Gannett headquarters in McLean, VA. (Photo: Tim Loehrke, USA TODAY)
Gannett, owner of USA TODAY, reported a decline in first-quarter revenue and a wider net loss on Friday but said its digital subscription strategy is gaining momentum.
The media company, which also owns more than 250 other daily publications as well as several hundred weeklies, reported a net loss of $142.3 million, or $1.06 a share, for the quarter after having reported a net loss of $80.2 million, or 61 cents, a year earlier.
During the first two months of 2020, the economy was largely unaffected by the pandemic, but when it erupted in March, the resulting business lockdowns stymied advertising spending.
For 2021, first-quarter revenue totaled $777 million, down 18% from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $100 million, up 1%.
On a comparable basis, circulation revenue declined 13%, and print advertising revenue fell 25%, while advertising and marketing services revenue slumped 18%.
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Gannett has been grappling with a decline in print newspaper revenue for years but has recently enjoyed success with an increased focus on paid digital subscriptions, which are viewed as crucial to the success of media companies as newspaper dollars decline.
The company reported Friday that digital subscriptions rose 37% in the first quarter to about 1.2 million, compared with a year earlier.
Gannett CEO Mike Reed said in January that the company had set a goal of securing 10 million digital subscriptions within five years.
Despite the lingering challenges related to the pandemic’s effect on the economy, Reed said in a statement on Friday that it was “a very encouraging start to the year as a whole.”
“We believe we are well positioned to not only meaningfully grow Adjusted EBITDA year over year, but also continue our evolution to a digitally focused content platform,” Reed said.
Investors have grown increasingly optimistic about Gannett’s prospects in recent months, nearly quadrupling the company’s stock since early November. Shares rose 1.1% to $4.50 on Thursday.
Some of the optimism stems from the company’s improving balance sheet. Gannett has taken several steps in recent months to improve its cash flow. Those moves included refinancing a loan from private equity firm Apollo Global Management that enabled the 2019 merger of New Media Investment Group and the company previously known as Gannett. The new, combined entity took on the Gannett name.
The company has also taken steps to shed overlapping costs following its merger, including closing certain printing facilities and eliminating redundant executive positions.
Gannett said it had met its goal of saving more than $300 million in annualized “synergies” by the end of 2021 and now expects to hit $325 million.
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