Deutsche Bank's 2017 Media & Telecom Conference - March 7, 2017
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Deutsche Bank’s 2017 Media & Telecom Conference March 7, 2017
Forward-looking Statements Certain statements in this presentation may be forward looking in nature or constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to a number of risks, trends and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. A number of those risks, trends and uncertainties are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the 2016 fiscal year and its subsequent Quarterly reports on form 10-Q. Any forward-looking statements should be evaluated in light of these important risk factors. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. This presentation also contains a discussion of certain non-GAAP financial measures that the Company presents in order to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the Company’s annual report on Form 10-K for the 2016 fiscal year and its subsequent Quarterly reports on Form 10-Q. The Company’s filings with the U.S Securities and Exchange Commission are available through the investor relations portion of our website. 2
Profile Company Name Headquarters Employees Gannett Co., Inc. McLean, VA 20,900 Incorporation Ticker 2016 Revenues Delaware GCI $3.0 billion President and CEO Robert J. Dickey 3
Gannett is a next-generation media company that empowers
communities to connect, act and thrive
Gannett owns ReachLocal, a digital marketing solutions platform, USA TODAY, 109 strong local media
organizations in 34 states and Guam, and more than 160 local media brands in the U.K.
Achieved 122 million unique visitors in November, making the company a powerhouse in the U.S. news and
information category.
50%* of the total domestic digital millennial audience (18-34) access content on the USA TODAY NETWORK.
Gannett reaches more people digitally than Netflix, CBSnews.com, New York Times Digital, BuzzFeed.com,
Huffington Post, or WashingtonPost.com.*
41%* of U.S. internet users access content on USA TODAY NETWORK platforms.
4 Source: ComScore
Investment Highlights
Strong Financial Profile Well-Positioned to Make High Liquidity Available for
Accretive Acquisitions Return of Capital to Shareholders
$867 million Q4 revenues, up 17% In 2016, completed the acquisitions of High level of stable cash flow. Cash flow from
year-over year. Journal Media Group (“JMG”), ReachLocal operations of $251 million* for full year 2016.
and the North Jersey Media Group “NJMG”.
Achieved $252 million fourth quarter Dividend of $0.16 per share, $0.64 per share
digital revenues, and record 122 Proforma consolidated digital revenues annualized.
million unique domestic digital visitors approach $1 billion at end of Q4.
in November. Authorized Share buyback program of $150
Over $800 million total revenues acquired in million. Repurchased 3.75 million shares in
National digital advertising up 19.1%, last twelve months (JMG, NJMG, Q4 at average cost of $8.71 per share.
up 16.4% excluding acquisitions. ReachLocal).
Generated $17 million in 2016 from certain
asset and real property sales.
5 *Before impact of $84.6 million pension contributionsReal Estate Portfolio
Owned Leased Total
The owned real estate portfolio on our
Total square footage 11.2 mm 3.7 mm 14.9 mm
75% 25% balance sheet represents a significant
value to the company
Number of properties 153 307 460
We see a lot of value that can be utilized to
Cash
Proceeds Properties further our strategies of consolidating
2016 sales $17 mm 13 publishing assets, investing in our digital
Current properties under contract $18 mm 9 future either organically or through
acquisition, or returning value to
Properties being marketed or evaluated $75 mm 28
shareholders.
6Digital Growth Story
News & Information Media Industry Transformation
Key Gannett Consolidation Strategy
Consolidation Strategy Digital Investments
Strategies Revenue and earnings growth Mobile
Synergies
and
Video
Free cash flow Data analytics and data mining
Initiatives Largest local-to-national news network Advertising technology
Return capital to shareholders Virtual Reality
Financial strength and Growing news network, Necessary scale and Solidifies market leading
industry leading scale enhanced revenues, resources for investment in position in the “next
position to make earnings, and free cash flow digital platforms and generation” of the news
consolidating local through operational technologies to transform and information media
market acquisitions. efficiencies and synergies. existing digital revenues. industry.
8Gannett’s Key Drivers of Digital Growth A diversified approach to our digital strategy, both on and off platform, has positioned Gannett as a leader in the digital media space. Gannett’s unique visitor growth has reached record highs, driven by smart acquisition decisions, enhanced content syndication strategies and organic growth through search and social platforms Product investments within our core mobile platforms has driven new and higher engaged audiences, leading to heightened monetization opportunities A focus on Gannett’s video strategy, has led to record video plays across the network, and differentiating monetization opportunities (e.g. YouTube, Teads) leading to revenue growth As consumers migrate to Social platforms to find and consume their news, Gannett’s social publishing strategy has led to an increased fan base, who becomes more engaged with the USA TODAY brand every week 9
Unique Digital Visitor Growth
With 106 million Unique Visitors in December, Gannett consistently ranks in the top 3
in the News & Information category in comScore
Immediately after the Broadcast division was spun off in July of
2015, Gannett dropped from rank #3 to rank #6 in the News &
Information comScore category
Through acquisitions, partnerships, and organic growth
Gannett’s unique visitors have grown 16% over that timeframe
Gannett ranked #2 in August and is currently competing with
CNN for rank #2 (Yahoo-ABC News is rank #1)
