Gannett grew its digital revenue to 41% of its total revenue last quarter and is hoping to increase that percentage to 55% by 2026 and break even, the company announced Thursday.
Gannett — the largest newspaper company in the country — ended the fourth quarter of 2023 with a $22.9 million loss. Its total loss for fiscal year 2023 was $27.8 million, an improvement from 2022, when it reported a $78 million loss. Executives on the company’s earning call struck an optimistic tone, noting that Gannett had grown its digital audience and revenues. They expect the company to hit its “inflection point” — when revenue flips from declining to growing — near the end of 2024.
“We expect digital revenues to grow approximately 10% versus 2023 and importantly, begin to outpace the declines we see in our legacy revenue streams,” CEO Mike Reed said during an earnings call with investors. “Our digital revenue strategy, and the foundation for anticipated future growth, is to expand our audience and improve engagement and improve the platform monetization at each point in the customer journey with us.”
Gannett grew digital revenue 2.9% year-over-year to $277.1 million last quarter. Average revenue per user was a little more than $28 a year, suggesting many subscribers benefit from deeply discounted rates. Gannett had roughly 2 million digital subscribers last quarter, up 1.6% from the previous quarter.
In an effort to cut costs, Gannett switched to mail delivery in 46 of its smaller markets last year and has plans to convert another 53 markets in the first half of 2024, CFO Doug Horne said. Mail delivery is roughly 50% of the cost of carrier delivery. The company also plans to reduce its printing plants. The Indianapolis Star announced last month that it will close its production facility in April, resulting in approximately 90 layoffs.
Gannett repaid more than $140 million of debt in 2023 and now owes roughly $1.1 billion from its 2019 merger with GateHouse. Real estate sales have been a key part of its debt repayment strategy, and the company expects another $45 million to $50 million in real estate and asset sales in 2024. Horne said the company is “critically assessing all office space” outside of its largest markets. That includes its main office in McLean, Virginia; the company will move its headquarters to an existing location in New York City.
Gannett stock closed at $1.99 a share Thursday afternoon, down nearly 10% from the previous day’s close.
The company’s 2024 priorities
Gannett will focus on “rebooting” its smallest newsrooms and keeping voters informed in 2024, chief content officer Kristin Roberts said on the call.
Last year, Gannett focused on “staying attuned” to audience preferences, especially around college football and high school sports, to grow pageviews and engagement, Roberts said. The company had 187 million average monthly unique visitors last quarter, up 4.3% year-over-year. Gannett also experimented with newsletters in its smaller newsrooms — a strategy it plans to continue this year.
“Our reporters combined a first-person voice with a newsletter approach that invited readers to join them in experiencing their community firsthand,” Roberts said. “The results were remarkable and gave us the confidence to boldly expand this strategy. We’re hiring more journalists in communities that, like the pilot sites, have lost local news reporters, and we’re converting more of our smaller newsrooms across the country to take advantage of the engagement rate, reader satisfaction and retention that the newsletters offer.”
Gannett is also investing in its elections coverage, which Roberts said will focus on serving voters. The company is creating voter guides in more than 100 cities and will be launching an email course to prepare readers to vote.
“The USA Today Network is committed to making the voter the VIP of our election strategy,” Roberts said. “We will help readers, viewers and listeners become more informed and ready to make the best choices for themselves and their families at the ballot box.”
Roberts took the helm last March, after the company underwent two rounds of mass layoffs and several top executives resigned. Since then, Gannett has hired more than 200 journalists, and Roberts has been vocal about her desire to invest in local journalism. In a story announcing Gannett’s plan to invest $2 million into the Indianapolis Star’s newsroom and business team, Roberts said she had “maximum ambition for local journalism.”
Many unionized workers at Gannett have been skeptical of the company’s commitment to local journalism. Some unions have spent years negotiating contracts with the company, which they argue is underpaying its workers. One concern for many unions has been Gannett’s use of artificial intelligence.
In response to an investor question during the earnings call Thursday, CEO Mike Reed said the company will not use AI to replace journalists or publish content. Instead, it aims to use AI to increase productivity and explore new monetization opportunities.
“We’re not using these tools to replace journalists or to publish content,” Reed said. “We’re using them more behind the scenes to help our journalists become more efficient, leading to more time for each journalist to be able to create more content.”
News organizations have been exploring deals with AI and tech companies, and Reed said he expects Gannett to eventually sign some, though he “can’t predict the timing of them at this point.”
“I can’t tell you whether it’s next month, next year, or three years when we start to really see these licensing deals come to fruition,” Reed said. “But we do believe they will because our content is copyright protected, and this content’s really important to a lot of these AI technologies.”
This piece originally appeared in The Poynter Report, our daily newsletter for everyone who cares about the media. Subscribe to The Poynter Report here.
