Gannett, the owner of USA TODAY, on Thursday reported lower revenue and a net loss in the fourth quarter following its merger with New Media Investment Group in November, a deal that created the largest media company by print circulation and one of the largest by digital audience.
The results came as the newly combined company logged a more than 25% increase in digital subscriptions.
The company, which took on the name Gannett, generated total revenue of $1.05 billion in the quarter, down 9.7% from a year earlier, due largely to print revenue declines.
New Media acquired the larger Gannett, renamed itself and began combining operations of the two companies.
The new company posted a net loss of $115.7 million for the quarter, which included a $101 million write-down due to “revaluation of intangibles” and $146 million in charges related to restructuring and transaction costs.
Adjusted earnings before interest, taxes, depreciation and amortization totaled $141.2 million for the quarter, which was down 19% from the same period a year earlier.
Gannett’s stock fell 13.9% to $4.21 at 9:52 a.m. Thursday.
The company – whose more than 260 media properties include the Arizona Republic, Columbus Dispatch, Detroit Free Press and Austin American-Statesman – also reported a 25.3% increase in digital subscriptions to 812,000 when their figures are combined. Paid online subscriptions are viewed as critical to the success of media companies in the digital age, due to declining newspaper dollars.
Gannett executives have said the merger is designed to pave the way for a digital transformation of the company.
Print advertising revenue totaled $334 million in the fourth quarter. When factoring out one-time effects, Gannett’s print ad revenue fell 18.4%. Those figures reflect the industry’s challenges as readers and advertisers shift online.
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The company is reducing its reliance on print and diversifying its revenue with investments in marketing services and other digital products. Digital advertising and marketing services revenue totaled $150 million for the period.
The company said advertising was weaker than expected due primarily to disruption from the merger. But digital marketing services revenue posted strong gains for the old Gannett while the old New Media’s events business nearly doubled its revenue, compared with a year earlier.
“We were pleased with the strong momentum we saw in our key growth areas, which positioned us for a solid start to 2020,” Gannett CEO Michael Reed said in a statement.
Print ads represented about 31% of the combined company’s revenue in 2019, down from 42% in 2018, according to a public presentation Gannett executives gave to the Needham Growth Conference on Jan. 15. That figure is expected to fall below 20% in 2022, according to the presentation.
The success of the merger is linked to the company’s plan to shed $300 million in overlapping costs on an annual basis within 18 to 24 months of the combination. That’s crucial to paying off a $1.8 billion loan from private equity firm Apollo Global Management that New Media used to help finance the acquisition.
The savings are coming from a variety of areas, including printing plant consolidation, combined financial services and the elimination of other overlapping corporate functions. The company has closed about 14 printing plants so far, which is about halfway through its plan, Reed told analysts in the company’s earnings call on Thursday.
Gannett said in a statement that it expects to reach $60 million in annualized savings by the end of the first quarter and “more than half” of its $300 million target by the end of 2020.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.