Gannett Inc(GCI-N)NYSE
There Are 11,500 Reasons You Don’t Want to Own Gannett Stock
The non-profit Poynter Institute for Media Studies published terrible news about Gannett Co. (GCO), the publishers of USA Today, and many other publications in the U.S. and the United Kingdom.
Poynter contributor Angela Fu reported on a NewsGuild pay study that found the median salary for journalists of color at six Atlantic-region Gannett publications was $11,500 less than those of their white counterparts.
Gannett stock has lost nearly 92% of its value over the past five years. This latest piece of news, while not entirely surprising, could be the nail that permanently shuts Gannett’s coffin.
Here’s why.
The USA Today I Knew Is Long Gone
I grew up in Toronto, Ontario. As a high school student, I loved going to Lichtman's, the local magazine shop, to buy newspapers. USA Today was always my favorite. I loved the colorful manner in which the news was presented. Way ahead of its time when it launched in September 1982.
I went off to university in Ottawa, Ontario, a year later. Every Friday, I would walk from my residence downtown to the only magazine shop that carried USA Today. I wanted the Friday edition of the paper because it covered the upcoming weekend’s events. Its sports coverage was excellent. Business too.
And the best part about it was it wasn’t highbrow journalism. It just reported the news in an easy, understandable manner.
It's no secret that Gannett has suffered cut after cut for over a decade. I won't get into all the machinations of its downfall. However, the NewsGuild pay study results suggest that the company hasn’t learned much from its fall from greatness.
If Gannett’s low share price -- $1.31 as I write this -- doesn’t scare you away, this study should.
Diversity Reflects a Healthy Business
Workplace diversity statistics demonstrate why businesses need to hire people from all walks of life. A diverse workforce is a healthy workforce.
Exude Inc. is a Philadelphia firm that provides consulting services in human capital management in areas such as employee benefits, human resources, leadership development, and diversity and equity & inclusion.
It knows a thing or two about diversity and why it matters. A May 2022 blog post from the company lays out 25 Important Workplace Diversity Statistics.
Three stand out for me.
1) Corporations identified as more diverse are 35% more likely to outperform competitors.
2) Companies with gender diversity produce up to 41% higher revenue.
3) 32% of employees wouldn’t apply to work at a company lacking diversity.
I guarantee that if you read all 25 of the statistics and then the NewsGuild study, there is no way that you will be able to sink a nickel into Gannett stock.
Let’s look at each of the three statistics above from the perspective of the study.
1) Corporations identified as more diverse are 35% more likely to outperform competitors.
The study found that 64% of the employees in the six newsrooms studied were male, and 77% were white. The 2020 census data showed that 58% of the U.S. population was white and non-Hispanic. Gannett is not aligned with the changing demographics of the country.
2) Companies with gender diversity produce up to 41% higher revenue.
Gannett’s 2021 annual report says the following about its diversity:
“In 2021, Gannett was recognized by Forbes Best Employers for Diversity for the second year in a row. Gannett was also recognized in the 2021 Best Places to Work for LGBTQ Equality,” pg. 11 of the 2021 annual report stated.
However, its revenue provides a less compelling case for investing in the company.
In 2021, it generated revenue of $3.21 billion, down from $3.41 billion in 2020. However, it managed an operating profit of $109.1 million. Unfortunately, it lost money on a GAAP basis due to the high interest on its debt. There is nothing that stands out as exceptional in its performance.
3) 32% of employees wouldn’t apply to work at a company lacking diversity.
In 2021, Gannett had 13,800 employees in the U.S. and another 2,500 outside the country. In 2015, it had 18,700 employees, 17% more than in 2021. That’s not a massive dropoff in staff for a media company.
It’s not how many jobs have been shed but Gannett’s inability to recruit the best talent because its old-fashioned hiring practices are turning away a third of potential workers.
INC. recently discussed the late Steve Jobs’ leadership style.
“Jobs exemplified the essence of good leadership: Build a company around a compelling vision, hire the smartest people, and give the team everything it takes to help them achieve their goals. This means setting the best environment in which to work,” wrote Contributing Editor Marcel Schwantes.
The NewsGuild pay study found that the median salary for minority journalists was $11,502 less than for white journalists. The gap widened to $12,267 between white men and minority women.
Gannett is not following Jobs’ leadership style. And shareholders are paying dearly for it.
A $1,000 investment in Gannett stock, at its all-time high of $25.43 in March 2015, is worth approximately $50 in October 2022.
The value destruction by Gannett management and its board is monumental. There genuinely are 11,500 reasons to avoid Gannett stock.
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