Home>Highlight>Gannett faces securities fraud, illegal business practices probe by law firm representing investors

Mike Reed, the chief executive officer of Gannett. (Photo: Gannett.)

Gannett faces securities fraud, illegal business practices probe by law firm representing investors

In New Jersey, Gannett-owned newspapers have still not reported a bid by their employees to unionize

By David Wildstein, March 12 2021 9:49 am

Gannett, which operates ten daily newspapers in New Jersey, faces an investigation by a group of their own investors to determine whether the company, or some of its officers, engaged in securities fraud or other illegal business practices.

The review could lead to a class action lawsuit, according to Robert S. Willoughby, a partner at the New York-based Pomeranz law firm.

After Gannett announced fourth quarter and full year financials last month, their stock prices fell by more than 14%, from $5.52 per share to $4.82.

The Pomeranz firm claimed Gannett reported a $670.5 million net loss that reflected a $393.4 million non-cash write-down reflecting an “impairment of good will” – which recognizes that there is a significant weakening of the company to generate cash flow.

Gannett also reported a $74.3 million non-cash loss on the derivative related to their convertible debt and an additional $43.8 million connected to an early extinguishment of debt.   The derivative fluctuates based on the value of the asset.

Employees at three of the New Jersey Gannet newspapers – The (Bergen) Record, the Daily Record and the New Jersey Herald – are attempting to unionize.

More than 90% of editorial staffers at The (Bergen) Record, the Daily Record and the New Jersey Herald signed a form to form a union affiliated with the NewsGuild of New York on February 10, but Gannett has not accepted their bid for voluntary recognition.

Earlier this month, U.S. Senators  Bob Menendez and Cory Booker, and Reps. Bill Pascrell (D-Paterson), Josh Gottheimer (D-Wyckoff) and Mikie Sherrill (D-Montclair) accused Gannett of holding anti-union captive audience meetings with their employees.

A union spokesperson confirmed that Gannett management is holding those meetings in a bid to stop employees from forming a union.

Gannett has repeatedly not responded to a request for comment, and has set up an apparent news blockade on efforts by their employees to form a union so that readers, subscribers and advertisers cannot learn of their internal issues.

In March, Gannett announced it was cancelling the syndication of a conservative comic strip, Mallard Fillmore, over portrayals of President Joe Biden and transgender athletes in women’s sports.

Dan Sforza, Gannett’s top executive in North Jersey, did not immediately respond to a 9:43 AM request for comment.

Spread the news:

 RELATED ARTICLES