From David Carr's Media Equation column in today's New York Times, about former CEO Craig Dubow; Carr takes no prisoners in this one:
His short six-year tenure was, by most accounts, a disaster. Gannett’s stock price declined to about $10 a share from a high of $75 the day after he took over; the number of employees at Gannett plummeted to 32,000 from about 52,000, resulting in a remarkable diminution in journalistic boots on the ground at the 82 newspapers the company owns.
Never a standout in journalism performance, the company strip-mined its newspapers in search of earnings, leaving many communities with far less original, serious reporting.
Given that legacy, it was about time Dubow was shown the door, right? Not in the current world we live in. Not only did Dubow retire under his own power because of health reasons, he got a mash note from Marjorie Magner, a member of Gannett’s board, who said without irony that “Craig championed our consumers and their ever-changing needs for news and information.”
But the board gave him far more than undeserved plaudits. Dubow walked out the door with just under $37.1 million in retirement, health and disability benefits. That comes on top of a combined $16 million in salary and bonuses in the last two years.
And in case you thought they were paying up just to get rid of a certain way of doing business — slicing and dicing their way to quarterly profits — Dubow was replaced by Gracia C. Martore, the company’s president and chief operating officer. She was Dubow’s steady accomplice in working the cost side of the business, without finding much in the way of new revenue. She has already pocketed millions in bonuses and will now be in line for even more.
Forget about occupying Wall Street; maybe it’s time to start occupying Main Street, a place Gannett has bled dry by offering less and less news while dumping and furloughing journalists in seemingly every quarter.
Earlier: In April, Carr wrote about "nice paydays" for GCI's top brass -- even after furloughs.
Related: USA Today editorial offers five good reasons why Wall Street breeds protesters.
His short six-year tenure was, by most accounts, a disaster. Gannett’s stock price declined to about $10 a share from a high of $75 the day after he took over; the number of employees at Gannett plummeted to 32,000 from about 52,000, resulting in a remarkable diminution in journalistic boots on the ground at the 82 newspapers the company owns.
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| Dubow |
Given that legacy, it was about time Dubow was shown the door, right? Not in the current world we live in. Not only did Dubow retire under his own power because of health reasons, he got a mash note from Marjorie Magner, a member of Gannett’s board, who said without irony that “Craig championed our consumers and their ever-changing needs for news and information.”
But the board gave him far more than undeserved plaudits. Dubow walked out the door with just under $37.1 million in retirement, health and disability benefits. That comes on top of a combined $16 million in salary and bonuses in the last two years.
And in case you thought they were paying up just to get rid of a certain way of doing business — slicing and dicing their way to quarterly profits — Dubow was replaced by Gracia C. Martore, the company’s president and chief operating officer. She was Dubow’s steady accomplice in working the cost side of the business, without finding much in the way of new revenue. She has already pocketed millions in bonuses and will now be in line for even more.
Forget about occupying Wall Street; maybe it’s time to start occupying Main Street, a place Gannett has bled dry by offering less and less news while dumping and furloughing journalists in seemingly every quarter.
Earlier: In April, Carr wrote about "nice paydays" for GCI's top brass -- even after furloughs.
Related: USA Today editorial offers five good reasons why Wall Street breeds protesters.
Worth noting: Carr reads Gannett Blog.
ReplyDeleteYes, and he certainly nails Gannett, Dubow, Martore and the board. Very well done piece.
ReplyDeleteOh my Gosh stop the presses! An angry journalist reads Gannett Blog. I would never have believed that.
ReplyDeleteI wonder if Carr ever writes that with all their bravado The NYT would be out of business if it weren't for their Mexican National Billionaire investor. Probably doesn't care that they can't pay their bills with advertising revenues.
ReplyDeleteWonder if this is on the agenda at the board meeting.
ReplyDeleteCarr called a spade a spade. And as for the Carlos Slim loan, the important fact is that he made it to NYT, not GCI.
ReplyDeleteOne word Gracia:
ReplyDeleteCLAWBACK
Carr didn't pull any punches, however I would have liked to see an analyst explaining the situation beyond "wage" envy by the workers. The money paid to Craig and Gracia is money that didn't go into the company. It was money that wasn't spent developing 21st Century digital platforms to get GCI's product out on tablets and smart phones, where the next generation of readers and customers are. In short, Craig and Gracia placed their personal gain over that of the company, failing in their fiduciary duty to the shareholder. Shame on them.
