Should the President of the United States have a Swiss bank account?

Look, I am not the Gannett spokesman. I don't own Gannett stock, I never really paid attention to what management was doing, even though anyone with a set of eyes and an occasional look at a business page has long known newspapers are in the crapper. I was only vaguely aware of Craig Dubow himself, until he became a regular name on this message board.

But I also know the posts on here are emotional and get written from the perspective of people facing layoffs and job losses from a company that was losing money (something he temporarily stopped) and starting to drown in debt (something he paid down). He used dramatic measures that affected a lot of people on this board. Which is where the emotion comes from.

It sucks that newspapers aren't the business that they were decades ago. I know it is a love for a significant number of people on here. But that isn't HIS fault, which is why I was trying to say that he wasn't incompetent the way it was suggested (using the company's stock price isn't an indictment of his management) -- nor was he the cause of Gannett's problems and subsequent gutting. The business Gannett was in, was.

Dubow was there for what, 30, 40 years? He never was that highly paid by CEO standards, when I looked. The last few years, he saw the newspaper business fall to a recession and get made nearly obsolete by a changing landscape. The company was in debt. It was losing money.

What he did temporarily brought it back to profitability and he found a way to pay down a huge amount of debt. That really isn't that easy to do for a company that size, when the business model is a failure. You are asking me for his "special skills." I am not the one who has to decide. The people he worked for do.

Here is what I am guessing they saw. He put together a plan. It got dramatic (and surprising) results that benefited the company's owners. The company has shown a profit (albeit shaky) after showing losses that were widening. It was loaded with debt and he found a way to pay most of it down. It was a sure bankruptcy that was turned into something with a bit of time to try (probably unsuccessfully) to save itself. If you think it is that easy, why didn't a monkey just make GM shed its debt and turn profitable? Are the Riggio Brothers at Barnes & Noble, which is bleeding money because they have a business model that became obsolete, incompetent? Why don't they do what you are suggesting is so easy and requires no special skill, and find a way to pay down their debt and actually show a profit?

I am not going to list his skills. I am just going to suggest that from the perspective of the people who pay him, he was charged with something that isn't as easy to do as you are blithely suggesting and he got pretty good results. Unfortunately, they were results that made a lot of employees casualties, which is why I don't think trying to discuss this reasonably on this message board will ever do me many favors. But it's the truth.

 

Don't rely on a blog and set your starting point after the carnage began.

Look at their income statement, year by year. It's in black and white. It paints a vivid picture. It sucks that I am stupidly spending part of my day doing it to answer you.

2008 was a devastating year for the company. It recorded an operating LOSS of $6.65 billion, compared to profits of $1.65 billion a year before. Yes, the company was losing money, as I said. And its debt was strangling it, as I suggested. Its bonds were reduced to junk status, making it difficult to secure financing to perform strategic growth moves.

At the end of 2008 the company had $3.2 billion in debt, and $2.2 billion of that was secured debt, and it had no ability to borrow anymore without paying loanshark rates, which would have strangled it even more.

What I am posting is not an indictment of Gannett, in particular, because that was the broad picture of the WHOLE newspaper industry.

The cost cutting measures started in 2008. You starting your post at 2010, demonstrates what he actually accomplished, not anything negative he caused. The company's debt to equity ratio at its worst in 2009 was somewhere on the order of 3.4 or 3.5 and rising. It was on a path to bankruptcy. It has continually dropped since then, and now stands at about 0.7. It's why the company is still operating at all.

If the company had stayed on the same path, we'd be talking about it in the past tense right now.