From August to 2021, I had been doing some work on contract with the Gannett/USA Today Network newspaper. A colleague, who also happened that to be one of their journalists and I had created podcasts and had achieved some local success. We could bring in local artisans and crafters to discuss their motivations and hobbies, their family life, and how each of these factors influenced the way they worked.
The podcast was just two years old at the time I was told that we wouldn't be able to continue. The decision was made to cut down on contractor work in order to save money. This wasn't the first time that our work was affected by Gannett's business decisions, but it was the final time. The show ended, but I was fortunate to find myself on a local radio show and am developing that show with a company I love.
When I worked with the local newspaper for this podcast, I was able to observe many things from inside the company. I became friends with local journalists, got to know them quite well, and noticed the way they collaborated. Unfortunately, budget cutbacks and restructuring caused them to change their leadership often.
In Louisiana, there are a few newspapers that are owned by Gannett. Aside from the paper that I had worked for, the papers appeared to have skeleton staffs. There were a couple of reporters, sales personnel, and an individual who was in charge. Local journalism is a mix of different hats. Reporters are often urban reporters, education reporters, lifestyle reporters, and sports reporters, all wrapped up into one staff member.
Recent reports from Gannett reveal that things are only getting worse.
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 about what I had done prior to working for the news because I wanted to make it clear that I am a fan of my local Gannett newspaper. I am a fan of the staff there. I was happy being a part of their team. Local journalism is usually an entirely different animal from national or regional journalism. Local journalists are incredibly busy people doing everything they have to, and they perform better than those who work on the larger stage.
However, I've witnessed the damage Gannett's management has caused to its newspapers. Those reporters deserve more. The editors also deserve more. The strategy they have adopted does not seem 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's easy to conclude that most of this should have been predicted. It's not like the economy suddenly went down in the last quarter. This has been brewing for quite a while.
However, that's not the only issue. Gannett has been cutting staff, restructuring, and making adjustments for a long time. Each time, it is hoped to solve the problems. They have made the choice to concentrate on clicks, rather than subscriptions. They decided to stop selling a complete paper and instead wanted to promote individual stories. The crash was long overdue, and I'm not sure if the crisis is over.
I've spent the majority of my professional life in the field of local journalism. I am awestruck by it and would like to wish every local journalist great success. However, there is a point where you must acknowledge that the product can only be that good as the business that is producing it. Currently, the Gannett product is doing that.
