2015 Annual Report Company Profile
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2015 ANNUAL REPORT COMPANY PROFILE GANNETT IS A LEADING INTERNATIONAL, MULTI-PLATFORM NEWS AND INFORMATION COMPANY that delivers high-quality, trusted USA TODAY is currently the content where and when consumers nation’s number one publication want to engage with it on virtually in consolidated print and digital any device or digital platform. The circulation, according to the Alliance company’s operations comprise USA for Audited Media’s December 2015 TODAY, 92 local media organizations Publisher’s Statement, with total in the U.S. and Guam, and in the U.K., daily circulation of 4.0 million and Newsquest (the company’s wholly Sunday circulation of 3.9 million, which owned subsidiary). includes daily print, digital replica, digital non-replica and branded Gannett’s vast USA TODAY NETWORK editions. There have been more than is powered by its award-winning 22 million downloads of USA TODAY’s U.S. media organizations, with deep award-winning app on mobile devices roots across the country, and has a and 3.7 million downloads of apps combined reach of more than 100 associated with Gannett’s local million unique visitors monthly. publications and digital platforms. USA TODAY’s national content, which has been a cornerstone of the national Newsquest has more than 150 news and information landscape for local news brands online, mobile more than three decades, is included and in print, and attracts nearly 24 in 36 local daily Gannett publications million unique visitors to its digital and in 23 non-Gannett markets. platforms monthly. Photo: Desair Brown, reader advocacy editor at USA TODAY, records a video segment for usatoday.com. TABLE OF CONTENTS BY THE NUMBERS 1 By the Numbers 3 Letter to Shareholders 7 Board of Directors Form 10-K Annual Report 1 WE MAKE A DIFFERENCE Photo: On USA TODAY Make A Difference Day, millions of people across the nation unite with a common mission: to improve the lives of others. DEAR FELLOW SHAREHOLDERS: 2015 was a milestone year for us, marking a new beginning and the start of many exciting changes. Gannett spun off in late June 2015 from its former parent, and when we did, we came out strong — the largest local to national media network in the U.S. and one of the U.K.’s leading regional media groups. Powered by integrated and award-winning news organizations with deep roots in 92 local communities, plus USA TODAY, our domestic multi-platform news network informs and engages more than 100 million unique visitors every month through our diverse portfolio of digital, mobile, print and experiential products. Overseas, Newsquest — with its more than 150 local news brands — reaches half of all mainland households in the U.K., nearly 24 million visitors a month online and approximately 6 million readers a week in print. “2015 WAS A MILESTONE YEAR FOR US, MARKING A NEW BEGINNING AND THE START OF MANY EXCITING CHANGES.” Since the time of the spin-off, we have continued to execute on our strategy to further strengthen our financial profile, improve operating efficiencies and launch initiatives to increase sales. We are combining all of our strengths to build a very resilient organization for today and the future. These improvements in our financial profile are demonstrated in our financial statements. As of December 27, 2015, the company had zero funded debt, nearly $200 million in cash, strong operating cash flows, a dividend yield of about 4 percent and a $150 million board-authorized share buyback program. Importantly, shareholders have been rewarded for our improving financial profile as our shares have outperformed both our peer group and the broader markets since the time of the spin-off through the end of 2015. Annual Report 3 “WE CONTINUE TO INNOVATE AND LEAD THE INDUSTRY IN EXPERIMENTING WITH NEW PLATFORMS.” Early Successes the three transactions will contribute Digital-First Focus well over $500 million in annual revenues mong our many accomplishments We continue to lead with a digital-first to Gannett’s top line. Because growing this past year, Gannett has built an mindset and integrate digital products A our footprint is a core strategy, as well impressive and diversified management within every part of the business. as good business, we will continue to team. This team brings the necessary As a result, we are seeing significant assess both print and digital acquisition experience across many different growth in the number of digital unique opportunities as we focus on expanding industries and skill sets to provide visitors and revenue, led by our flagship our reach as the best next-generation leadership and insight as we continue brand, USA TODAY. Over the last four media company for consumers our transformation. Other notable quarters, we generated $677 million in and businesses. actions include the implementation digital revenues. Overall, we now receive of a $67 million cost