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Gannett CEO on Q2 earnings, the future of print

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Michael Reed, Chairman and Chief Executive Officer of Gannett, joins Yahoo Finance Live to discuss the company’s latest earnings report and break down what the future of print looks like post-pandemic.

Video Transcript

BRIAN SOZZI: News Powerhouse Gannett is out with earnings today. And the headline looks pretty good. The company said it set new records for digital-only subscribers. Adjusted operating profits rose 48.4% from a year ago. And now Gannett is entering the sports betting arena. Joining us now is Gannett chairman and CEO, Michael Reed. Michael, good to see you here this morning here. One number that stood out to me, among many, is the digital numbers. 1.4 million subscribers up 41% year over year. Talk to us about that pivot you're making inside the company and how are you able to drive that growth?

MIKE REED: Yeah. Thanks, Brian. And thank you to Brian for guys having me on the show. My first time with you guys. And I'm excited to be here today. The number one priority in our strategy is digital subscription growth. We've been working on this for quite a while now. And as you noted, we hit 1.4 million, which is a nice milestone. Our goal is 10 million. We're ahead of our expectations in achieving that.

We have about 147 million unique visitors to our digital platforms per month here in the US. And 174 million unique visitors to our platforms when you consider our UK properties. And so, we're in the very early innings of growth. We saw 160,000 new net ads in the second quarter. And that was our highest quarter ever. As you noted, up 41% the prior year.

We saw 120,000 new net ads in the first quarter. So we saw a nice sequential growth to Q2 as well. So part of our strategy is clicking on all cylinders. But the addressable market is so big that we're still in the first inning. So we expect a lot more growth to come. The fact that we have 150 million unique visitors, basically to our digital platforms every month is a reflection of how unique and how valuable the content is that we produce every day. I'm pretty excited it's part of our business.

MYLES UDLAND: Yeah. And Michael, it's certainly it's always a conversation inside of media companies around the tolerance that your readers are going to have for going to a subscription model. I'm curious how you guys think about those, let's call them, secular tailwinds. Of it seems like, at least from my vantage point and we're both having media consumers, the two of us, it seems like people are more comfortable now paying for news. And they know, they expect now that they're going to have to pay for something, which is very different than it might have been five or 10 years ago.

MIKE REED: Yeah, exactly. And that path has really been blazed by others. And so it gives us a lot of confidence that we're going to be able to continue to propel our digital subscription strategy forward. The most important part in our view to the strategy though is you have to produce unique compelling content every day. You can't produce commodities content. That's what we feel like we do with our "USA Today" network.

We have more than 250 local media markets combined with "USA Today." Nearly 5,000 journalists who are creating unique content every day that has relevance and value to consumers across the country. So that mixed with the path that's been blazed and the willingness for consumers to pay for content gives us a ton of optimism here.

BRIAN SOZZI: Michael, it has been a different news cycle, to say the very least, over the past six to seven months. The pandemic continues to rage on. We no longer have President Trump in office, more I would say a conciliatory tone in DC. How are those events impacting what you do on the day-to-day?

MIKE REED: Yeah. So our penetration right now is still small, relative to the size of our audience, that we still have tremendous opportunity to grow off of the back of the unique content we're producing every day. Having said that, a year ago at the height of the pandemic, in a lot of the unrest going on, and, of course, the political environment last year, we saw even bigger audiences.

And so 150 million as measured by com course, pretty darn big. We were seeing closer to 190 million a year ago. So the fact that people, consumers, in a time of need turned to us for their content gives us a lot of comfort that our subscription strategy is the right one for the company. And, as I said, we're optimistic about the addressable market here. And we're very early stage in terms of growth.

MYLES UDLAND: And in terms of that content differentiation, you guys have now a sports betting agreement with Typico. I'm curious how you're seeing sports betting and just sort of gambling coverage, I mean, in some way I think markets coverage fits into this as well. But how is sports betting maybe fixed into that strategy as you try to drive that subscriber growth going forward?

MIKE REED: Yeah. It's a great question. So we're really excited about the partnership. I think it's going to add tremendous value to Gannett and its shareholders, as well as value to our company internally over the next five years. And we saw this incredibly hot space that's legalizing across the country. And we can't participate in that growth through accepting bets, however we reach 46 million engaged sports enthusiasts every month.

We have about 500 sports reporters in over 200 sports websites that are highly trafficked by these 46 million people. So we know we have the audience to drive sports enthusiasts to a good partner on the gaming side. And so the way for us to really capitalize on this hot space, in this hot sector, in this big growth opportunity was to do a partnership like we did with Typico. So a huge opportunity for us here with their media spend with us, as well as the incentives we'll earn as we drive customers to them. We actually think we're the most uniquely positioned media company in the country to help a sports gaming company grow.

BRIAN SOZZI: And speaking of incentives, Michael, Facebook has continued to try to appear to be a friend to the news publishing industry, paying publishers. Do you think we're at a point where those funds from Facebook will really truly start to impact the industry and will help impact your bottom line?

MIKE REED: Not at all. They're not a friend to the industry, not at all. We do over $3 billion in sales, in revenue per year between subscriptions, digital marketing solutions. And that's on the back of this great content we produce in 150 million people are driving to us. And so it's not even a drop in the bucket, what the likes of Facebook talked to us about today.

BRIAN SOZZI: What would they need to do to be more helpful?

MIKE REED: Well, look, we're driving a $1.5 billion in subscription revenue. And so if we're going to share our content and our data to help them keep folks on their platform, we need to replace that revenue.

BRIAN SOZZI: Fair enough. Ganette Chairman and CEO, Michael Reed. Good to see you. Good to see the turn around gaining some traction here. We'll talk to you soon.

MIKE REED: Thanks for having me.