Updated at 3:47 p.m. ET. It's easy to imagine that Gannett's increasingly serious problems -- especially competition from technology companies -- are mostly recent. But then I read the company's new second-quarter 10-Q statement, filed yesterday with the Securities and Exchange Commission. I paid close attention to the "potential risks" section published quarterly, then compared it to the second-quarter report filed in August 1998.The bottom line? For at least 10 years now, management has known about the same, fundamental risks that Gannett newspapers like The Clarion Ledger (above) are furiously fighting today. The chief difference now and then may only be the magnitude of those risks.
These passages are often referred to as legal boilerplate, text meant solely to comply with regulations. In other words, it's the Legal Department justifying its existence. "You've probably read a thousand of these things and you know perfectly well how they work," a reader says in a comment, below. "You also know that companies really don't use these statements as a basis for forming a business strategy. Companies list every threat, real or imagined, on these forms -- in large part to help protect them legally."
I disagree. This is part of a federal regulatory filing, required to be truthful and accurate. Investors use these statements to weigh the risk of buying stock -- and investors use them to sue companies when things go south.
Now, judge for yourself:
Aug. 12, 1998
In a 10-Q, the company says "potential risks and uncertainties which could adversely affect the company's ability to obtain these results" include:
- increased consolidation among major retailers or other events which may adversely affect business operations of major customers and depress the level of local and national advertising
- an economic downturn in some or all of the company's principal newspaper or television markets leading to decreased circulation or local or national advertising
- a decline in general newspaper readership patterns as a result of competitive alternative media or other factors
- an increase in newsprint or syndication programming costs over the levels anticipated
- labor disputes which may cause revenue declines or increased labor costs
- acquisitions of new businesses or dispositions of existing businesses
- a decline in viewership of major networks and local news programming
- rapid technological changes and frequent new product introductions prevalent in electronic publishing
In the new 10-Q, the company lists these risks:
- increased consolidation among major retailers or other events which may adversely affect business operations of major customers and depress the level of local and national advertising
- a further economic downturn in some or all of the company’s principal publishing or broadcasting markets leading to decreased circulation or local, national or classified advertising
- a decline in general publishing readership and/or advertiser patterns as a result of competitive alternative media or other factors
- an increase in newsprint or syndication programming costs over the levels anticipated
- labor disputes which may cause revenue declines or increased labor costs
- acquisitions of new businesses or dispositions of existing businesses
- a decline in viewership of major networks and local news programming
- rapid technological changes and frequent new product introductions prevalent in electronic publishing
- an increase in interest rates
- a weakening in the Sterling to U.S. dollar exchange rate
- volatility in financial and credit markets which could affect the value of retirement plan assets and the company’s ability to raise funds through debt or equity issuance
- changes in the regulatory environment
- an other than temporary decline in operating results and enterprise value that could lead to further non-cash goodwill, other intangible asset or property, plant and equipment impairment charges
- general economic, political and business conditions
So what Jim? This is no different than the risks a gay man would be aware of when having unprotected sex with another male. You continue to do it knowing that there are some obvious risks.
ReplyDeleteAnon 10:13
ReplyDeleteYou are a homophobic ass.
The question is not about sexual preference. Its about the challenges facing Gannett and what the company has done (or not done) to address them. Wake up.
So what, Jim? This is the same as a lion tamer risking having his head bitten off every time he puts it in the lion's mouth. Yet lion tamers continue to do it, so there.
ReplyDeleteRest assured, Gannett executives earned every penny of their seven-, eight- and nine-figure compensation packages over the last decade. As you point out, they foresaw today's challenges 10 years ago. But you can't respond to these things overnight, or even overdecade.
Or ever...
ReplyDeletejohn reinan wrote:
ReplyDeletethey foresaw today's challenges 10 years ago. But you can't respond to these things overnight, or even overdecade.
