Bad to worse for news biz: Gannett chain turns to union busting, layoffs, stock buybacks

Local news coverage is in crisis, and Gannett's corporate shenanigans won't help. Can unions stand and fight back?

Published August 23, 2022 5:45AM (EDT)

The headquarters of USA Today owned by Gannett Co. is seen June 17, 2022 in McLean, Virginia. (Win McNamee/Getty Images)
The headquarters of USA Today owned by Gannett Co. is seen June 17, 2022 in McLean, Virginia. (Win McNamee/Getty Images)

This article was originally published by InsiderNJ. Used by permission.

There's been a lot of reporting about the unprecedented wave of union organizing in the wake of the COVID pandemic, which has claimed the lives of many thousands of essential workers and sickened many more.

From Starbucks stores to Amazon warehouses workers are standing up for themselves, collectively putting their own situation at risk to improve the social contract they have with the corporate behemoths who for decades have gotten their way in Washington.

This multiracial labor movement, often led by women and people of color at the local level, is in ascendancy at the local Dollar General in the poorest part of town while also holding accountable media giants like the New York Times, so adept at delivering an audience that demands luxury while informing the world. It was on display at the June Poor People's Campaign march in Washington, where thousands and thousands of union activists participated, most not yet born when the Rev. Martin Luther King Jr. envisioned the first such march, which he would not live to see.

What's gotten less attention from the corporate news media is how publicly traded corporations like Amazon and Starbucks are doubling down on illegal or dubious strategies to defeat these organizing efforts, often in ways that are not in the long-term interest of workers, the nation, their brands or even their investors, but actually serve only to personally enrich the C-suite.

Such is evidently the case with the Gannett newspaper chain, which owns more than 250 newspapers across the country including USA Today. In my home state of New Jersey, Gannett now controls a long list of the Garden State's most trusted legacy local papers: the Asbury Park Press, The Bergen Record, the Courier News, The Courier Post, the Daily Record, the Home News Tribune, the Daily Journal, the New Jersey Herald and the Burlington County Times.

All throughout COVID, when New Jersey had the highest per capita death rate in the world, Gannett's local reporters and videographers were out in the field providing essential independent situational awareness, even as federal, state and local government was tested to near the breaking point and the death toll mounted, with basic supplies like masks and testing kits in short supply.

Jon Schleuss is president of the NewsGuild-CWA union that has 24,000 members, including 50 Gannett newsrooms, including the Bergen Record, Daily Record and Asbury Park Press. In an op-ed several months into the pandemic he described the precarious state of the already struggling for-profit local news business.

Meanwhile, the local news industry is enduring dire circumstances due to the COVID-19 pandemic. Advertising revenue has diminished as businesses are making an effort to combat the virus, leading to layoffs, furloughs, and pay cuts for thousands of journalists. Journalists, like many others, are essential workers, and New Jerseyeans depend on local publications to receive targeted information pertaining to their communities. This includes getting life-saving public health information about the impact of COVID-19 in their areas. Many outlets are even making their online COVID-19 coverage free for all readers as a public service, despite the financial strains they face.

Journalists who are currently still employed have reported from emergency rooms and other COVID-19 hotspots where risks of infection are significantly higher. Meanwhile, other journalists have been subject to police violence — in violation of their First Amendment rights — while covering protests in the wake of the Black Lives Matter movement.

Whether it's Amazon, Starbucks or Gannett, too many of America's publicly traded corporations take a scorched-earth approach that would rather close operations down in a given location than let workers sit at the table as equals to negotiate with dignity. Gannett's precarious business model has been to pile up hundreds of millions of dollars in debt, which our corporate tax code encourages, to buy up local papers and then cut costs by shrinking newsroom staffs, invariably resulting in a degradation of local news coverage.

Gannett's business model has relied on piling up hundreds of millions in debt to buy up local papers and then cut costs ruthlessly, further degrading local coverage.

In response, 1,500 journalists in at least 50 newsrooms, including the Bergen Record and Asbury Park Press, have opted to organize under the NewsGuild-CWA banner to push back against this predator behavior and preserve local journalism using a sustainable business model.

"Many communities have seen the resources of their local news outlets decline as economic pressure and consolidation have created news deserts across the country," wrote Schleuss. "Since 2004, the U.S. has lost a staggering approximately 2,100 newspapers, many of them small, local papers outside of major cities. In New Jersey alone, we've seen 92 closures or mergers, including the Clark Patriot and Edgewater View."

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Last year, Gannett CEO Mike Reed raked in $7.7 million while the median salary of a Gannett employee was $48,419. According to their union, it's not uncommon for members to have to resort to food pantries to make ends meet. Meanwhile, Gannett spared no expense hiring union-busting attorneys and now has 11 open investigations for unfair labor practices, according to the NRLB website.

An email to Gannett's public relation's office with the union's latest concerns did not elicit a response.

Earlier this year, Gannett disclosed it had lost $54 million after it made a bad bet on a partnership with European internet gambling sports book operator Tipico. Reed blamed a 31 percent spike in newsprint costs combined with declines in print circulation and advertising revenues. He also conceded that last summer's hyped wager on Tipico had not panned out.

Yet, just a year earlier, it was all upside.

