S&P says Gannett has 38.2% chance of defaulting on loans

The nation’s largest newspaper chain, Gannet, has a probability of default of 38.2% as a result of the global coronavirus pandemic, according to an analysis by S&P Global Market Intelligence released last week.

Gannett operates ten daily newspapers in New Jersey.

“The one-year market signal probability of default scores for several major publicly traded newspaper publishers remain up as compared to pre-pandemic level,” S&P noted. “Gannett’s one-year market signal probability of default score is down from an April 7 high of 59.9%, it is up significantly from early March, when the score was in the low-to-mid 20% range.”

According to S&P, cash liquidity is the key for Gannett’s survival. The company continues to pay down debt from its merger with GateHouse Media and owes a Wall Street investment bank about $1.79 billion.

Gannett has a $125 million interest payment due on its term loan this month, with $50 million due in the third and fourth quarters, S&P reported.

In an effort to preserve cash flow, Gannett has furloughed reporters for one week every month,  cut the salaries of top executives by 25%, and eliminated nearly 600 jobs.

In New Jersey, The (Bergen) Record and the Asbury Park Press both laid off their editorial page editors, bringing an end to newspaper-driven local news editorials.

Gannett also owns the Herald News, Daily Record, New Jersey Herald, Courier News, Home News Tribune, Courier-Post, Daily Journal, and Burlington County Times newspapers.