • Digital-only circulation revenue was $34.5 million, an increase of 35.4% year-over-year.
  • Digital Marketing Solutions brought in total revenue of $120.0 million, a 3.4% increase year-over-year, including a record high of $118.7 million in total core platform revenue.
  • Digital Marketing Solutions now has 15,800 total core platform customers, an increase of 2.6% year-over-year. Average revenue per user was $2,511, also a 2.6% increase.
  • The company reported a net loss attributable to Gannett of $54.1 million, a loss margin of 7.5%.
  • Adjusted EBITDA was $51.9 million for the quarter, a 49.1% decrease year-over-year.
  • At the end of the quarter, the company had repaid $24.3 million in debt. Gannett reported had cash and cash equivalents of $124.9 million.

Insider Take

The cost-cutting measures Gannett implemented will likely contribute to a more positive fourth-quarter earnings report, but Gannett has a long way to go to make such significant losses.. However, the costs in goodwill and to employees’ livelihoods is high. In August, Gannett cut 400 jobs and eliminated 400 open positions, as part of a reorganization that was announced in June. In October, Gannett slashed expenses that directly impacted staff. For example, the company has temporarily suspended 401(k) matching contributions, employees must take five days of unpaid leave in December, there is a hiring freeze, and voluntary options for adjusted work weeks and severance.

Meanwhile, employees and their unions are drawing attention to Reed’s salary. In 2021, Reed earned $7,741,052, according to SEC filings. The NewsGuild of New York said this is 160 times the median salary of a Gannett employee.

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