10 Source: comScoreElections Coverage Coverage of the November general election drove network unique Visitors up to 122 million, a record month for the USA Today Network USA Today Elections content produced 56 million page views and was a +103% increase over the 2012 elections (source: Adobe Analytics) Local markets also reached record unique visitors, driven by acquisitions, shared content from national election coverage, and coverage of Tennessee wildfires 11 Source: comScore and Adobe Analytics
Mobile Web Growth
Gannett ranked #1 in mobile web in the News & Information category
in comScore at the end of December 2016
Mobile Web Unique Digital Visitors
12 Source: comScore and DFPVideo as a component of Gannett’s Digital Growth
Gannett continues to build an innovative video network, with best in class video
content to drive new audiences and create and grow current revenue streams
In Q4, Gannett generated 474 million total cross platform plays, an
increase of 104% YoY Network Video Replays
- USA TODAY up +92% YoY to 204M plays
- Local sites +111% YoY to 69M plays
Our Sports Digital Properties, both owned and operated and
Affiliates, continue to be a significant contributor to the growth with
a 88% YoY increase
Building on our core success, and growing our mobile and social
footprint, will be a key focus areas in 2017
13 Source: Adobe AnalyticsReachLocal 14
REACHLOCAL PRODUCT PORTFOLIO
A TOTAL DIGITAL MARKETING SYSTEM DESIGNED TO
HELP LOCAL BUSINESS GET MORE LEADS AND TURN THEM INTO CUSTOMERS
CONVERT LEADS INTO
GET DISCOVERED GET CONTACTED
CUSTOMERS
DIGITAL ADVERTISING WEB PRESENCE SOFTWARE
ReachSearch ReachDisplay ReachSite ReachCast ReachEdge
ReachDisplay ReachRetargeting TotalLiveChat ReachSEO Kickserv
InApp
ReachSocial Ads TotalTrack ReachListings
CUSTOM SOLUTIONS
15INITIATED WORKSTREAMS ON THREE
OPPORTUNITIES WITH GANNETT
Build a digital marketing services business in
Newsquest
the UK
Use these markets to set up the opportunity
JMG to expand wallet share of GCI’s local
advertisers with digital solutions
Replace G/O Digital mid-2017 and grow
Gannett
digital offerings
16 16Publishing 17
Local Daily Publications in 109 Markets Throughout The U.S. 18
Attractive Local Circulation & Advertising Revenue Profile
Local Market Circulation – U.S. Domestic Local Market Advertising – U.S.
Publishing Domestic Publishing
Nearly 3.0 million Full Access including Digital Only Subscriptions. Local Digital Advertising makes up 26% of Local
64% of Subscribers are either on EZ Pay or Annual Payments. Account revenue, up slightly year over year before
CareerBuilder contract changes.
Digital Only subscribers up 71% YoY.
Digital only subscribers now exceed 225,000 with acquired businesses.
Organic growth of 71% year over year
CIRCULATION Other, 3% ADVERTISING &
REVENUE MARKETING
Single Copy, 17% National
SERVICE Major Retail
REVENUE Accounts,
18%
Full Access Including
Digital Only, 80% Local, 82%
Full access including digital only subscription Local accounts offer some
revenue provides Gannett a more stable revenue base protection from secular pressures
19USA Today: A Powerful & Unique National Brand
23+ million downloads of USA TODAY's award-winning app. USA TODAY SITES DIGITAL UNIQUE VISITORS (MM)
Quality content delivered on multiple platforms drive visitors and
engagement.
65%
Sports continues to be a driver of growth for USA TODAY. since 2013
Video views across platform and social media averaged 117
million views a month in the fourth quarter.
Mobile traffic and engagement is the driver of growth for USA DAILY AVERAGE CIRCULATION (MM)
Today, with more than 60% of our Facebook followers in the
Millennial or GenX age groups.
139%
since 2012
20 Source: comScore and AAMA Leading Community Publisher in The U.K.
Robust and Growing Digital Revenues and Audience
Newsquest Overview Q4 2016 Update
Leading regional media Strong digital performance GROWTH IN DIGITAL /
player in the UK. Digital display revenues up 14% YoY. PRINT AD REVENUE RATIO
19 daily paid-for titles. Digital advertising now 26% of total 23%
26%
21%
150+ weekly print advertising 17%
products, magazines, and Daily Newsquest centers reach 70% of
trade publications. adults in local markets online
Leading network of local Q4 2013 Q4 2014 Q4 2015 Q4 2016
news websites, and digital Working with ReachLocal on new digital
classifieds (s1 and solutions for U.K. small and mid-sized
Exchange & Mart). businesses GROWTH IN MONTHLY UNIQUE USERS
Average monthly browsers - millions, Oct-Dec
Industry leading margins. Strong cost management, total Q4 costs 23 24
20
down 11% YoY. 16
New lifestyle magazines and hyper local ad
magazines
Q4 2013 Q4 2014 Q4 2015 Q4 2016
21Outlook
Overall reported revenues expected to increase to $3.15 billion to $3.22 billion - Core print advertising
and circulation revenue trends are expected to be consistent with recent 2016 trends which will be more
than offset by the additional revenues from businesses acquired in 2016 and growth in digital advertising.
Adjusted EBITDA expected to be in a range of $325 million to $335 million. Items negatively impacting
1st half results: unfavorable FX; timing of digital product investments. Items favorably impacting 2nd half
results; cost improvement projects.
Additionally, for the full year of 2017, the company expects the following:
• Capital expenditures of approximately $65 - $75 million, not including real estate projects.
• Depreciation and amortization of approximately $150-$155 million.
• Effective tax rate of 28% - 32%.
*The company defines Adjusted EBITDA as earnings before income taxes, equity income, other non-operating items (which include interest income and interest expense, among other items), severance related charges including early retirement programs, asset
impairment charges, depreciation and amortization. Because of the variability of these and other items as well as the impact of future events on these items, management is unable to reconcile without unreasonable effort the Company's forecasted range of
adjusted EBITDA for the full year to a comparable GAAP range.
22Adjusted EBITDA 24
Adjusted EPS 25
26
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