November 5, 2021

Gannett is making progress on growing paid digital subscriptions — now 1.5 million across the chain — and diversifying its USA Today sports offerings with a premium app and a link allowing gamblers to place bets.

Those were highlights of the company’s third-quarter financial report Friday as it held revenue at $800 million, even compared to the same period a year ago, and posted a modest profit.

The digital subscription total represented 46% growth from the same period a year ago. Digital revenue grew less — 26.6% — indicating that Gannett is for now relying on discounted introductory offers, especially at USA Today, which only this year put in a paywall for premium content.

CEO Mike Reed has set a goal of 10 million paying subscribers within the next five years, arguing that number is reasonable given a market of 179 million unique visitors per month.

The company has refinanced and paid down the debt it took on to finance the Gannett-GateHouse merger two years ago. Debt was reduced by $91 million in the third quarter and stands at $1.4 billion.

While deemphasizing print, especially print advertising, Reed said that print remains a solid business and that the company is investing in “expanded content” in the 30 largest dailies of its 250.

In recent months, the company has sold a number of weeklies and closed a few others. They no longer fit with Gannett’s strategic plans.

The company’s revenue mix is changing, Reed said, with a third now from digital activity and only 15% from USA Today’s news business.

A target growth area for the last several years has been events like sports banquets and road races. The banquets have had to shift back to virtual formats in the third quarter and this one, Reed said, because of the resurgence of the coronavirus.

In response to an analyst’s question in a conference call, Reed said that the payroll tax credit for local journalists, currently included in the federal budget bill, would benefit the company to the tune of $30 to $35 million next year.

Gannett stock, while still not a market favorite, has steadily improved. At $5.98 a share in mid-morning trading, it now is worth more than five times as much as the $1.15 low it hit in October 2019, just after the merger. That reflects increased investor confidence that the company can manage the heavy debt it took on then (though it still had to make $35 million in interest payments in the quarter).

I am cautious about extrapolating Gannett’s financial results to the rest of the industry. But digital subscription progress and at least a modest advertising and marketing service rebound compared to the worst of the pandemic slowdown seems to be the norm.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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