Gannett Co., Inc. has announced its financial results for the fourth quarter of 2024, demonstrating significant progress in its ongoing digital transformation. The company reported a 5% year-on-year increase in total digital revenues, exceeding $1.1 billion for the year. This growth was fueled by expanded audience reach, improved engagement, and diversified digital channels.
Key highlights from the report include:
- Total digital revenues of $280.4 million, up 1.2% (or 3.4% on a same-store basis).
- Digital-only subscription revenues increased by 17.0%, reaching $49.0 million.
- Average monthly unique visitors surpassed 200 million, a 7.0% increase.
- Digital advertising revenues grew by 1.7%, totaling $92.7 million.
Gannett’s strong digital performance was complemented by improvements in key financial metrics. The company achieved full-year growth in Adjusted EBITDA and free cash flow, alongside a significant reduction in debt.
Looking ahead to 2025, Gannett anticipates continued growth in digital revenues, expecting them to comprise 50% of total revenues. The company also projects overall revenue growth and further improvements in Adjusted EBITDA and free cash flow.
Gannett’s successful execution of its digital-focused strategy is yielding positive results. The company’s ability to expand its digital audience, enhance engagement, and diversify revenue streams positions it well for sustained growth in the evolving media landscape.
ANALYSIS:
Profitability: While Gannett has shown strong performance in digital revenue growth and adjusted EBITDA, its net income attributable to Gannett for the full year of 2024 was ($26,354) thousand, and the net income margin was (1.1%). This indicates ongoing challenges in achieving overall profitability.
Liquidity: Gannett's free cash flow has shown significant improvement, with a 40% increase year-over-year. This suggests enhanced financial flexibility and the ability to generate cash
Bottom Line: The company's successful digital transition, debt reduction efforts, and improved free cash flow are positive indicators. However, ongoing profitability challenges and the need to navigate a transforming industry suggest areas that require attention.
Gannett Divests Austin American-Statesman to Hearst: A Strategic Move
Gannett also announced a significant shift in its portfolio, entering into an agreement with Hearst to sell the Austin American-Statesman. This move signals a strategic realignment for Gannett, focusing on future growth while passing the torch of a respected local institution to a company with a strong track record in publishing.
A New Chapter for the Statesman
The Austin American-Statesman, a Pulitzer Prize finalist and Edward R. Murrow Award winner, has been a cornerstone of the Austin community since 1871. Gannett CEO Michael Reed emphasized the alignment of values between the two companies, expressing confidence that Hearst would provide a strong foundation for the Statesman’s continued success. This suggests a focus on ensuring the legacy and journalistic integrity of the publication are preserved.
Gannett’s Strategic Focus
For Gannett, this divestiture is a strategic decision. While the Statesman is a valuable asset, the sale allows Gannett to further refine its focus and prioritize growth areas. The company highlighted its commitment to the USA TODAY Network, comprised of over 200 local publications. This move likely allows Gannett to consolidate resources and invest more heavily in its remaining portfolio, potentially accelerating its ongoing digital transformation and other strategic initiatives. The news release specifically mentions using the proceeds from the sale for debt reduction, a common and often prudent financial strategy.
Hearst’s Expanding Footprint
Hearst, a major player in the media landscape, continues to demonstrate its commitment to local journalism with this acquisition. Jeff Johnson, president of Hearst Newspapers, highlighted the synergy between the Statesman and Hearst’s existing portfolio, emphasizing the company’s strategy of investing in thriving communities. Furthermore, this acquisition reinforces Hearst’s dedication to delivering high-quality journalism and expands its reach in the Texas market.
Looking Ahead
The transaction is expected to close in the first quarter of 2025. The sale of the Austin American-Statesman represents a significant development in the media industry, highlighting the evolving strategies of major players like Gannett and Hearst. While the details of the transition remain to be seen, both companies appear optimistic about the future of the Statesman and their respective organizations. This move underscores the dynamic nature of the media landscape and the ongoing efforts of companies to adapt and thrive in a rapidly changing environment. It will be interesting to observe how this change impacts the Austin media landscape and what innovations and strategies both Gannett and Hearst pursue in the coming years.
