Reversing a decade-long trend, Gannett plans to grow its newsroom staffs in the second half of 2020

Furloughs and pay cuts are being phased out in favor of permanent reductions from facilities, leases, travel and the elimination of some business jobs

August 6, 2020

As Gannett plans for continued COVID-related revenue pressure for the balance of the year, permanent expense reductions are in the works — but no newsroom layoffs.

In fact, some staffing increases are coming at both USA Today and the company’s network of 260 regional dailies, Mike Reed, Gannett’s CEO, told me in an interview Thursday.

Reed said that the company wants to build on traffic and paid digital subscription momentum over the last few months as its journalists have provided high volume and high-quality coverage of the pandemic and social justice protests.

“We need to get even better (at news content),” he said, to support the key strategy of strong audience revenue growth as advertising losses have accelerated. The company expects to pass the 1 million mark in paid digital subscriptions this quarter, he said. (And, of course, the basic USA Today site remains free.)

In a conference call with analysts earlier Thursday, Reed had said that the furloughs and pay cuts of the second quarter are being phased out. “We are replacing them with permanent reductions,” he said, “since we expect the economy will continue to be challenged.”

In the interview, Reed said those savings will come from a variety of sources — combining facilities, renegotiating leases, less travel and some elimination of business-side jobs as Gannett and the GateHouse chain continue to merge.

He said that he did not want to leave the impression that reporters, editors and visual journalists might be taking another hit. Most were required to take an unpaid week off on furlough for each of three months in the second quarter.

Reed’s comments echo the substance of The New York Times quarterly financial report Wednesday. The Times’ news site posted its strongest paid subscription growth ever for one quarter — nearly 500,000.

Top Times executives, CEO Mark Thompson and COO Meredith Kopit Levien, said that they have found getting readers to sample the Times’s journalism is the single best source for new paid subscriptions — more effective than any other kind of marketing.

The Times’s news operation now has a staff of 1,750, Thompson said, 250 more than when he joined the company eight years ago. And that number will grow more, Levien said, as the Times drives to a goal of 10 million subscribers by 2025.

Gannett has roughly 5,000 journalists. Reed did not offer a number for the expected growth, which he said was still being planned.

In November, New Media Investment, parent of the GateHouse chain, acquired Gannett for $1.4 billion (retaining the Gannett name). Merging operations is expected to play out over a period of two years, and the company claims it can realize roughly $300 million in cost-saving “synergies.”

Reed, who had been CEO of New Media, became CEO of the “new” Gannett with the acquisition. In June, he and the Gannett board of directors eliminated the job of his second-in-command, Paul Bascobert, who had held the title of operating CEO.

In Thursday’s report, Reed said that the company is current on its debt payments and that the merger plans are on track — despite some big declines in revenue in the quarter compared to the same period in 2019.

Gannett’s total revenues were down 28% year-to-year on a same property basis. Print advertising revenue declined by 45% and circulation revenue by 13.6%.

Reed said that single-copy sales were weak, particularly for the print edition of USA Today, which is mainly distributed in hotels — sitting largely empty as most business travel stopped. He declined to give a number or percentage for the losses but said the total would have been under 10% otherwise.

Gannett expenses fell nearly as much as revenue — 23.6%. So the company operated profitably on a cash basis. It did post a large loss for the quarter under accounting rules because it marked down the book value of its assets — but that action has no cash impact.

While Gannett and GateHouse have not gutted metro newsrooms as, for instance, the hedge fund-controlled MediaNews Group has, their mid-sized and small papers have made deep cuts.

The chain, the largest in the U.S., is often a bellwether for other publicly owned regional groups and the larger private chains like Hearst and Advance Local and now McClatchy.

I have no evidence that others will follow — or that the staff additions will be of a significant number. However, even if the industry swings just to stopping cuts and stabilizing newsrooms, that would be a significant change to the decline of recent years — and very good news.

Rick Edmonds is Poynter’s media business analyst. He can be reached at redmonds@poynter.org.