NO ... instead of addressing the underlying challenges Gannett editors were pushed to focus on News 2000, All American contests, First Five Paragraphs and now, Local,Local,Local ... none of which did anything toward making the corporation stronger financially.
I worked at a small Gannett newspaper that was the FIRST in the corporation to have a website and put news on the Internet in the late 1990s. It was a monster fight, discouraged at nearly every turn by corporate. The talented and dedicated editors nearly killed themselves working at their routine duties all day and posting news after midnight. That newspaper's Internet presence is now the Gannett cookiecutter image, boring, boring, boring.
If those seven- or eight-figure salaries were earned, it wasn't for being innovative or giving various newspapers their head when they tried something new.
This comment has been removed by the author.
ReplyDeleteInteresting. But these are the inherent risks of any newspaper since, for the most part, the beginning of time.
ReplyDeleteThe big one that I observed even before 1998 is the consolidation of retail... and I have said for decades that this is NOT capitalism in a true sense and it is NOT healthy for America. The speed of that consolidation process as grown exponentially to a point where America is barely distinguishible from Mousselini-style fascism. The government and corporate interests are almost one and the same.
I've said this before, but if Gannett were smart, it would see its ad reps as a profitable public service to help local mom-and-pops build back from the bottom up. I'm in the newsroom, but I think the new direction that advertising NEEDS to go in if Gannett is to survive is exciting and creative. Gannett should be able to get tech-savvy young professionals who can be very cost-effective labor to achieve this to build Gannett into a solid, labor-friendly corporation.
AND WHAT'S MORE...
ReplyDeleteThe reason corporate discouraged editors venturing onto the Internet on their own was ...
"There's no profit in it ..."
Because the editors couldn't justify the move financially, they were told to CUT IT OUT!
Broadcast Division President Cecil Walker (another former account executive or time salesman) told a number of people at company functions "we will never be part of that internet." He felt it was just sleazy.
ReplyDeleteI am serious. Even at the height of the late 90's tech bubble not one of their highly profitable TV stations did any more than a token move on the web.
Newspapers in particular are (were) great candidates for online. After the publish a table of contents (search engine) and were the community center for personal ads. (social network).
That language is simply boilerplate. Someone in the legal dept in Tysons got a bunch of money for it.
Now the company will try to slash their way to greater profitability. It will not work.
Most of these readers seem to be the newspaper types. In most cases the local paper is a monopoly (or was) for real news coverage.
TV has always had competition but with the exception of Denver and to an extent Minneapolis the company has chosen to be a comfortable number 2 or 3. Or in the case of Washington DC 4 or 5.
This firm does not have the DNA to compete to enlarge audience. Sadly it just isn't there.
I'm sitting in the Amen Corner for you anon 12:10 p.m. RE: This firm does not have the DNA to compete to enlarge audience.
ReplyDeleteWhich makes all the time and effort invested in luring 18-28-year olds to the print product by writing "cool" such a loss.
Better to have catered to the needs and desires of the paper's most loyal readers ... adults ... until the college students and young adults grow into newspaper readership (which usually happens when their kids start playing organized sports or getting on the honor roll).
Jim "The Coward" Hopkins - Will you be hiding scared at the 2009 board meeting?
ReplyDeleteThis is lazy propoganda-ish writing and you should know better, Jim. As a former business reporter, you know how this boilerplate disclosure stuff works. Companies list every threat, real or imagined, on these forms -- in large part to help protect them legally.
ReplyDeleteYou've probably read a thousand of these things and you know perfectly well how they work; you also know that companies really don't use these statements as a basis for forming a business strategy.
This is the latest example of what I see as a disturbing trend in this blog...seize on some small item, hype it to a fare-thee-well far beyond its actual worth or meaning, slap on some mindless snark and then pretend you've discovered some great insight that shows what idiots we have for executives.
It's a cheap way to get page views, but it's a small and phony way to cover Gannett. You're capable of much better (and occasionally you show it).
