Gannett Files Definitive Proxy Statement and Mails Letter to Shareholders
Gannett Co., Inc. (NYSE: GCI) (“Gannett” or “company”) today announced that it has filed definitive proxy materials with the U.S. Securities and Exchange Commission and will be mailing the proxy materials and a letter to shareholders in connection with the company’s 2019 Annual Meeting. The Gannett board of directors unanimously recommends that shareholders vote “FOR ALL” of the company’s highly qualified, fully independent director nominees on the WHITE proxy card today.
The Annual Meeting will be held at 8:30 a.m. ET on May 16, 2019 at Gannett’s corporate headquarters, located at 7950 Jones Branch Drive, McLean, VA 22107. Shareholders of record as of the close of business on March 18, 2019 will be entitled to vote at the Annual Meeting. Admission to the Annual Meeting will begin at 8:00 a.m. ET.
The full text of the letter follows below:
March 26, 2019
Dear Fellow Shareholder,
At Gannett’s Annual Meeting of Stockholders on May 16, 2019, you will be asked to make an important decision regarding the composition of the company’s board of directors that we believe will impact the future of the company and the value of your investment in Gannett.
This year’s meeting is particularly significant because MNG Enterprises, Inc. (“MNG”), also known as Digital First Media, a competing news media company majority-owned by the New York based hedge fund Alden Global Capital (“Alden”), is attempting to take control of Gannett through a problematic, two-pronged approach: first, it demanded that Gannett sell itself to MNG and, second, MNG nominated a control slate of candidates, all of whom are affiliated with MNG and/or Alden, to stand for election to the Gannett board.
Your board unanimously rejected the unsolicited proposal from MNG to acquire Gannett after careful review and consideration in consultation with our financial and legal advisors. We determined that MNG’s proposal undervalues the company and is not credible or actionable, particularly given MNG’s failure to produce committed financing and its persistent refusal to answer basic questions regarding how it would overcome likely antitrust and pension issues, among other important matters.
Your board believes that MNG’s nominees would not bring any additive skills or experience to the Gannett board. Additionally, your board is cognizant of Alden’s history of engaging in transactions that have destroyed value while lining the pockets of Alden and its affiliates, including, at MNG, stripping newspapers of certain assets while paying Alden generous management fees. Your board believes that MNG’s nominees are being put forward simply to advance Alden’s goal: to enrich itself at the expense of Gannett’s shareholders.
Underscoring this concern, we believe all six candidates nominated by MNG exhibit obvious and significant conflicts of interest. Gannett believes that if MNG’s nominees were to be elected to the Gannett board, it would effectively transfer control of the board to MNG and Alden – without any control premium – at which point MNG and Alden would be able to advance a self-serving agenda at yet another American news media company.
Your vote is very important. We encourage you to protect the value of your investment in Gannett by voting “FOR ALL” of your board’s eight independent nominees today – online, by telephone or by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided. Please simply discard and do NOT vote using any Blue proxy cards you may receive from MNG.
GANNETT’S STRATEGIC TRANSFORMATION IS DEMONSTRATING RESULTS THAT WILL DELIVER GROWTH AND ENHANCE SHAREHOLDER VALUE
Under the direction of the company’s board and management team, Gannett is executing a digital transformation that, combined with the company’s USA TODAY NETWORK strategy, will enable Gannett to serve as a trusted, comprehensive digital marketing partner to local and national businesses while also defining, strengthening and growing our communities through digital engagement.
During 2018, while this transformation was ongoing, your board and management team drove significant progress, as underscored by the strong digital growth and the Pulitzer Prize-winning coverage provided through the USA TODAY NETWORK. Your board is confident that Gannett has significant value creation potential through the continued digital transformation and execution of the company’s strategic plan. We have made progress by:
- Creating a Best-In-Class Digital Marketing Services Organization: Through a combination of organic investment and disciplined acquisitions of marketing services businesses, Gannett now offers best-in-class digital marketing solutions, which continue to position the company as an important partner that businesses trust with their marketing spend. Since acquiring ReachLocal in 2016, we have succeeded in transforming an unprofitable business into a healthy and growing digital leader – in 2018, we grew ReachLocal revenues 15% and increased their adjusted EBITDA margins to 12%, achieving double-digit adjusted EBITDA margin targets several quarters ahead of expectations.1 We continued to grow our client base and average revenue per client in 2018 and, driven by the strength of our digital marketing services offerings, 36% of Gannett’s total revenue and 47% of the company’s advertising revenue is now digital. Gannett’s marketing services organization has demonstrated its potential as a major growth engine, meaningfully contributing to overall profitability, with strong operating leverage driving continued margin expansion.
- Launching USA TODAY NETWORK: By combining local and national news organizations in the U.S. under the USA TODAY NETWORK and introducing new, innovative experiences such as the company’s video franchises and virtual and augmented reality products, Gannett has consistently increased its overall readership and meaningfully grown digital engagement, enhancing monetization opportunities. The USA TODAY NETWORK has grown monthly unique visitors as measured by comScore from an average of 110 million in 2016 to 126 million in 2018. Furthermore, Gannett ranked first in mobile web unique visitors in comScore’s News and Information category in 2018. Gannett now has more than 500,000 paid digital-only subscribers and, given the 2018 growth rate of 46% for digital subscriptions Gannett is on track to reach the company’s goal of one million digital subscribers in the next two years.
- Enhancing and Growing Digital Advertising: Based on the USA TODAY NETWORK’s trusted audiences of scale, our national sales team delivered strong digital advertising revenue growth in 2018 for the second year in a row, up 19% from 2017, led by gains across both our premium and programmatic sales channels. In addition, our USA TODAY operations achieved total advertising revenue growth in the fourth quarter of 2018 due to gains in digital advertising, and more than 75% of its advertising revenue is now digital. In an effort to drive more robust digital advertising and marketing services revenue growth at the local level, in 2018, we better aligned our local sales organization based on our customers’ spending and marketing objectives, with strategies tailored to individual client accounts rather than a “one size fits all” approach.
- Carefully Managing Cost Base to Maintain Profitability: Gannett has and will continue to thoughtfully and strategically rationalize its cost base and align its legacy printing operation costs with print revenue trends, while ensuring publications are sufficiently staffed to drive continued consumer engagement and deliver on our commitment to the highest journalistic standards. Since the spin-off – and including acquisitions – we have reduced our annual operating expenses by over $820 million, including consolidating 13 production facilities.
These strategic actions by your board and management team have enabled Gannett to deliver solid performance and value creation despite the challenging industry environment, including: