NEW YORK — Gannett, which owns USA TODAY and more than 100 local news properties, said Monday that it is reducing its workforce by “about 2%” to help manage costs in a difficult environment for print and digital advertising.
The cutbacks come as other media companies take similar actions. Last week, The Wall Street Journal said it is offering buyouts to a “substantial number of employees” in an effort to limit the number of involuntary layoffs and an email from the top editor of Dow Jones’ weekly magazine Barron’s mistakenly sent to Journal employees revealed that layoffs there were imminent. Both the Journal and Barron’s are owned by News Corp. In July, The New York Times reported that about 80 employees took voluntary buyout packages.
The reductions at Gannett will affect workers across the company, including at its headquarters in McLean, Va. The majority of affected employees will be notified by Tuesday and reductions will be completed by the end of this week, President and CEO Bob Dickey said in a letter to employees.
“Actions like these are difficult, but I remain steadfastly committed to reinvesting in our employees and the capabilities required to sustain and grow our company so that we may continue to serve our customers with excellence,” Dickey said.
Gannett’s transformation into a national digital media company has met challenges also faced by the broader industry. In the second quarter, net income fell 77% to $12.3 million as the company had one-time expenses related to severance and acquisition costs, and advertising revenue came in flat at $409.8 million. Adjusted earnings, before interest, taxes and amortization, a measure that removes certain one-time items that the investment community uses to evaluate companies, was $89.7 million, down 7.6%.
National digital advertising revenue rose 22.4%, but similar to other companies with a legacy steeped in newspaper publishing, digital revenue and traffic haven’t risen fast enough to offset weakness in print. Gannett is set to report third-quarter financial results Thursday.
Across the industry, U.S. newspaper advertising revenue, excluding digital, fell 8% in 2015 and is expected to decline another 8% in 2016, according to research firm eMarketer. Digital advertising revenue for all media rose more than 20% in 2015 and is expected to grow at similar levels in 2016.
Gannett has been buying local newspapers and their affiliated digital properties in a strategy designed to consolidate the local news business and gain digital marketing prowess that can be pitched to corporate clients and small-business owners. The company last December announced the creation of the USA TODAY NETWORK, uniting its national and local news properties and its roster of journalists across the country.
In an effort to expand the reach of the network, Gannett this year purchased Journal Media Group, which owned the Milwaukee Journal Sentinel, The Commercial Appeal of Memphis and 13 other daily newspapers as well as assets of the North Jersey Media Group. Gannett reportedly remains in talks to purchase Tronc, the publisher formerly known as Tribune Publishing, which owns the Los Angeles Times, Chicago Tribune and nine other dailies. And in August it completed the acquisition of ReachLocal, an online marketing company that helps local businesses manage sales leads and grow revenue.
“Over the next 18 months, we will continue to build our scale and invest in important digital capabilities and experiences — such as critical e-commerce infrastructure and significant upgrades to our digital content platforms,” Dickey said in the letter to employees.