GCI - Why I Just Invested in America's Largest Newspaper Publisher
I'll preface this article by saying that Gannett (NYSE: GCI), now the largest publisher of newspapers in America, is a risky play. The newspaper business is a brutal industry with ad revenue and subscriptions falling significantly in recent years, and many newspapers dropping like flies. The U.S. has lost almost 1,800 papers since 2004, including more than 60 dailies and 1,700 weeklies, according to the Hussman School of Journalism and Media at the University of North Carolina.
But with big risk comes big reward. Last November, Gannett merged with New Media Investment Group, the owner of Gatehouse Media, to create America's largest publisher, which now includes newspaper brands such as USA Today, Detroit Free Press, and The Columbus Dispatch. The deal kept Gannett's name, while New Media CEO Michael Reed became the head of the combined company.
Investors' displeasure with the deal, combined with the fallout from the coronavirus pandemic, has sent the company's stock tumbling to just $0.82 per share as of this writing. To make matters worse, Gannett recently announced it will be eliminating its upcoming quarterly dividend and looking to reduce expenses by an additional $100 million to $125 million through job cuts, furloughs, and pay reductions for senior management. Obviously, things are not going well, but the stock has a year-to-date high point of $7 per share and was trading at almost $19 in mid-2018. If the company can survive, there's significant upside.