"Our highly engaged audience of more than 46 million sports fans crave analysis, betting insights, odds and unique features which we will provide with our Tipico alliance," said Reed, when the deal was announced in July of 2021. "Tipico adds incredible expertise from their European operations and next generation product capabilities, which offer our sports enthusiasts and local consumers a way to become even more invested in the games and sports they care about."

A few months later the website Gambling News reported that Dutch regulators had fined Tipico for operating illegally in the Netherlands, a charge it denied.

Early this month, Reed was forced to engage in rhetorical tap-dancing during a call with analysts explaining that Tipico, which was supposed to be such a national player with USA Today, was only licensed to operate in two states, Colorado and New Jersey. (Someone in the C-suite failed to do basic due diligence.) "We are already off and exploring opportunities with other sports gaming providers and expect to see increased revenue from this category moving forward," Reed reportedly told analysts.

Of course, Reed is personally insulated from his bad bets by his huge compensation, and always had Gannett's playbook of layoffs and selling off real estate assets, while executing a $100 million stock buyback, to fall back on. According to Poynter, the nonprofit journalism advocacy website, "journalists across more than 25 states also reported being laid off. Several executive editors were terminated, including Mary Dolan, who oversaw The Journal News/ (New York) and Douglas Ray, who oversaw the Gainesville (Florida) Sun, Ocala Star-Banner and Leesburg Daily Commercial. The Landmark (Massachusetts) also lost its editor and will shut down next month, reported The Grafton (Massachusetts) Villager."

One under-reported and potentially important trend has been local interests buying back their community paper from Gannett. Last year, Poynter reported that Gannett had sold 23 of its papers to local owners.

"The recent behavior of Gannett's senior managers' behavior recalls an old Roman adage: Those who have something to distribute do not neglect themselves," wrote James Henry, an economist, lawyer and international tax expert, after reviewing Gannett's latest SEC filings. "Evidently these managers and their favorite bankers realized that 2022 would be a terrible year, with a 5 to 15% decline in circulation and ad revenue, a failed online gambling venture, soaring interest rates and other costs that were hard to control."

Henry continued. "So they decided in February 2022 to pledge the company's cash andother assets,  borrow up to $100 million (at 6 to 10% interest), and authorize these funds to be used to engage in one of the modern business practices that is truly the last refuge of the CEO who is completely out of ideas: buying back their own stock.

Gannett management's recent behavior, said economist James Henry, "recalls an old Roman adage: Those who have something to distribute do not neglect themselves."

"Indeed, armed with this bank term line, in April 2022 they began buying back shares — many of which they may have owned themselves, as part of the company's generous stock compensation plan — the modern-day private corporate equivalent of printing money," Henry wrote in a detailed analysis prepared for InsiderNJ. "We don't have more recent data, but as of June 30, Gannett had bought back 864,000 shares, or $3.1 million worth, at an average price/share of $3.84 — all of this paid for with very costly borrowed money."

Henry believes Gannett's declining trajectory is likely to continue, "with senior management increasingly relying on Civil War surgery-type tactics, a sure sign that they have lost the thread and are in lurch mode: mass layoffs, benefit cuts, sudden shutdowns or divestitures of whole business units, U-turns in strategy and — to put bandages on the amputations — even more corporate debt.

"Not surprisingly, Wall Street has seen the impact of such self-serving corporate 'bloodletting' practices before, and is not impressed," Henry concluded. "Gannett's closing stock price [last Friday] was $2.26, well below the buyback average. Investors, at least, understand that managers who literally mortgage their companies' futures for the sake of bailing out a few of their pals are unlikely to be part of a sustainable solution."

Amid all this corporate self-dealing by Gannett, its journalists have delivered like never before for their communities and the entire nation. It was the Austin-American-Statesman, a Gannett paper, that got to the bottom of the botched response of local, state and federal law enforcement agencies during the mass shooting at Robb Elementary School in Uvalde, Texas.

In Ohio and Indiana, it was Gannett's Columbus Dispatch and Indianapolis Star that authenticated the story about a pregnant 10-year-old rape victim who was compelled to leave Ohio and travel to Indiana because of a restrictive abortion law passed after the Supreme Court overturned Roe v. Wade.

"An indignant President Biden cited the story a week later as an example of extreme abortion laws, and his political opponents pounced. They suggested it was a lie or a hoax," reported the Washington Post. A national newspaper's editorial board concluded it was "too good to confirm," and even Ohio's attorney general suggested it was a "fabrication." Reporters at Gannett's papers in Columbus and Indianapolis confirmed that it was not.

As we have seen in our nation's dysfunctional response to the pandemic, as well as in the violent assault on the U.S. Capitol, there's a steep price to be paid when wild rumors or malicious fake news on social media replaces locally authenticated news delivered by professional journalists like those in the News Guild-CWA. Everything Gannett is doing now is only likely to make that problem worse. 

By Bob Hennelly

Bob Hennelly has written and reported for the Village Voice, Pacifica Radio, WNYC, CBS MoneyWatch and other outlets. His book, "Stuck Nation: Can the United States Change Course on Our History of Choosing Profits Over People?" was published in 2021 by Democracy@Work. He is now a reporter for the Chief-Leader, covering public unions and the civil service in New York City. Follow him on Twitter: @stucknation

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