I did contract work for a Gannett/USA Today Network newspaper up until August 2021. My friend was one of their reporters. We had started a podcast, which had minor success in the local market. Local craftspeople and businesses were invited to discuss their lives, inspirations and families.
The podcast was about two years old when I was told that we couldn’t continue. To save money, the order was made to reduce contractor work. It wasn’t the first time our work had been impacted by Gannett’s business choices, but it was the last time. The podcast was over, and I was able to find myself a radio station in my area. I have since been building it with a company that I love.
Working with local media on podcasts, I was able to see many things from inside. The local journalists were my friends. I got to know them well and was impressed by how cooperative they worked. They had to make leadership changes because of budget cuts, restructuring, and other factors.
Gannett owns a few papers in Louisiana. The papers, with the exception of one I knew personally, seemed to be run with very few staff. One reporter, sales people, and one in charge. There are many roles in local journalism. These journalists include reporters for the city, reporters who cover education, reporters covering sports, reporters that report on lifestyle, etc.
Gannett’s recent filings indicate that this is just the beginning.
Gannett recorded a dismal second quarter financially, the company reported Thursday – important revenues sources down, costs up and a loss of $54 million on revenues of $749 million.
We are seeing strong efforts to reduce costs. Maribel Perez Wadsworth from the Media Division warned staff about impending layoffs in a memo. “In the coming days,” she wrote, “we will … be making necessary but painful reductions to staffing, eliminating some open positions and roles that will impact valued colleagues.”
Gannett stock was already at 45%, but it fell an additional 28.5% during midmorning trading. Wall Street did not expect such negative results.
To be precise, what I did before I got to the news was written because I liked my Gannett newspaper. They are nice people. They were great to work alongside. The local journalist is often more complex than national or regional journalism. As I mentioned, local journalists work hard to cover all the information they require and do so much better than those on larger stages.
But I have seen what Gannett’s management has done to its papers. Those reporters deserve more. Editors deserve better. They don’t seem to have a strategy that works.
- As companies cut their advertising schedules, digital advertising was less successful than expected. A particular problem was programmatic advertising. It is priced according digital traffic, not subscriptions.
- Print advertising and print circulation were both lower than anticipated. Reed explained that future losses have actually been extended into 2022, as Reed predicted. The high price of subscriptions has led to some customers abandoning print, leaving Reed with a few clients.
- The cost of printing papers at home is becoming more challenging due to rising labor costs. Newsprint costs are up 31% over last year. There was a slight increase in overall costs from a year ago.
- For the remainder of 2018, inflationary pressures, uncertainty and possible recession are all likely. Therefore, the operating environment is unlikely to change in the near-term.
It’s easy to point out that not only was a large portion of it predictable, but most of it should also have been expected. After all, it’s not as though the economy suddenly went south this quarter. It’s been building up for a long time.
But that isn’t the whole problem. Gannett has been making drastic changes over the years. Each time, the goal is to find the right solution. Their focus was on clicks, not subscriptions. Instead of trying to sell whole papers, they wanted to focus on selling individual stories. This crash has been a long time coming, and unfortunately, I don’t think the crash is over.
My professional life has included a great deal of time in local journalism. Local journalism is something I love and I wish it every success. But there comes a time when you have to acknowledge that the product is only so good as the company producing it, and as it stands right now, Gannett’s product is showing that.
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