Mike Reed Sets Goals for New Gannett

Selling unneeded real estate is a good idea. Gannett has been the proceeds money to pay down debt. Also an excellent idea.

But what happens when the company runs out of buildings to sell?

 

Hopefully I'll be retired when that happens.

 

I'd also add that with the real estate sales, it's not a slam dunk, 100 percent profit. None of these papers are going 100 percent digital. They're selling the valuable downtown, near city hall and where the news happens real estate, and renting in some non-descript office park at the edge of town. It's a net gain from an immediate financial perspective, but another one of those "this is a sad reflection on the times" thing.

 

It can't be much longer before the companies run out of buildings. They have been doing it for a while and one would think the most marketable properties are gone.

 

The metrics only mattered when they wanted them to matter. They could find just as much justification to cut something that had good metrics by finding a way to twist it - for example, at my shop, suddenly professional sports were no longer "local," so we stopped covering them - despite that coverage generating about 60 percent of the traffic.

 

Why so little hope about Gannett's future? The national roll out of Deal Chicken shows what good leadership can accomplish.

 

Exactly. I had a story on my college beat that was picked up by USAT and was a week-long gushing of page views, more than any other story got from our shop since we starting paying attention, and by a long shot.

During our planning meeting the next week, when the PVs came up, I was told that the PVs for that "didn't count" because they weren't the right kind of PVs. They came from non-local readers who couldn't be expected to return to our site, so I don't get credit for them.

 

Your question did not address who the payment to Fortress benefited.

Fortress gained control of Gatehouse in a previous bankruptcy. At that time they wrote a contract to themselves run the company. Fortress then quickly sold off almost all the stock. A smart move because the stock trended down after the IPO.

Michael Reed and whoever the CFO was worked for Fortress. The contract paid $10 to $20 million dollars a year to Fortress. When the Gatehouse bought Gannett Fortress agreed to terminate the contract on 12/21/2021. Gannett has now decided to buy Fortress out of the last year of their contract. Michael Reed has signed a contract to work directly for Gannett as CEO.

Fortress looted the company post bankruptcy. At least now they will go away. Leon Cooperman said as much to Reed in an earnings call.

 

If you can drive a forklift, you will be OK.

 

Just another example of the suits not valuing employees on their staffs. Suit: "Hey buddy just shut up and work 70 and get paid for 40. I don't wanna hear about your page views. We'll let you know if you are getting enough."

 

When Fortress took the company out of bankruptcy they wrote the management contract for themselves and quickly sold off all but 74,000 shares of the stock. So Softbank did not put up 1.5 billion dollars to buy Gannett. Apollo financed it. Softbank/Fortress risked almost nothing. In this way Fortress/Softbank is different than Digital First. As far as I know when DFM guts a paper they have invested their own money and are entitled to try to earn the money back.

I find it immoral for a company to write itself a contract that takes that much money out of a a struggling company over a period of several years while assuming a negligible equity risk. Leon Cooperman agrees "I only got paid when I made money for investors. The kind of money that Fortress is walking away here … they're going to walk away with hundreds of millions of dollars. It's just morally wrong and they shouldn't even take the money, given what they've done here.”

You disagree with Leon and me.