Gannett, the owner of USA TODAY, posted a second straight quarterly profit as the company's digital subscription strategy gained momentum.
The media company, which also owns more than 200 other daily publications as well as several hundred weeklies, reported net income of $15 million for the period ended Sept. 30.
The earnings report came after Gannett in the second quarter posted its first profit since the 2019 merger of New Media Investment Group and the company formerly known as Gannett.
In the third quarter of 2021, Gannett recorded total revenue of $800.2 million, down 1.8% from a year earlier. On a comparable basis – a figure representing continuing operations – revenue rose 0.9%.
Gannett's stock was down 5.7% to $5.94 at 10:13 a.m.
Gannett has been grappling with the industry-wide challenge of declining print revenue for years but has been recently increasing its paid digital subscriptions.
Digital subscriptions, which are viewed as crucial to creating a path for growth, rose 46% to more than 1.5 million at the end of the third quarter. That led to a 26.6% jump in digital-only circulation revenue to $25.7 million.
Gannett Chairman and CEO Michael Reed said in January that the company had set a goal of securing 10 million digital subscriptions within five years. That target includes subscriptions from USA TODAY, which launched paid digital access for premium content earlier this year.
Gannett expects to finish 2021 with more than 1.65 million digital subscriptions, Reed said on the company’s earnings call with investors and analysts. That would reflect growth of more than 50% compared with 2020.
Reed was asked about introductory offers – whether there are concerns about subscriber retention after those expire – and he said the company is happy with what it is seeing, with retention around 70-75%.
For the third quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $102 million, up 16% from a year earlier.
On a comparable basis, circulation revenue fell 8.2%, while advertising and marketing services revenue rose 5%. Digital sales totaled $265 million, up 17.8%.
“Nine months ago, we outlined a long-term vision for growth at Gannett. While we are still in early stages, the strong growth in digital-only circulation and digital marketing solutions confirms we are on the right path,” Reed said in a statement.
Meanwhile, Gannett could be poised to benefit from a movement in Congress to boost local news organizations with payroll tax credits for employing journalists. If the Local Journalism Sustainability Act is approved by Congress and signed into law by President Joe Biden as it currently stands, the employment tax credits would be worth $30 million to $35 million for Gannett, Reed said.
You can follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday morning.
