by Kevin Slimp
Ken Doctor wrote an excellent column today titled, “Poison pill swallowed, what’s next for Gannett?” It’s an insightful and interesting look as to what caused Gannett’s stock to nosedive over the past few days.
I’d like to take you a little further back than Ken did in his column, and discuss what I’ve been writing and speaking about for the past 10 years or so.
I could go back a few months, when I was interviewed by The Washington Post about the then-upcoming Gatehouse/Gannett merger. During the interview, we discussed a lot more than was included in the three or four paragraphs that made the front page of the Business Section. The reporter asked how I had predicted so many things correctly about the plight of Gannett and Gatehouse years ago. Apparently, a few journalists had been sending him my columns from eight or ten years ago.
If he were to write a column about our interview today, he’d probably mention I told him the Gatehouse/Gannett merger would be a disaster, and would lead to exactly what happened this week.
It doesn’t take a brain surgeon to understand what has happened at Gannett. I used to speak about “the world’s biggest ponzi scheme.” Buying newspapers, reducing the staff, cutting pages, bringing the costs down, along with the quality. By the time readers catch on and cancel their subscriptions, Gatehouse and Gannett were making nice profits on paper. After all, there’s a lot of money to be made if the subscriptions are still coming in and there’s very little personnel and printing costs.
Until subscribers quit subscribing.
That allowed executives to report profits at shareholders meetings, which in turn lead to hefty bonuses for them, which increased the incentive to push the envelope a little further.
It had to be stressful, staying one step ahead of the looming disaster. I’m quite sure I’m not the only one who saw what was coming. It would be a rare week when someone affiliated with Gannett or Gatehouse didn’t contact me to ask, “What in the ___ are we doing?”
I often tried to help these folks find jobs with independent papers. It seemed the least I could do.
What has been most amazing to me has been how far the rest of the newspaper world has stretched, trying to believe that the folks at Gannett and Gatehouse somehow had some idea about what they were doing. Newspaper groups, associations and journalism schools scoop up ex-Gannett folks like they hold the keys to all journalism knowledge.
Sixty-three cents. That’s what a share of Gannett stock listed for yesterday. Sixty-three cents.
Attendees at conventions I’ve spoken at through the years love to write and remind me when one of my predictions comes true. Such was the case a few years ago when Gannett began selling off their buildings. Of course, they had to get rid of the people in them first, or at least a lot of them.
You see, if you can sell enough buildings, you can show a profit at the quarterly meeting. And when you show a profit.
You get a bonus.
Is it all starting to make sense? Buy papers, cut staff, cut pages, reduce expenses, make a profit.
For a while. Until readers quit reading.
That’s okay. As long as you tell your sales staff to quit selling print ads, you can tell your stockholders, for whatever reason, people aren’t buying print ads. What could you do? How could any individual be to blame if the public doesn’t want print anymore? By the way, I have friends and colleagues who were told they could no longer sell print ads. Luckily, most of them left on their own after hearing those words. It’s hard to earn commission when you have nothing to sell.
It doesn’t take a brain surgeon.
But everything is still fine. As long as there’s a profit when the reports come out, bonuses continue to roll.
Until there’s no more real estate to sell.
Then what do you do? You find someone to buy you, fast. Someone that is either gullible or in as bad of shape as you are. That should increase stock prices for a little while. Maybe a day. Or two.
Eventually, however, the walls start to crumble. Stockholders realize they’ve been duped. Readers quit reading. All that money promised from online news? Yes, just another promise.
Don’t be fooled, as tough as COVID-19 has been on newspapers, and it has been very tough, Gannett’s problems started long before quarantines took place.
It does, however, make for a handy excuse.
Ken’s column today was excellent. If you’ve not read it, you can find it at: msb.press/gannett .
However, the problem with Gannett didn’t begin this week, or this year.
It doesn’t take a brain surgeon to figure that out.