With Newspaper Owners Like Gannett, Who Needs Enemies?
3:26 PM EDT on August 19, 2022
Mega-publisher Gannett announced last week that it would be laying off workers, including some untold amount of reporters. Poynter estimated that at least 50 journalists across 42 newsrooms were laid off, adding at that "there are likely many more." This matters because Gannett is the largest newspaper publisher in the country and, by dint of that, the single largest purveyor of local news in the United States. Per its own website, Gannett publishes more than 400 local publications across 48 states, as well as the national publication USA Today. For all the attention garnered by The New York Times, Washington Post, and Wall Street Journal, the reality is that a company like Gannett has far more sway on how people—especially those outside of New York and Washington, D.C.—get their state and local news. At least, for now.
These layoffs happened for the same reason layoffs historically happen at a shop like Gannett: The company's millions in revenue were somehow not enough, and the fastest way to make more money appear on the ledger and keep shareholders of a public company happy is to cut payroll (a lesson I learned while working in newspapers). Gannett made $748.7 million in revenue in the second quarter of this year alone, according to the company's quarterly report. It is down a bit from the same period in 2021, for a net loss of a little less than $54 million, but that's not the real issue. The real issue is Gannett is currently carrying more than $1 billion in debt from its merger with GateHouse Media, and CEO Mike Reed said the company intends to pay back $150 million to $200 million of that debt this year. The money to pay down the debt had to come from somewhere—and it surely was not coming from Reed's pocketbook.
Reed's salary last year was more than $7.7 million, according to Gannett's 2022 proxy statement. The median salary of a Gannett employee last year, according to that same document, was $48,419. Per the company's own proxy statement, that makes the pay ratio between its CEO and the median pay of an employee 160 to one. (I found these figures with the help of reporting done by Dan Kennedy over at Media Nation.) In fact, with layoffs looming, Reed bought 500,000 more shares of Gannett stock.
The numbers do not get much better as you go down the proxy statement. Last year, CFO and CAO Douglas Horne was paid $1.7 million. The Gannett board is made up of nine people—Reed and eight others from outside the company. All eight members of the board were paid well over $200,000 for their service, which includes doing, well, I have no clue. I am comfortable saying none of them work as hard for Gannett as Gannett employees, who are toiling away for that median salary of less than $49,000, and were banned from asking any questions at all at a recent town hall.
If any of these well-paid executives and board members agreed to take cuts to their own pay to help cover the debt payments, I did not see it reported anywhere and I didn't see it mentioned in the quarterly report. A docking of pay would have merit given the connection between the company's financial losses and decisions made by corporate leadership. Gannett's leadership made a lot of noise about "headwinds" in digital advertising, leading off its quarterly report with the fact. Yet the first page of that report did not mention, though it was later reported, that another factor in revenue not meeting expectations was a deal with the online gambling company Tipico not panning out. According to PlayUSA, "Gannett essentially got an undisclosed 'referral' bonus for each customer it drove to Tipico." Reed, the CEO, crowed about the arrangement in 2021, saying, "Our highly engaged audience of more than 46 million sports fans crave analysis, betting insights, odds and unique features which we will provide with our Tipico alliance." But Tipico, based in Germany, hasn't seen much growth in the U.S, and the original agreement was mutually terminated in July, according to SEC documents. Now Gannett workers—not the company's $7.7 million CEO, not its $1.7 million CFO, not its board—have to pay the price.
They pay the price to keep shareholders happy. And the key shareholders in Gannett are, it's worth mentioning, not people. They're investment vehicles. The top three three largest owners of Gannett common stock, per its own proxy statement, are BlackRock, followed by Vanguard, followed by the William H. Miller III Living Trust.
Yet what I keep coming back to about Gannett is that it is literally the same story, decade after decade, CEO after CEO, newspaper after newspaper, forever fulfilling the paradox of a company that is perpetually growing and constantly shrinking. When I graduated from college in 2003, Gannett owned about 100 newspapers, including a handful in Florida, where I grew up. The general word on the street about Gannett back then was you wanted to avoid working for a Gannett paper for two reasons: They were obsessed with high profits and less obsessed with paying for good journalism.