ReplyDeleteTo 5:22 a.m.
ReplyDeleteGracia: Rather than respond to Jim's blog and act like the New York Times is tanking, please spend your days trying to figure out how to resuscitate your failing news company.
Times has no problem talking about its paywall or online subscriptions while you do.
Get a life.
Gannett's board has squandered an opportunity to put GCI on a more prosperous road. It's committed to doing the same old thing over and over in hopes of better results. That's insane. Gannett needs a visionary leader. Martore is an accountant. Yikes.
ReplyDeleteI bet Robin Pence is glad she is not at Gannett today to have to deal with this PR Nightmare.
ReplyDeleteSeems to me that CEO compensation is an issue that needs to be looked into from a legal perspective....Collusion? How many CEOS and board members get too cozy when calculating each other's compensation.
ReplyDeleteCEOs need to answer to the board....and the board members need to expect results. not line each others pockets. I got your back....you've got mine....wink, wink?
Collusion is illegal. I can't imagine these crazy compensation packages being entered into without some dealings going on.
Does anyone know what the "Normal" theories and practices are for establishing CEO compensation?
ReplyDeleteWhat are the normal "Checks and Balances" to insure there's no funny stuff going on between boards and CEOs. Surely there are some legal parameters to prevent them running it like their own little country club cliche.
Is there any government regulatory oversight on such things as board/CEO compensation and collusion issues?
ReplyDeletePR disaster alert: stock up 5+%.
ReplyDeleteGood to know that David Carr sees the light that Martore is stuffing her pockets just as much as Dubow. The company is in desperate need of entirely new top management, including the Board, and Martore's latest picks are not the answer.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteI left Gannett earlier this year after 15 years with the company. I didn't have another job to go to, but I'd simply had enough of the way it was being run - not just the job cuts, but the way in which the company had divided in two, with the management growing ever further apart from the workforce. It used to feel like a team effort, all with the same goal, but it hadn't seemed that way for a good few years, and for me it was time to go.
ReplyDeleteWhen I left, I found I had to deliberately avoid looking at sites such as this blog, because the continuing way in which the company was being run - and the unjustifiable rewards being heaped on those at the top so they could afford ever shinier Captain's uniforms to wear on the bridge of the Titanic - filled me with such a fury that I simply had to look away and concentrate on more productive activities.
I've now got a new job and, out of curiosity, I thought I'd look back, peep across into the Gannett garden and see how things have grown. And what do I read? Advertising still tanking, stock buyback options being talked about again due to the low, low price... and Craig Dubow being handed $37.1m as a going-away present. My jaw literally dropped when I saw that figure. $37.1m? For what? Let's not even consider that in terms of how newspapers have been affected, how newsrooms are diminished, how that's plainly showing to the readership. Forget all that for a moment, if you can.
In economic terms, in investor terms, is Gannett in any better shape as something you'd want to invest in ahead of other companies at the end of Dubow's reign? Or would you not touch it with a bargepole?
Whether we like it or not, that's the measure that really matters at the boardroom level - but even using that measure, Dubow's performance looks far more like the kind you'd kick to the roadside rather than rain money down upon.
This tells me two things - first, that things haven't changed since I've left and there's no prospect they will; and second, that I am happier than ever that I walked.
I would love it to return to the kind of company it was for most of the time I worked there, because the newspapers I worked for are ones I care passionately about, with readerships that deserve better than they are now being provided with, and because old colleagues - many of them brilliant, fantastic journalists - are still struggling along, trying to make the best of a bad deal. I just don't see that change happening.
McClatchey had good earnings report which helped drive all newspaper stocks up. We're just riding on their earnings.
ReplyDeleteDavid Carr has written his share of scathing articles about Gannett. He does have a bias against Gannett. Having said that, it's hard to argue with this report.
ReplyDeleteAny bias against Gannett is universal. Everyone in the business knows that Gannett papers are the worst in class.
ReplyDeleteBoing 2!
ReplyDelete11:13 -- Most boards no longer serve investors. They serve management. Why? Because a member of a board like Gannett's makes more money for serving (a job that requires about 40 hours a year) than most American's make in a year. And many people serve on multiple boards.
ReplyDeleteSo, you have a situation where people are making $250,000 a year or more for a week's worth of work. Are those people motivated to pick a fight with management, even though it would be in the interest of shareholders? Of course not. You don't want to rock a boat that's taking you straight to the land of untold riches.
