MNG Enterprises Comments on Gannett’s First Quarter 2019 Results and Issues Shareholder Presentation Addressing Gannett’s Misleading Statements
Gannett Board Praises 1Q Performance Even as Organic Revenue Falls
10% Year-over-Year, Free Cash Flow Declines 52% Year-over-Year and Net
Debt Balloons 33% Year-over-Year
Neither the Company nor any Officers nor Directors Have Purchased
Shares Despite Public Claims that $12/share Cash Premium Offer
“Undervalues” Company
No Identifiable Progress on CEO Search to Fill Leadership Void
MNG Investor Presentation Highlights Gannett’s FICTION
and Notes the FACTS so Shareholders Can FAIRLY
Decide to Vote on the BLUE Proxy Card
FOR MNG’s Director Nominees
DENVER–(BUSINESS WIRE)–MNG Enterprises, Inc. (“MNG”), owner and operator of one of the largest
newspaper businesses in the U.S. and the largest active shareholder in
Gannett Co., Inc. (NYSE:GCI) (“Gannett” or the “Company”), with an
approximate 7.4% ownership interest, today issued the following comments
on Gannett’s first quarter 2019 financial results:
“If 10% same store revenue declines, a 52% reduction in free cash flow
and higher net losses represent a ‘solid start’ as Gannett says,
shareholders must wonder where this ends. Even the ReachLocal segment,
the supposed cornerstone of Gannett’s digital business, saw a 6% decline
in same store revenues, while digital advertising and marketing services
on a same-store basis declined by over 5%. The Company also increased
its capital structure risk, going from a net debt balance of $159
million in the year-ago quarter to a net debt balance of $211 million at
the end of the 2019 first quarter.
“Today’s earnings announcement underscores the stark choice between
MNG’s nominees, who will serve as a catalyst for immediate value
creation, and the entrenched incumbent directors, who endorse a failing,
risky, multi-year digital transformation that we believe is extremely
unlikely ever to produce a $12 per share valuation. We also note that
neither the Company nor any of its officers or directors purchased
shares in the quarter, despite protestations that MNG’s $12 proposal
undervalues Gannett. The Gannett board desperately needs change, and we
hope that shareholders will send them a clear message by electing MNG’s
nominees.”
“To say there is a leadership void at Gannett is a gross understatement,
given the CEO’s impending retirement, the recent departure of
ReachLocal’s head and a newly appointed COO with a legal rather than
operational background. When coupled with the Company’s prolonged
underperformance, it is difficult to fathom how any reasonable investor
could have confidence in Gannett’s ability to offset the declines in its
core business and execute a so-called ‘digital transformation’. Simply
put, this board needs fresh perspective and real accountability.”
Gannett’s Financial Results in Context
Gannett’s negative performance continued across key metrics in Q1 2019
compared to Q1 2018, highlighted by:
- Free Cash Flow down 52%;
- Total Same Store Revenue down 10%;
- Total Revenue down 8%;
- Operating Income down from -$0.3 million to -$6.4 million;
- Net Income down from -$0.4 to -$11.9 million; and
- Diluted Earnings per Share down from -$0.00 to -$0.10 per share
Gannett’s key performance metrics have also worsened since the fourth
quarter of 2018 and the Company’s performance since spin-off looks even
worse than previously known. This includes:
- Net Income down 98%;1
- Diluted Earnings per Share down 98%;1
- Operating Income down 90%;1
- Free Cash Flow down 66%.1
MNG Investor Presentation Available
MNG also announced that it has issued a presentation that addresses
misleading and factually incorrect statements made by Gannett since
receiving MNG’s 41% premium, all-cash offer to acquire the Company in
January of this year, and sets forth the facts for Gannett shareholders.
These misleading and false statements include statements regarding
Gannett’s digital strategy, performance compared to peers, margins and
cash flow generation and the Company’s leadership, among other topics.
Further, the presentation rebuts false and misleading claims about the
credibility of MNG’s offer from financial, antitrust and pension risk
perspectives; and inaccuracies about MNG and its nominees.
MNG encourages all Gannett shareholders to carefully review this
presentation to understand the FACTS.
Additional information about MNG, its proposal to acquire Gannett, and
its three nominees for election to Gannett’s Board of Directors is
available at www.SaveGannett.com.
Moelis & Company LLC is acting as financial advisor to MNG. Akin Gump
Strauss Hauer & Feld LLP and Olshan Frome Wolosky LLP are serving as its
legal counsel. Okapi Partners LLC is acting as MNG’s proxy solicitor.
About MNG Enterprises
MNG Enterprises, Inc. is one of the largest owners and operators of
newspapers in the United States by circulation, with approximately 200
publications including The Denver Post, The Mercury News, The Orange
County Register and The Boston Herald. MNG is a leader in local,
multi-platform news and information, distinguished by its award-winning
original content and high quality, diversified portfolio of both print
and local news and information web sites and mobile apps offering rich
multimedia experiences across the nation. For more information, please
visit www.medianewsgroup.com.
Additional Information
MNG Enterprises, Inc., together with the other participants in its proxy
solicitation (collectively, “MNG”), have filed a definitive proxy
statement and an accompanying BLUE proxy card with the Securities and
Exchange Commission (the “SEC”) to be used to solicit votes for the
election of MNG’s slate of highly-qualified director nominees at the
2019 annual meeting of stockholders (the “Annual Meeting”) of Gannett
Co., Inc. (the “Company”). Stockholders are advised to read the proxy
statement and any other documents related to the solicitation of
stockholders of the Company in connection with the Annual Meeting
because they contain important information, including additional
information relating to the participants in MNG’s proxy solicitation.
These materials and other materials filed by MNG in connection with the
solicitation of proxies are available at no charge on the SEC’s website
at www.sec.gov.
The definitive proxy statement and other relevant documents filed by MNG
with the SEC are also available, without charge, by directing a request
to MNG’s proxy solicitor, Okapi Partners LLC, at its toll-free number
(888) 785-6668 or via email at info@okapipartners.com.
1 Changes in Gannett financial results since its 2015
spin-off from its former parent company reflect changes in trailing
12-month financials from June 28, 2015 to March 31, 2019.
Contacts
MEDIA:
Reevemark
Paul Caminiti / Hugh Burns /
Renée Soto
+1 212.433.4600
MNGInquiries@reevemark.com
INVESTORS:
Okapi Partners LLC
Bruce Goldfarb/Pat
McHugh
+ 212.297.0720
info@okapipartners.com
