Gannett praises digital growth as she fights a public takeover bid

by



[ad_1]

Gannett, who publishes USA Today and is the largest newspaper chain in the country, said his operating income for the last three months of 2018 was $ 751.4 million. That's down from $ 854.2 million a year ago.

Like many news companies, Gannett (GCI) has struggled against a steady decline in printing revenues, and these losses are often accompanied by sharp reductions. The company suffered layoffs in newspapers from one end of the country to the other last month during a dark period marked by the loss of about 1,000 jobs in the sector. media in several outlets.

The Gannett stock has lost about 3% during trading hours in the morning, Wednesday.

However, Robert Dickey, president and CEO of Gannett, who plans to retire later this year, said the company was "pleased" by the growth of digital advertising, which he said , was motivated by "strong national advertising" through its network of newspapers.

Gannett said Wednesday that its total digital revenues for the fourth quarter amounted to $ 272.3 million, or 36% of its total sales. The number of digital subscribers only rose to 504,000, an increase of 46.3% over the previous year.

That did not impress MNG Enterprises, the hedge fund company trying to take over an unsolicited takeover of Gannett since January 14th.

In a statement released on Wednesday, MNG said that "Gannett's disappointing earnings and forecasts at the end of the year underscore MNG's concerns about the health and direction of the company."

"Gannett has lost two-thirds of its free cash flow since 2014 and now expects a steady decline in adjusted EBITDA by 2019," the statement said. "Despite earnings gains from its digital assets, Gannett has only partially disclosed the profitability of these assets and has reaffirmed its interest in new digital acquisitions." It's hard to understand how the board of directors of Gannett may continue to reject a proposal for acquiring bonuses and cash when further declines and value destruction are on the horizon.

Gannett resisted the move, calling the offer $ 12 per MNG share not credible. Meanwhile, journalists in Gannett's publications feared the potential buyout.

MNG, also known as Digital First Media and primarily owned by the New York hedge fund Alden Capital, has carved a reputation for owning a flawless newspaper. And the company has been aggressive in its quest for Gannett, of which MNG is already a minority shareholder.

MNG strongly criticized Gannett's leadership and overall strategy. In his January 14 letter of offer, MNG called on Gannett to take "a series of destructive value decisions made by an untargeted management team". In addition, MNG called for a moratorium on Gannett's digital investments.

Gannett rejects public takeover bid for Digital First Media, owned by hedge funds
In recent years, Gannett has sought to expand its digital footprint to complement its traditional print offerings. The Wall Street Journal announced last month that Gannett was considering an acquisition of Gizmodo Media Group, publisher of websites like Deadspin and Jezebel.

On Wednesday, in anticipation of Gannett's financial results report, MNG added further pressure by launching a website: www.SaveGannett.com.

MNG urged Gannett's shareholders to "demand answers to unanswered questions" about the company's recent actions and its way forward.

Among the questions suggested to shareholders by MNG: "Why did you reject MNG's offer and refuse their request to extend the term of appointment of directors even before meeting MNG, rather than engage in good faith to satisfy your fiduciary obligations to shareholders? "

In his own statement on Wednesday, Gannett called the criticism "merely a new attempt by MNG to distract attention from the fact that his unsolicited proposal to acquire Gannett is not credible".

"Gannett's board is confident that Gannett has significant value creation potential to continue to implement the company's digital transformation and USA TODAY NETWORK strategy," the statement said. "Given Gannett's operational expertise, our drive to evolve our business model and our unwavering commitment to remain a reliable source of information, Gannett is well positioned to grow the company and its valuable assets." for the benefit of Gannett's shareholders and the communities we serve. "

Dickey preempted such a review at the top of a call with analysts Wednesday. He stated that at a meeting between the two parties on February 7, MNG "again failed to provide concrete answers to the fundamental questions regarding its ability to finance and close the proposed transaction. ".

Dickey said that he would not comment beyond that. But he has used much of his time to highlight Gannett's progress in the digital realm, perhaps a subtle rebuke to MNG's recommendation to stop investing in the field.

Dickey assured attendees that Gannett would be "disciplined in our use of capital". But he is also committed to continuing the "digital transformation" of the company.

[ad_2]

Source link