There are certainly exceptions. If your board members are so wealthy that they are serving for something other than the money -- or if they are also heavily invested in the company -- you might see them act for the greater good of the organization. In many cases, however, being a board member is really good work. And the more under the radar you are, the more likely you are to keep that sweet gig.
It's all part of the class warfare game that has been thrust upon us but that the ultra-rich.
12:30, how do you see the MNI numbers as good?
ReplyDelete12:55 - I don't want class warfare.....I get paid what I'm worth based on the free market and performance. Everyone should.
ReplyDeleteIt's obvious that high priced CEOs, Other upper-level management and many boards do exactly as 11:13 stated. Even non-profits fall into this game.
Something needs to be done to investigate how these compensation packages are arrived at? What's the methodology/rational behind the plans?
Likely not one - just a group of suits looking out for one another with no one to stop them from enriching their fellow conspirators.
12:30,
ReplyDelete"McClatchey had good earnings report which helped drive all newspaper stocks up. We're just riding on their earnings."
Good earnings report? really?
"Results: Net income for the publisher fell to $4.9 million (6 cents per share) vs. $7.3 million (9 cents per share) a year earlier. This is a decline of 32% from the year earlier quarter."
They may have beat estimates, but it's not a good earnings report.
What's the length of service for each current board member? I'm thinking term-limits are in order!
ReplyDeleteYes, McClatchy's ad revenue was down about 10%. And they don't have any TV stations to diversify their dollars. They do have part of CareerBuilder and a piece of Cars.com. But they're basically as pure a newspaper play as you can get, and they're not solving the problem of how to get more new revenue coming in the door.
ReplyDelete2:05 Of the nine board members, all but one -- Duncan M. McFarland -- have been on the board five years or less.
ReplyDeleteDuring Dubow's time, he saw to it that virtually all the members were replaced with people who were likely to be loyal to him. That, unfortunately, is the way it works in Corporate America.
Newspaper stocks are up because the market in general is up. Likely a bit of a short squeeze going on. What industry has been a better short over the past few years than publishing?
ReplyDeleteWhen the market drops again, so will media stocks.
Like other newspaper companies, Gannett would have faced tough times with or without Dubow. But, clearly, Dubow was a bumbler and someone who had no notion of the depth of his ignorance.
ReplyDelete3:13 Who knows? Gannett might have done better without him. From a post I wrote in February; I've highlighted this before, and no doubt will do so again:
ReplyDeleteIn a match-up selected by the company itself, Gannett's stock has fared worse than shares of the overall newspaper industry for the third consecutive year, according to the just-released annual 10-K report to federal regulators.
I'm for less government but...there needs to be some government oversight and regulations on how Boards and CEOs, CFOs and so on interact/operate.
ReplyDeleteFinancial statements are regulated and hard to manipulate but it gets done....see Enron.
Imagine how much easier and harder to detect it is to just offer unwarranted stock options, bonuses, severance packages and hefty salaries for CEOs and Board Members? How much regulation is there on that?
Not much....and we're all seeing it. It's about time these issues came to a head and were addressed. How about a Senate hearing on that rather than steroids?
Two items so far on Corporate's Twitter feed today: Highlights of Steve Jobs biographer on last night's "60 Minutes," and a link to a USAT story about Google Earth.
ReplyDeleteUnsurprisingly: Nothing about Carr story.
I'm thinking a Senate hearing with Dubow and the rest of the Gannett Board and upper management as the central theme might be fun.
ReplyDeleteWe can use them as the poster child for the scandalous ways of Boards and CEOs, CFOs and COO's work together.
Let's draw back the curtain.
Jim - Keep up the good work. It is obviously noticed and noted by many.
ReplyDeleteDubow's severance/retirement cash-out of $37 million could have been put to better use purchasing an additional TV station. (That cash buys into an attractive mid sized market these days). At 10X cash flow that investment should yield about $4 million/year.
ReplyDeleteOr how about using that money as venture capital? Or a website to replace the Mom's Like Me?
How about "Retired on Disability CEO's Like Me?" Lots of pictures and links to country clubs around the world.
Can you play golf on disability?
Thank you, David Carr. Thank you, thank you, thank you. You have put this insanity out to a larger audience and expressed what many of us believe.
ReplyDeleteAnd thank you, Jim, for the original reporting and your dogged perseverance.
Both of you have my thanks and respect.
A fan of Page One and That Blasted (Gannett) Blog.
