Two weeks before a vote on a hostile takeover attempt, Gannett has reported a decline in revenues for the first quarter of 2019 but an increase in paid digital subscriptions.
The publishing giant, which owns eight New Jersey daily newspapers — including The (Bergen) Record and the Asbury Park Press – reported net losses of $11.9 million.
The losses were considerably more than the $377,000 loss the company had projected.
Operating revenues for the first three months of the year declined from $723 million to $664.4 million, with 37% of the total revenues now coming from the digital market.
MNG/Digital First Media, the company that has launched the takeover bid, reduced their slate of board candidates from six to three last week – an indication that Gannett is favored to retain a majority of the seats on the eight-member board.
The Wall Street Journal reported that “seeking fewer seats could make it easier to win support from other shareholders and the proxy-advisory firms whose opinions influence the way some big institutional shareholders vote.” The WSJ also suggested that Digital First would have less influence over Gannett even if they win three board seats.
Gannett CEO Robert Dickey said that the company “experienced robust new client acquisition in March and April that would improve digital advertising and marketing services revenues in future quarters.”
Digital First said that with continued losses “shareholders must wonder where this ends.”
“Today’s earnings announcement underscores the stark choice between MNG’s nominees, who will serve as a catalyst for immediate value creation, and the entrenched incumbent directors, who endorse a failing risky, multi-year digital transformation that we believe is extremely unlikely ever to produce a $12 valuation,” Digital First said. “We also note that neither the Company nor any of its officers or directors purchased shares in the quarter, despite protestations that MNG’s $12 proposal undervalues Gannett. The Gannett board desperately needs change, and we hope that shareholders will send them a clear message by electing MNG’s nominees.”
This story was updated at 7:30 PM with comment from Gannett:
“We believe MNG is only seeking to distract attention from its highly conflicted director nominees who have a record of destroying value and given close affiliations with MNG and/or its majority shareholder Alden Global Capital, cannot be expected to act in the best interests of Gannett shareholders. All eight of Gannett’s director nominees are fully independent and bring broad and diverse backgrounds, professional experiences and skills to continue to oversee the Company’s USA TODAY NETWORK strategy and ongoing digital transformation, and deliver value for all shareholders.”