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Gannett to take $2.5 to $3 billion write-down, centered on UK operations

Gannett to take $2.5 to $3 billion write-down, centered on UK operations

The largest U.S. newspaper chain, Gannett Co., will write down its assets by about $2.5 billion to $3 billion this quarter to reflect the declining value of its operations in the United Kingdom and the United States.
At a Deutsche Bank investor conference in New York, Gannett Chief Financial Officer Gracia Martore said much of the writedown reflects a declining value in Gannett's United Kingdom newspaper operation, Newsquest. It also generally reflects "where the market perceives traditional print businesses to be," she said.
Stock in Gannett, which publishes USA Today, has lost roughly half its value in the last year, as the newspaper industry has struggled with declining revenue and circulation.
On an aftertax basis, the writedown will be in a range of $2.3 billion to $2.8 billion, she said.
Gannett shares fell in early trading Monday by 1 percent to $27.48 a share. With about 228 million shares outstanding, the company has a market capitalization of about $6.3 billion.
Gannett acquired Newsquest in 1999. The subsidiary includes 17 dailies and nearly 300 weeklies in the United Kingdom with a combined readership of more than 13 million. Newsquest employs about 8,500 workers.
The economic woes that have hampered U.S. operations have hit the United Kingdom in recent months, Martore said. The real estate market in particular has taken a nosedive in the UK, resulting in a loss of advertising revenue.
But Martore said Gannett is optimistic about the long-term prospects at Newsquest.
"I don't think it reflects that Newsquest was a bad acquisition," Martore said.
More generally, Gannett Chairman and Chief Executive Craig Dubow said Wall Street is overly bearish on Gannett's prospects. He said Gannett is in the midst of a transition that ultimately will allow the company to do a better job of helping advertisers target consumers, with Gannett's news content as the hook.
"I believe our strengths are getting undervalued way too much," and that Gannett will rebound once the overall economy turns around, Dubow said.
Martore emphasized that the writedown is essentially an accounting issue and does not affect Gannett's day-to-day business operations. Excluding the writedown, she predicted second quarter earnings of about $1.01 to $1.03 a share, which is a little lower than the $1.06 estimate of Wall Street analysts surveyed by Thomson Financial.


Updated : 2021-06-14 09:34 GMT+08:00