Here is an article by Angela Fu from Poynter Institute about continuing budget cuts and falling revenue at the oleaginous oligopolistic GANNETT, owner of the incredible shrinking St. Augustine Record (sic):
Gannett is cutting $100 million and rethinking subscriptions to curb falling revenue
With profit up but year-over-year revenue down, the country's largest newspaper chain looks to raise prices and lean on AI
After a difficult first half of the year, Gannett, the largest newspaper chain in the country, is executing $100 million in cuts and rethinking its subscription strategy, executives announced Thursday.
The company ended its most recent quarter with a profit of $78.4 million, up from the $13.7 million profit it posted during the same period last year. However, total revenue fell 8.6% year-over-year to $584.9 million. To address this issue, Gannett recently began making cuts with the goal of saving $100 million. Those reductions include closing two of the company’s largest print facilities, shifting some of its markets to mail delivery and automating and outsourcing certain parts of its business.
“This is a moment to tap into AI-driven automation across our workflows and back office processes, which is expected to unlock an additional layer of operation efficiency,” Gannett chief financial officer Trisha Gosser said during an earnings call Thursday.
The $100 million cost reduction program likely includes recently announced companywide buyouts. In a memo to staff announcing the buyouts last week, CEO Mike Reed wrote that Gannett needed to cut costs given “static revenue trends.” He added that the company would “continue to use AI and leverage automation to realize efficiencies.”
Gannett is also changing its subscription strategy in an effort to reduce churn, executives said Thursday. Like many news companies, Gannett has tried to entice new readers by offering extremely cheap, introductory subscriptions. For example, one introductory offer gives USA Today subscribers daily delivery Monday-Friday for $9.99 a month for the first three months. That strategy led to high subscription rates, but many readers left after the introductory offers expired.
Instead, Gannett will focus on annual subscription offers, executives said. The company will also start raising prices in markets with higher engagement instead of offering similar prices nationwide and introduce pay-per-article options for occasional readers.
“That means some pain in the short term, but this is an intentional, necessary shift that is already starting to show positive signs of improvement,” Reed said during the earnings call Thursday.
Since joining Gannett as chief content officer in 2023, Kristin Roberts has emphasized increasing audience engagement. On Thursday, Roberts said that Gannett would continue to focus on “highly engaging verticals” like sports and entertainment. She noted that the company recently hired former People editor-in-chief Wendy Naugle as the executive editor of entertainment for the USA Today network.
The changes in subscription strategy mean it will take “a few quarters” for digital-only subscriptions to return to year-over-year growth, Gosser said. As a result, Gannett revised its financial forecasts, predicting that total revenues will decrease slightly this year and that the company will end fiscal year 2025 with a loss. The company expects revenue to be flat and net income to improve in 2026, in part due to the company’s $100 million cost reduction program, Gosser said.
In addition to using AI to further cost savings, Gannett is looking to use the technology to expand revenue opportunities. The company announced a deal with AI-powered search engine Perplexity Wednesday, which allows the search engine to license Gannett’s content. Gannett has also started implementing measures to prevent AI companies from scraping its content and collecting data without permission.
In response to an investor question, Reed said he believes AI companies are now more open to striking fair deals with media publishers. That is in part because many AI companies are entering the search business, where up-to-date information is much more necessary, he said.
“There’s definitely a very momentous shift happening (and) moving towards content creators and AI platforms coming together to figure out fair deals,” Reed said. “Over the next 12 months, as we finish this year and get into the next year, we hope there’s quite a few more deals to do.”
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