Gannett Co., Inc., the company that resulted from the merger of New Media Investment Group and Gannett late last year, released its Q4 and full-year 2019 results, with a focus on integration and paying down debt.
Michael Reed, Gannett Chairman-CEO, stated: "Although we acquired Legacy Gannett only six weeks before the end of the quarter, we immediately began implementing our integration plan. By the end of the first quarter of 2020, we expect to have implemented measures that will result in over $60 million in annualized savings.
"As a result of these measures, we expect to realize $10-$15 million of savings in the first quarter, and we expect the savings in subsequent quarters to increase as we continue to implement synergies throughout the year.”
The report presents results in four ways: Actual GAAP results reflecting a full quarter or year of Legacy New Media operations and six weeks of Legacy Gannett operations; same store revenue trends for Legacy Gannett and Legacy New Media on a standalone basis for the period; pro forma results reflecting the consolidated operations adjusted to reflect New Media owning Legacy Gannett for the entire period; and adjusted EBITDA calculated from actual results and on a proforma basis.
The company reports paid digital-only subscriber numbers at around 812,000, a 25.3% increase year over year on a pro forma basis.
Across Q4 results, GAAP revenues rose 68.1% to $699.3 million, compared to the year prior, reflecting the acquisition. Legacy Gannett Q4 same store revenues dropped 10.1% year over year, which Legacy New Media revenues decreased 9.6% year over year.
Full-year 2019 GAAP revenues rose 22.4% to $1.9 billion compared to the year prior, reflecting the acquisition. Legacy Gannett 2019 revenues decreased 9.4% year over year and Legacy New Media decreased 8% year over year.
Pro forma digital advertising and marketing revenues rose to $231.8 million in Q4 and to $912.5 million for the year, accounting for 22% of total Q4 pro forma revenues and 21.8% 2019 pro forma revenues.
GAAP net loss of $95.1 million attributable to Gannett in Q4 and of $119.8 million for the year reflect a one-time non-cash write-down of $100.7 million and a one-time cash charges related to restricting and transition related costs of $145.6 million for Q4 and $182.9 million for the year.
Adjusted EBITDA totaled $98.8 million for Q4 and $223.9 million for the year. On a pro forma basis, adjusted EBITDA totaled $141.2 million for Q4 and $485.5 million for the year.
Across the company’s publishing segment in Q4, revenues totaled $653.9 million and $964.7 million on a pro forma basis.
Advertising revenues totaled $240.9 million in Q4 and $334.1 million on a pro forma basis. Same store Legacy Gannett print advertising revenues dropped 20.1% compared to the year prior, while Legacy New Media dropped 16.3% compared to the year prior.
Digital advertising and marketing revenues also dropped in Q4, with the company reporting $90.1 million and $150.3 million on a pro forma basis. Legacy Gannett same store revenue decreased by 1.6% compared to the year prior, while Legacy New Media decreased .4%.
Circulation revenues during Q4 totaled $255.6 million and $384.4 million on a pro forma basis, with Legacy Gannett revenues decreasing 10.3% year over year and Legacy New Media revenues decreasing 7.2%.
"As expected, same store trends weakened in the fourth quarter, in large part reflecting the runoff of more aggressive subscriber pricing initiatives that Legacy Gannett implemented in the fourth quarter of 2018. Beyond circulation revenue, same store advertising trends were a bit weaker than expected, primarily due to disruption from the Acquisition,” Reed stated.
“We have already seen trends improve in the first quarter and are confident in our ability to sustain these positive trends. In the fourth quarter, we saw strong gains in digital marketing services revenues at Legacy Gannett in our local markets, and the Legacy New Media events business nearly doubled its revenues compared to the prior year period.”
The company is also reportedly ahead of schedule in paying down debt.“As announced earlier in January, we paid down $35.8 million in principal on our credit facility during the fourth quarter,” stated Reed. “Subsequent to the quarter, we have paid down an additional $9.4 million. Real-estate sales have driven $8.9 million of the repayments, and we anticipate an additional $100-$125 million in real-estate sales by the end of 2021."