There's plenty of real trouble with this company and this industry. You don't have to hype stuff to find it. Drop this petty cheap non-coverage, calm down the fake hyper-snarky writing that feels like score-settling to me and get to the real work of covering this company.
I need this blog to give me insight about my employer as I decide my future. Thousands of people now use it for the same reason. But noise like this means I've got to constantly separate this nonsense from reality.
Jim: Nice cheapshot at people who live in trailer parks. But I forgot -- trailer parks are probably too low-class for someone who made $100,000+ from a company he still thinks wasn't good to him.
ReplyDeleteYou boorish, whiny snob.
@2:54 p.m. Yes, I've read this plenty of times. I've also heard boilerplate like this recited in court testimony when shareholders suits are brought against management. And it's not entirely boilerplate; there ARE subtle changes in the language over time.
ReplyDeleteAs to your advice that I get to the "real work," trust me: What I've been doing for the past seven months has been a lot of work already. This is a volunteer gig; I can't let it become a full-time job.
Said it before, and I'll say it again: There are 46,000 Gannett employees and one of me. You're one of those 46,000: What primary research have you done for this blog?
@2:55 p.m. Well, you're right; I hesitated before hitting the publish button on that one -- but I let my anger get the better of me. I'm now taking that comment down.
ReplyDeleteJim: Don't let the whiners get to you. You are doing a GREAT job chronicling the issues of a very important--yet little understood--company.
ReplyDeleteI don't remember reading the "old" disclosure stuff and I certainly didn't see the updated version. Likely I didn't even know where to look for it, let alone remember to compare them in light of the current state of GCI.
ReplyDeleteSo while this may be old stuff, and boilerplate to some, it is new to me and valuable especially in the context of this conversation.
I don't really understand the venom of some who come to this blog. Do they expect praise or something? People who read and post here see their vocation and careers going down the tubes and they feel sick about it.
They know they've done the best job they can to report the news and update their skills in hopes of improving their product. Yet, the company stock is worth a small percentage of what it was when they came on board and they see their colleagues being escorted out the door, box of stuff from their desk in hand.
These are tough times. People in the newsroom feel helpless. And the people in charge really don't deserve a pat on the back for this state of affairs.
To me, it appears Gracia has mastered the art of cut-and-paste. Now if she could just learn to hold on to her BlackBerry for more than 6 weeks.
ReplyDeleteHey 2:54 PM
ReplyDeleteYou have choices you know. Perhaps you'd be happier reading Gannett's official version rather than Jim's blog.
Nonsense!
ReplyDeleteI like nonsense ...
We don't have nearly enough nonsense in this business.
Or fun, either!
Anon 2:54 p.m., you still don't understand the Internet media, it seems. The only "hype" is whatever hype is in the reader's eyes on a blog. Every entry is just an entry, just a thought, with no highlight more or less than another thought ... unlike a newspaper where we decide for readers what stories are the most important.
ReplyDeleteSo, if you're miffed by the "hype," you probably should be looking into the mirror for the blame on that.
I agree that, to some degree, the stuff in the report is boilerplate, but IT SHOULDN'T BE!!! It's irresponsible if the overpaid corporate chiefs wrote stuff for investors that they didn't take seriously.
Why didn't the company do something, even divest its industry? Maybe we should have invested in forests and paper factories, if we wanted to sustain a print market. Maybe we should have divested into pharmaceuticals or the energy industry (renewables, preferrably) if they wanted the company to thrive despite the inherent deterioration of the newspaper market.
Why publish "boilerplate" for investors, unless those well paid corporate types were intentionally pulling the wool over teacher's eyes to swing a C-minus grade?
For John Reinan:
ReplyDeleteThis isn't lion taming. This is journalism, which we peons would hope requires rational thought. But like lion taming, it also takes courage, which Gannett execs lacked and still lack.
And is it possible that you support big salaries and perks for top management because your wife was among them?