Just curious: Can anyone say how the $37 million compares to USAT's annual newsroom budget?
ReplyDeleteCorporate has never released that figure.
ReplyDeleteI would estimate that Gannett now employs about 3,000 newsroom employees. If they were paid an average $50,000 each per year -- allowing for higher-paid workers such as executive editors, and for the cost of benefits like medical care -- the payroll cost alone would be $150 million annually.
That doesn't include other costs, such as for technology, travel, etc.
thanks, Jim -- what about just USAT news-gathering payroll?
ReplyDelete12:18 USAT has about 375 newsroom employees, and they are paid on average much more than typical Gannett newsroom staffers.
ReplyDeleteLet's say the average is $125,000 per employee per year, once more allowing for the cost of benefits and of higher-paid managers.
That would mean USAT's annual newsroom payroll cost would be about $47 million. I have no idea what other newsroom items would cost, such as for travel.
As a laid-off Gannett employee (yippee), but also as someone with a 401(k), IRA and stock portfolio, I agree with Big Business Professor that business leaders such as those at the helm of Gannett are a disaster for shareholders (and the U.S. economy). And these days, most of us are shareholders. They suck the business dry and don't have the imagination, the skill, or any qualification needed to run a major corporation. Oh, I forgot: Greed and incompetence. Craig has that in abundance.
ReplyDeleteWhy don't all newsrooms just strike? What in the hell do you all have to lose? You've taken pay cuts, you've seen good people all around you get laid off, you have been asked to take furlough after furlough. The guy who was supposed to be navigating your company through this mess obviously failed miserably, and he gets a bonus package big enough to keep most small newspapers afloat for several years. I'm not a Gannett employee or a former Gannett employee, but I am a former newspaper person. I love newspapers, and I love the people who work everyday to put them out. I'm sickened by the New York Times column, and I think every current employee should just walk out. It's time for all of you to become the story.
ReplyDeleteIt won't happen, but damn that would be fun to see.
12:40, I couldn't agree more. I wish I worked there, I'd lead the pack right out the door.
ReplyDeleteAs a former Ganneteer, I'm not surprised but am disgusted by the fact they gave Dubow that kind of a severance deal. The man was boderline incompetent, and surrounded himself with "yes" men and women. It was never wise to rise a voice of dissent. I came out of one of the TV properties and the folks running it made rear end kissing an art form. People who have "not renewed the contracts" of skilled professionals and replaced them with young, cheap and not ready for prime time players. The end result is that Dubow with help from his broadcast division accomplices ruined many once extremely powerful TV properties.I could complain about these managers for hours but all I really feel is sorry for those who still work for them.
ReplyDeleteI've been staring at this empty comment box for ten minutes. I think that asking for people to be fair and generally good natured is asking too much of the average person. what I don't understand is why a small group of people find it so easy or even possible to be... just horrible, wretched humans.
ReplyDeleteThe printed newspaper is all but dead. I've been in Gannett circulation for ten years now and I feel the bloody splatter of every cough as it holds my hand and assures me that I've got at least another ten years before it's funeral. My Father was a Circ. wonder boy at Gannett for twenty-five years before being forced out after earning fourteen rings. My stepmother, a marketing VP got, "We'll call it a retirement" from our publisher. My mother clings to a job at a small Gannett paper. Newspapers are important in my family. We genuinely care about the product and it's success. I just celebrated my one year marriage anniversary and am terrified to expand my family because in reality, I'll be lucky to last another year through this USAT take over of my department. Reading the article in NYT made my body ACHE.
$37.1 million? That's nearly 1000 people at my salary level. So the printed newspaper dying; that is progress and I understand that. I don't understand why the entire industry just waited for this problem to fix it's self while they slept. Ideas exist. Good ideas. The last ten years were crucial for the industry and we wasted them on CEOs that were too afraid to shake us up with innovative thinking. The opportunity passed. We blew it. Debow and many at his level were a foot on the neck of the business that consumed my family dinner table growing up.
I'm not a journalist, I'm a low-level circulation man. The only evidence that something was wrong has been the almost daily drop in my circ. reports and my 401K. I stayed willfully ignorant and tried my best to keep my numbers on trend but I am so aware now.
I'm young, I'll be okay but that is not the case for every single person I spend my days and nights working with. If there were something I could do, I would do it with heat. I owe it... because I care about newspapers and newspaper people. I guess Craig did not.