Since then, Gannett has brought more newspapers, dabbled with buying Tribune, then fully merged with GateHouse, giving it a massive portfolio. The chain that once owned a few Florida newspapers now owns, by my count, 19.
The names of the newspaper change, but the merger results are always the same: More newspapers in the chain means they need fewer people working there and somehow the CEO always makes millions, regardless. Gannett is legendary for this. As David Carr noted more than a decade ago, "Gannett is a high achiever when it comes to downsizing." Fewer people means less news. Except less news is not happening in the United States; there's just nobody there to cover it unless it happens in the White House press briefing room.
The defense of Gannett, then and now, is that it is simply doing what is required of it to play by the rules of a publicly traded company amid a dying industry. But Gannett isn't a company. It's an angel of death. All it does is buy local newspapers, then slowly smother them out of existence. You won't notice it at first; anyone who has been through any merger, even not with Gannett, knows the rules. Your new parent company always gives you a year, maybe two, to believe things will be just fine before they creep in and tell you how thing are really going to be now. The copy desk gets outsourced to a "regional hub." (They always come for the copy desk first because they are the employees readers might not realize exist, though they are critical.) Then comes the hiring freeze. Then comes the skyrocketing price for an obit and a print ad. Then comes the shrinking print news hole. They phase out the staff photographers. Then comes the elimination of your reporting or editing position because they don't need it, what with such a small news hole, even though your community and your news is not shrinking. Advertising, sales, marketing—that all goes to the regional hub, too. Whoever is left behind is stuck with an impossible task, doing far too much for too little pay, and it all concludes with them getting yelled at online about typos.
Gannett is currently the subject of 14 open cases with the National Labor Relations Board. A survey done last year by the NewGuild of 14 Gannett newsrooms across the country had its own bleak findings. Of the 14 newsroom surveyed, 13 were whiter than the communities they covered. Men of color, women of color, and white women were all paid significantly less than white men, with women of color paying the largest financial price. White men also made up nearly half of the workforce. It concludes with quotes from anonymous journalists, this one from a reporter at the Palm Beach Post, which was a Cox newsroom when I competed against it at Scripps Treasure Coast Newspapers, which is now known as just Treasure Coast Newspapers and also owned by Gannett.
Honestly, what the paper pays some people is insulting. Some reporters with advanced degrees earn less than $20 per hour. How are people supposed to live on that? And what does that say to them about their value to the company?
Most reporters love their jobs, and they take their responsibility to serve the community very seriously. But the community loses out on that passion, expertise and knowledge when reporters don’t stick around because they cannot afford to survive.
The problem is you work hard, learn, move up and take on added responsibilities,but your pay does not change. It is very de-motivating.
You have managers who refuse to pay overtime to hourly wage-earners. They tellyou to take time off instead. It is against the law, but they do it. And if you callthem out on it, watch out, because the retaliation rains down fast and hard.
The same is happening at newspapers not owned by Gannett—at least, not yet. As Jeong Park of the Los Angeles Times pointed out, the Times, Post, and Journal combined now employ as many journalists as the entire Gannett chain.
For decades, companies like Gannett have convinced people the problem is newspapers. If only the internet hadn't happened. If only social media hadn't happened. If only another recession hadn't happened. Somehow, it is always someone else's fault. Sure, the days you could be a literal idiot and still make millions because your daddy was rich enough to buy a printing press are over. But that doesn't mean there isn't still a market and value in local news. It somehow never occurs to people that Gannett is the problem; that a system that requires massive profits every quarter in an industry undergoing profound changes is the problem; that a newspaper company answering to global money managers instead of actual readers is the problem; that a lack of support for trying out real, tangible solutions to fill in the gaps in local news deserts is the problem. The problem is not newspapers are dying. The problem is corporate greed killed them.