Until August 2021, I was contracting with a Gannett/USA Today Network newspaper. One of their reporters was a friend and we had a podcast that had some success in our area. We were able to bring in local craftspeople and businesses to discuss their inspirations, hobbies, families, and how these all impacted what we did.
When I received the news that we could not continue with the podcast, it was almost two years old. To save money, the order was made to reduce contractor work. Gannett’s business decisions had not impacted our work before, but this was the first. The podcast was over, but I found myself with a local radio station and began working with a company that I love.
Working with the local newspaper on the podcast allowed me to see many things from the inside. I made friends with local reporters and got to know them well. I was impressed by how well they worked together. Unfortunately, they had to go through too many leadership changes due to budget cuts and restructuring.
Gannett owns a few papers in Louisiana. Except for the one I was with, it seemed that the papers were run by a skeleton staff. There were a couple of reporters, sales personnel, and the person in charge. Local journalism requires many different roles. These journalists include reporters for the city, education, sports, lifestyle, and political reporters.
However, recent Gannett filings show that things are only getting worse.
Gannett reported disappointing second-quarter financial results on Thursday. The company said that important revenue sources were down and costs were up, as well as a loss of $54million on revenues of $749million.
There are strong cost-cutting moves in the works. Maribel Perez Wadsworth from the Media Division warned staff about impending layoffs in a note. She warned that in the coming days, she would make painful but necessary reductions to staffing and eliminate some roles and positions that could have a negative impact on valued colleagues.
Gannett stock fell by another 28.5% during midmorning trades, after being down around 45% for the year. This indicates that Wall Street was not expecting such poor results.
Because I wanted to make it clear, I wrote the things I did before I got the news. The people are great. It was a pleasure to work with them. Local journalism can be a very different beast from national or regional journalism. As I mentioned, local journalists work hard to cover all the information they need and do it better than those on larger stages.
I’ve seen Gannett’s management do to its papers. Those reporters deserve more. Editors deserve more. Their strategy doesn’t seem to be working.
As companies cut their schedules, digital advertising fell short of expectations. Particularly problematic was programmatic advertising, which is priced according to digital traffic and not subscriptions.
Both print circulation, as well as print advertising, fell more than anticipated. Reed stated that losses in the future have been moved forward to 2022. Due to the high subscription prices, some customers are dropping print.
Cost-wise, there are increasing labor costs and rising expenses, which makes it more difficult to deliver printed papers at home. Newsprint costs are up 31% over last year. The overall cost of newsprint showed a slight increase year-to-year.
For the remainder of the year, inflationary pressures, economic uncertainty, and a possible recession are all possible. Therefore, the short-term operating environment is not expected to improve.
It’s easy to point out that most of this if it wasn’t all, could have been predicted. It’s not like the economy went down in this quarter. It has been growing for a while.
This isn’t the problem. Gannett has been making changes, restructuring, and cutting staff for many years. Each time is supposed to be the solution that stops the bleeding. They decided to concentrate on clicks and not subscriptions. They decided to stop trying to sell whole papers and instead focus on selling individual stories. It has taken a while for this crash to happen, and I’m not sure it is over.
Local journalism has been a part of my professional life most of the time. It is a joy and I wish all local reporters success. However, there comes a point when the product can only be as good as the company that produces it. Gannett’s product right now is proving that.
