Home>Highlight>Facing serious financial problems, Gannett preparing for layoffs, budget cuts

A Gannett office building in Indiana. (Photo: Jonathan Weiss/Shutterstock).

Facing serious financial problems, Gannett preparing for layoffs, budget cuts

Unstaffed delivery routes up 267% since 2020, print circulation revenues down 11.7%

By David Wildstein, August 04 2022 5:06 pm

Gannett lost $54 million during the second quarter of this year and is about to embark on a series of cost-cutting measures, including layoffs, as the struggling national news chain – which operates nine daily newspapers in New Jersey – plans to take a butcher knife to an already decimated local news organization.

“We are taking significant and permanent costs out of the organization, primarily on the print side of our business,” said Gannett CEO Michael Reed on a conference call with reporters on Thursday morning.  “Given that we do not expect the near-term pressures to abate in the second half of 2022, we have moved quickly to implement a significant cost reduction program.”

Stock prices dropped nearly 30% by the middle of the day.  Gannett stock is already down about 45% so far this year.

Later, Poynter reported that Gannett notified staff that layoffs are on their way.

“We will…be making necessary but painful reductions to staffing, eliminating some open positions and roles that will impact valued colleagues,” said Maribel Perez Wadsworth, the head of Gannett’s media division.

That’s potentially tough news for some of the New Jersey newspapers, which are already operating with a skeleton crew of local news reporters.  Many Gannett newspapers stopped printing Saturday editions earlier this year.
Reed put some of the blame for Gannett’s financial woes on inflation.

“The impact of macro-economic conditions was felt most acutely in our legacy print business,” he said.  Both print advertising and print circulation experienced greater than expected losses, with home delivery revenue being the most severely impacted.”

Unstaffed delivery routes have increased by 67% year over year, Reed said, and are up 267% compared to 2020.  He blamed labor shortages.

According to Reed, unstaffed delivery routes have caused circulation revenues for Gannett newspapers to drop by 11.7%.

“Couple that with increasing consumer weakness and we saw accelerated print circulation losses,” Reed reported.  “More than we anticipated.  And we clearly see that household budgets have tightened from gas at the pump to groceries.”

Reed repeatedly stressed growth priorities that don’t involve local news: crossword puzzles, gaming, sports and events.

But he also acknowledged that a sports betting deal with a German company has not worked out.

Still, Reed defended his own ability to fix Gannett’s financial woes.

“We have a very seasoned management team who have navigated choppy waters in the past.  We are taking aggressive steps to manage our business in the near term while keeping our focus on driving our long term digital growth,” Reed said. “We believe our strategy is right, and the pain we have now is pulling forward future losses, which will make us stronger as we move forward.”

The president of the News Guild, which represents some of the Gannett newspapers in New Jersey, disagreed.

“Gannett’s executives don’t know how to run a business. They spend millions on all the wrong things,” said Jon Schleuss.  “The solution is to invest in journalists.”

In a Tweet, NewsGuild-CWA criticized Gannett for spending millions on stock buybacks, executive pay, and “anti-journalist lawyers to fight its own newsrooms.”

The national chain operates The (Bergen) Record, New Jersey Herald, Daily Record, Courier News, Home News Tribune, Asbury Park Press, Burlington County Times,  Courier-Post and Daily Journal newspapers in the state.

Gannett opened up the earnings call for media questions, but their conference call host said there were none.  The New Jersey Globe had requested to ask a question.

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