Gannett marked steady progress on key goals of building paid digital subscriptions and stabilizing revenues as it announced quarterly financial results Thursday.
The nation’s largest newspaper publisher with 250-plus regional dailies and USA Today added 118,000 new digital subscribers in the first quarter of 2022. It now has 1.75 million, a 46% increase from the same period a year ago, and is on track to pass 2 million by the end of the year.
Gannett also said that digital circulation revenues were up 30% year-to-year. The percentages don’t match, but the company is having some success in moving added digital readers from cheap introductory rates to paying more.
The company was not profitable, recording a small loss of $3 million on revenues of $748 million (on an operating basis it did better). But there was a positive in the revenue figure. Not long ago, sinking print ad income was driving year-to-year revenue declines approaching 10%. This year, they were down just 3.7%, and the company has set a goal of turning to revenue growth by 2024.
Gannett has said that it is committed to digital transition in both business and news delivery. It took a big step in 2021 by instituting a partial paywall for USA Today, whose main digital report had always been free. Then in March, it stopped publishing Saturday print papers in 136 markets, encouraging readers to view an e-replica edition instead.
“The impact on volume (i.e. print subscription cancellations) has been minimal,” CEO Mike Reed said, and the move has proved timely as the company now encounters significant “headwinds of inflation.” Costs of paper, fuel and the contract labor to deliver papers are all soaring, Reed said, and that is expected to continue through the rest of 2022.
While Gannett remains mainly a news publisher, it has been growing a direct marketing services business, especially targeted at smaller business clients. Also its events business — which includes sports banquets, 10K races and more — has kicked back up as the pandemic wanes.
The company’s “five pillars” strategy includes one addressing issues of diversity, equity and inclusion. While the News Leaders Association’s latest attempt at a census survey for the industry foundered for lack of participation, Gannett has published a detailed report on its numbers and has set targets for increasing the number of minorities in leadership positions.
The effort extends to an LGBTQ equality program and taking positions on environmental and social issues.
The company has reduced the $2 billion debt it took on when Gannett and the GateHouse chain merged in 2019 to $1.2 billion at the end of the quarter.
To summarize, Reed said in a release of the results, “As we continue to evolve the business, we believe we are well-positioned to generate significant free cash flow, further improve the balance sheet through debt pay down, and invest in growth opportunities. We remain optimistic for Gannett, not only in the short term, but also for anticipated long-term shareholder value creation.”
On a bad day for the stock market generally, Gannett shares were down roughly 6% to $3.96 in late afternoon trading. The shares have fallen roughly 37% from a high for the year in mid-February.
