Apparently, the board of America’s largest newspaper chain, Gannett Co Inc. (NYSE: GCI), will be reelected at the company annual meeting. Another newspaper chain, Digital First Media, had pressed its slate of three directors, against three of those on Gannett’s slate of eight.
Digital First is famous for dismantling newspapers by way of cost cuts, which have primarily been personnel cuts. Many in the industry expected that if the Digital First directors began to influence the board, Gannett faced the same fate. Eventually, Digital First might even become Gannett’s owner.
Digital First began its pursuit of Gannett via a $12 cash per share offer. Gannett rebuffed that. Among the reasons is that Digital First may never have had the money. Gannett’s board had another reason for turning down an offer. It had watched Digital First’s destruction of newspapers such as the Denver Post, where it decimated the editorial operations. Digital First management almost certainly would lay off large numbers of Gannett workers, even if only to handle payment of the debt it would have incurred to close a deal.
Gannett management argued that it could get the company’s stock up by itself. They said that the change of the Gannett from a print-based newspaper company to a digital news operation was already underway. That, in turn, would increase both revenue and profit margins. Gannett and its new chief executive officer, who likely will be announced in the next few days, will have to prove that to move shares above the $8.87 where they trade now.
If Gannett can accomplish the transformation, it will be the only large chain to do so, based on current trends. At any rate, Gannett has a very few years to arrest the fall of its top line as it tries to replace its current revenue stream to one dominated by digital advertising and subscriptions.
Gannett has been through its own series of layoffs, although nothing close to what Digital First has done at its properties. It will be a sign that Gannett has turned itself around successfully when those layoffs have ended.