Gannett's billion-dollar debt weighs on its future
Gannett's heavy debt load, compounded with brutal economic pressures across the industry, sets the stage for a gloomy future.
Driving the news: Gannett's stock dropped more than 28% Thursday after an abysmal earnings report and bleak outlook.
- Gannett swung from a profit to a net loss of $53.7 million during Q2.
- The company also revised its 2022 full-year outlook to a net loss of $60 million to $70 million. That's a huge miss compared to the outlook it shared last quarter of $50 million to $70 million in net income.
The intrigue: Gannett CEO Mike Reed said the company still intends to repay $150 million to $200 million in debt this year, noting plans to sell real estate and reduce costs of its print business.
- Gannett Media head Maribel Perez Wadsworth also emailed staff on Thursday about impending layoffs, removing some open roles and reductions to freelance and travel budgets.
Yes, but: Perhaps more concerning: Gannett's $1.34 billion debt load.
What they're saying: When asked about Gannett as a candidate for takeover, Huber Research Partners' Douglas Arthur said, "Lot of debt. That would be an expensive ticket for someone in industry."
- "Except at big national titles like The New York Times, new digital revenues still have not picked up the pace to fully cover print revenue losses," Poynter's Rick Edmonds writes.
- "So the last thing the industry needs, after the COVID economy shock, is another round of revenue hits and cost pressure," he added.
The bottom line: The last thing Gannett needs is the constant worry of paying down debt when the business requires cash to get itself out of its current hole.