Newspaper Giant Gannett Faces More Layoffs Amid Disastrous Quarter and Recession Fears

Newspaper Giant Gannett Faces More Layoffs Amid Disastrous Quarter and Recession Fears
Jacquelyn Martin

Up until around August of 2021, I was doing some contract work with a Gannett/USA Today Network paper. A friend, who happened to be one of their reporters, and I had put together a podcast and had some minor local success with it. We were able to bring in local businesses and craftspeople to talk about their inspirations, hobbies, families, and how all of these things impacted what they did.

The podcast was about two years old when I was told that we couldn’t continue. The order was given to minimize contractor work to save money. It wasn’t the first time our work had been impacted by Gannett’s business choices, but it was the last time. That podcast ended, but I luckily found myself with a local radio show and have been working on building that with a company I really love.

In working with the local paper on the podcast, I did see a lot of things from the inside. I made friends with the local reporters, got to know them pretty well, and I noticed how well they all worked together. Sadly, though, budget cuts and restructuring forced them to undergo leadership changes far too often.

In Louisiana, there are a handful of papers owned by Gannett. With the exception of the one I worked with, the papers seemed to operate with skeleton crews. A couple of reporters, sales staff, and a person in charge. Local journalism involves wearing many hats, and those journalists are city reporters, education reporters, sports reporters, and lifestyle reporters all rolled into a single staff member.

Recent filings from Gannett show that things are only getting worse, however.

Gannett recorded a dismal second quarter financially, the company reported Thursday – important revenues sources down, costs up and a loss of $54 million on revenues of $749 million.

Strong cost reduction moves are on the way. Media division head Maribel Perez Wadsworth, in a note to staff, warned of impending layoffs. “In the coming days,” she wrote, “we will … be making necessary but painful reductions to staffing, eliminating some open positions and roles that will impact valued colleagues.”

Gannett stock, already down roughly 45% for the year, fell another 28.5% in midmorning trading, indicating Wall Street had not expected such bad results.

I wrote what I did before getting to the news because I wanted to be clear: I like my local Gannett paper. I like the people there. I liked working with them. Local journalism is often a different beast than regional or national journalism. Those reporters at the local level, as I said, work themselves to death covering everything they need to, and they do it way better than the people on the bigger stages.

But I have seen what Gannett’s management has done to its papers. Those reporters deserve more. The editors deserve more. Their strategy does not appear to be working.

  • Digital advertising fell below expectations as companies reduced their schedules. Programmatic advertising, priced according to digital traffic rather than subscriptions, was a particular trouble spot.
  • Both print circulation and print advertising were off more than expected. Reed said that, in effect, losses anticipated in future years have already been pushed forward into 2022. With consumers pinched, the company is seeing some customers dropping print because of how high the subscription price has become.
  • On the cost side, labor shortages and expenses are rising, making it increasingly difficult to home deliver print papers. The cost of newsprint is up 31% compared to a year ago. Overall costs showed a small increase year-to-year.
  • Inflationary pressures, economic uncertainty and a possible recession are all in prospect for the rest of the year so the short-term operating climate is not expected to improve.

It is very easy to say that a lot of this, if not all of it, should have been predicted. After all, it’s not as though the economy suddenly went south this quarter. It’s been building up for a long time.

But that isn’t the whole problem. Gannett has been restructuring, cutting staff, and making changes for years now. Every time is meant to be the solution that will stop the bleeding. They made the decision to focus on clicks rather than subscriptions. They stopped trying to sell a whole paper and wanted to sell individual stories. This crash has been a long time coming, and unfortunately, I don’t think the crash is over.

I have worked a lot of my professional life in local journalism. I adore it and wish every local reporter nothing but success. But there comes a time when you have to acknowledge that the product is only so good as the company producing it, and as it stands right now, Gannett’s product is showing that.

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