reduction program more than 100 million unique digital One Integrated Organization and the planned acquisition of Journal visitors every month across our powerful Media Group (JMG), which is expected to Meanwhile, we have continued building local and national digital media brands, add 15 daily newspapers, 18 weeklies and one integrated organization and have reaching 39 percent of the total domestic their affiliated digital properties to our unified our local and national media digital population (according to comScore portfolio of trusted media brands. brands under the USA TODAY NETWORK. Media Metrix), which places us ahead of With the help of our more than 3,100 Huffington Post and Buzzfeed. This digital At the time of this writing, we expect that journalists, the USA TODAY NETWORK reach also ranks us among a select group the acquisition of Journal Media Group is positioned to deliver high-quality of digital publishers that can provide will be completed in the next few weeks. content and outstanding journalism to premium scale to national advertisers. JMG, which includes key markets such more consumers than any other media It’s worth noting that our national digital as Milwaukee, WI, and Memphis and organization in the country. advertising revenue has been increasing Knoxville, TN, further expands our local throughout the year and was up 32 footprint and enables us to drive more “WE NOW RECEIVE MORE THAN percent in the fourth quarter (U.S.). marketplace synergies. We believe it 100 MILLION UNIQUE DIGITAL As part of our digital focus, we continue to VISITORS EVERY MONTH.” is a great cultural fit as we merge the build our programmatic, audience-specific best of each of our organizations. We By working together to share data and digital advertising business. will continue to build on our strengths information, we have had an exceptional as an industry leader with great local positive impact on the communities Emerging Trends to national scale, dedicated to the local we serve. For example, our Stingray and Innovation communities we serve and committed investigation about secretive cell-phone We continue to innovate and lead the to generating value for shareholders. tracking devices featured investigative industry in experimenting with new work in 60 markets and prompted a platforms like mobile video. We also Just prior to our spin-off, Gannett review of more than 100 prosecutions sponsor an internal Innovation Challenge acquired the remaining 59.4 percent in Baltimore and other new rules across program to harness the talent and great interest in the Texas-New Mexico the country. In addition, our Rape Kit ideas of our employees. In 2015, the Newspapers Partnership as well as the investigation included work from 85 local National Press Foundation honored Romanes Group in the U.K. Since then, markets and led to the release of about The Des Moines Register and the Gannett we have successfully integrated these $125 million in combined grants from product team as the first-ever recipients of publications and their affiliated digital the Manhattan DA and the U.S. Justice the ‘Best Use of Technology in Journalism’ products into the operating structure of Department to test more than 100,000 award for their ‘Harvest of Change’ and Gannett. With the JMG acquisition, rape evidence kits. ‘Iowa State Fair Soapbox’ projects. LETTER TO SHAREHOLDERS With ‘Harvest of Change,’ The Des memberships around food and drink, 360-DEGREE VIDEO, Moines Register worked closely with things to do, sports, and health and BLUE ANGELS STYLE. the Gannett product team to produce wellness. For example, The Coloradoan a groundbreaking virtual reality (VR) recently launched its EAT + DRINK With virtual reality and 360-degree experience on Iowa agriculture. membership, which has created great video, we are seeing the beginning The 3-D immersive tour of a southwest buzz with its unique events, community of a new medium that will likely Iowa family farm was the first of nine outreach and engaging content. And have a significant impact on news VR experiences produced by journalists The Indianapolis Star’s ‘Things to Do’ and information delivery. and digital product experts within the app is the fastest-downloaded niche USA TODAY NETWORK. In addition to app that The Star has ever launched. Today, people are truly amazed by the experiences and new story ‘Harvest of Change,’ The Des Moines formats we are pioneering. Case Register and the Gannett product Positive Trends in point: USA TODAY’s 360-degree team provided live 360-degree coverage On the revenue side, about 75 percent of video piece on the Blue Angels, the of the speeches from the Iowa State our advertising revenues are from local Navy’s legendary flight squadron, Fair Presidential Soapbox, giving at- customers. We believe this mix provides let consumers experience an home viewers a first-of-its-kind, fully a more stable revenue base and is incredibly realistic aerial display.