USA TODAY owner Gannett reported a net loss in the first quarter as the spread of the coronavirus reduced advertising spending from businesses hobbled by the pandemic, but the company turned a profit when factoring out one-time occurrences.
The media company, which owns more than 260 daily publications, posted a net loss of $80.2 million, including $78 million due to depreciation and amortization and $34 million in cash charges tied to the company’s recent merger.
When factoring out one-time items, Gannett posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $99.1 million.
Excluding the impact of one-time issues, revenue fell 10% from a year earlier to about $939 million.
The results reflect the combination of New Media Investment Group and Gannett after their merger in November, a deal that created the largest U.S. media company by print circulation and one of the largest by digital audience.
“Revenue and EBITDA performance were strong, despite the disruption experienced over the last two weeks of March from the COVID 19 pandemic,” Gannett CEO Michael Reed said in a statement. “The impact on our business from the pandemic came fast and is significant. However, we continue to execute on our operating and integration plans from the Acquisition of Legacy Gannett last year. The realization of synergies remains on track and debt pay down remains ahead of schedule.”
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Coronavirus impact: Gannett suspends dividend and implements cost cuts
The journalism industry is grappling with a sharper-than-usual reduction in advertising due to COVID-19, which has hurt key spenders like restaurants, stores and travel companies. The industry also continues to deal with the advertising shift from print to digital.
To offset a sudden drop in revenue from the coronavirus fallout, Gannett suspended its dividend on April 1 and announced plans to implement $100 million to $125 million in cost cuts in addition to previously planned savings tied to the merger.
The fresh round of cuts has included furloughs, job cuts, pay reductions for senior managers and the suspension of nonessential travel and spending. Many other news outlets have taken similar steps in recent weeks.
“We continue to evaluate additional options to strengthen our company as we navigate through this crisis,” Reed said.
Annualized savings tied to the company’s merger totaled more than $75 million in the first quarter, as the company said it “remains highly confident” of achieving its goal of $300 million by the end of 2021.
Gannett’s print advertising revenues fell 21.2% to $268 million in the first quarter, compared with the same period a year earlier. Circulation revenue declined 7.5% to $375 million. But digital advertising and marketing services revenue rose 1.7% to $136 million.
The company is obligated to pay off a 5-year, $1.8 billion loan owed to Apollo Global Management, which helped finance GateHouse Media parent company New Media’s acquisition of the “old” Gannett. The combined company took on the Gannett name.
Paid digital subscriptions to the company’s journalism rose 29% to 863,000 in the first quarter, compared with a year earlier. Online subscriptions are viewed as critical to the success of media companies in the digital age as newspaper dollars decline.
Gannett’s publications include the Arizona Republic, Detroit Free Press, Columbus Dispatch, Austin American-Statesman, Milwaukee Journal Sentinel, Louisville Courier Journal and hundreds of other daily and weekly news properties.
The Courier Journal on Monday won the Pulitzer Prize for Breaking News Reporting for its coverage of last-minute pardons issued by Kentucky’s outgoing governor in 2019.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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