Gannett Hit By Soft Print, Digital Ad Revenue In Q2

Gannett faced “strong economic headwinds” in Q2, with larger-than-expected losses of print and digital ad revenues, CEO Mike Reed said during a conference call on Thursday morning.  

However, the firm is succeeding with its SaaS-like B2B solutions business, which brought in $116 million in the second quarter, over 60% of which is in recurring evergreen contracts. 

Total company revenues fell by 6.9% to $748.7 million. The net loss attributable to Gannett totaled  $53.7 million, a 7.2% margin loss, adjusted to $26.9 million.  

Print took a particular hit due to distribution problems resulting from a tighter labor market. This included a 67% increase in unstaffed delivery routes YOY, and 267% over 2020. Print was also affected by higher energy costs and increased consumer sensitivity to price.  

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The net loss was also affected by costs related to headcount reductions. 

Given that it does not expect these pressures to abate, Gannett is pursuing a significant cost-cutting program, primarily on the print side, but also including “transformative cost reductions,” Reed said. This entails an increased reliance on automation and third-party resources. 

An 8.9% decrease in digital media ads was largely due to a softer programmatic ad market and policy challenges in monetizing third-party affiliates. 

However, digital-only circulation revenues grew by 35.3% to $32.5 million. Gannett now has 1.87 million paid digital subscriptions, and added 155,000 in the quarter.  

Looking forward, the company is forecasting annual revenue of $2.95 billion to $3 billion for fiscal 2002, with a net income loss in the $60 million-$70 million range. But it expects to have from 2 million to 2.2 million in digital-only subscribers. 

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