Executive Summary / Key Takeaways

• Gannett is undergoing a significant digital transformation, with digital revenues nearing 50% of total company revenue and projected to surpass this mark in 2026, driven by strategic investments in content, technology, and new monetization channels.
• The company has achieved a major financial milestone, reducing its total debt below $1 billion for the first time since its 2019 merger, with a commitment to repay over $135 million in debt during 2025 and target a first lien net leverage approaching 2x by year-end.
• Strategic AI licensing deals with partners like Perplexity and Microsoft , coupled with proprietary AI tools such as DeeperDive and Dash, are creating new high-margin revenue streams and enhancing operational efficiency, while aggressive blocking of unauthorized AI scraping protects content value.
• A $100 million cost reduction program is fully implemented, expected to drive significant year-over-year adjusted EBITDA growth in Q4 2025 and contribute to a third consecutive year of adjusted EBITDA and free cash flow growth.
• A recent partial summary judgment ruling in Gannett's antitrust lawsuit against Google , establishing Google's liability on certain claims, signals a potential structural shift towards a more equitable digital advertising ecosystem for publishers.

A Media Giant's Digital Evolution

Gannett Co., Inc. (NYSE:GCI), a diversified media and digital marketing solutions company, stands at a pivotal juncture in its transformation. Rooted in its expansive USA TODAY NETWORK and local media organizations across the U.S., alongside its U.K. subsidiary Newsquest and digital marketing brand LocaliQ, Gannett is strategically pivoting from its legacy print operations to a digital-first future. This evolution is critical in an industry grappling with declining print revenues and the profound impact of large technology platforms and emerging artificial intelligence.

The media landscape is undergoing rapid shifts, with audiences increasingly migrating to digital platforms and new technologies like AI reshaping content creation, distribution, and monetization. Gannett's strategy is designed to meet these challenges head-on, focusing on audience growth, deeper engagement, and the diversification of digital revenue streams. This approach is essential as print advertising and circulation revenues continue their secular decline, and third-party platforms exert significant control over content visibility and revenue.

Gannett's competitive positioning is unique, leveraging its extensive local and national reach to differentiate itself from broader national players like The New York Times Company (NYT) and global conglomerates such as News Corporation (NWSA). While NYT excels in premium national journalism and NWSA boasts diversified global assets, Gannett's strength lies in its hyper-local content and deep community ties. This local focus, combined with its digital marketing solutions, allows Gannett to serve regional businesses and audiences more effectively. However, the company faces competitive pressures in digital innovation and financial resilience compared to its more digitally agile rivals.

Technological Edge and Innovation Driving Growth

Gannett's digital transformation is underpinned by a robust and evolving technological framework designed to enhance content delivery, audience engagement, and monetization. A core differentiator is its suite of AI-powered solutions and strategic technology partnerships.

At the heart of its digital marketing segment, LocaliQ, is Dash, an AI-powered prospect and lead management software solution. Dash's conversational AI voice and SMS agents are demonstrating tangible benefits, managing 15% of calls for enabled customers. This drives greater efficiency and simplifies daily operations for small and medium-sized businesses (SMBs), allowing them to follow up on all leads, thereby improving their return on investment and fostering stickier client relationships. Complementing Dash, AI Smart Bidding is being rapidly adopted, expected to be leveraged by nearly half of U.S. advertising budgets by year-end 2025, delivering a better cost per lead compared to traditional strategies.

In its media segment, Gannett has deployed DeeperDive, an industry-first generative AI answer engine created by Taboola (TBLA), fully implemented on USA TODAY by September 2025. This technology enables AI-powered conversations directly on USA TODAY's platform, tapping into years of proprietary, real-time content. Since its mid-September launch, readers have asked over 3 million questions, with average daily activity exceeding 50,000 interactions. This strong traction highlights meaningful opportunities to drive higher readership, deeper engagement, and enhanced monetization through contextually relevant, high-intent ads directly within AI-powered results.

Gannett is also proactively addressing the monetization of its content in the AI era. The company is blocking over 99% of unauthorized AI bots attempting to scrape its content, with approximately 70 million attempts from OpenAI alone in September 2025, primarily targeting local content. This aggressive stance underscores the value of Gannett's content and its commitment to fair compensation. Strategic AI licensing deals, such as those recently announced with Perplexity and Microsoft , exemplify this approach. The Perplexity deal, launched in October 2025, integrates Gannett's content into Perplexity's AI-powered search experiences and its Comet browser, comprising both licensing fees and advertising revenue share. The Microsoft (MSFT) deal supports the upcoming launch of its publisher content marketplace, aiming to fairly compensate publishers for AI usage. These partnerships are crucial building blocks for a more sustainable and balanced digital ecosystem.

Further technological and product innovations include the launch of USA TODAY PLAY in October 2025, a unified digital hub for casual entertainment and gaming. Management estimates that a mere 1% increase in audience engagement with PLAY could translate to an additional $10 million annually in digital-only subscription and digital advertising revenue. The Studio IX women's sports vertical, reaching over 40 million fans, demonstrates the power of specialized content to drive engagement and attract new sponsorships and affiliate revenue. These technological differentiators and strategic initiatives are not merely incremental improvements; they are foundational to Gannett's competitive moat, driving higher advertising CPMs, lower operational costs, improved margins, and a stronger market position in the evolving digital landscape.

Financial Performance and Strategic Deleveraging

Gannett's financial performance in the first nine months of 2025 reflects a company in active transformation, balancing legacy declines with digital growth and aggressive cost management. For the three months ended September 30, 2025, total revenues decreased by 8% year-over-year to $560.8 million, while digital revenues saw a 5% decline to $262.7 million. Print and commercial revenues experienced an 11% decrease to $298.1 million. The net loss attributable to Gannett for Q3 2025 was $39.2 million. However, for the nine months ended September 30, 2025, the company reported a net income attributable to Gannett of $31.8 million, a notable shift from a net loss in the prior year period. This was influenced by a pre-tax book loss and a decrease in valuation allowances on non-deductible U.S. interest expense carryforwards.

Operating costs and selling, general, and administrative expenses decreased by 6% and 13% respectively for Q3 2025, reflecting disciplined cost management. The company's $100 million cost reduction program, fully implemented by the end of Q3 2025, is expected to yield significant benefits, though it led to a pull-forward of certain expenses, such as medical and benefit-related costs tied to employee exits, impacting Q3 adjusted EBITDA by approximately $7 million. Adjusted EBITDA for Q3 2025 was $57.2 million, representing a 10.2% margin.

A significant highlight is Gannett's progress in debt reduction. For the first time since its 2019 merger, total debt fell below $1 billion as of September 30, 2025, with $971.8 million outstanding. The company repaid $116.4 million in debt during the first nine months of 2025 and anticipates repaying over $135 million for the full year.

This aggressive deleveraging strategy, supported by asset sales like the Austin American-Statesman, which generated a $20.8 million gain in Q1 2025, aims to achieve a first lien net leverage approaching 2x by the end of 2025.

Cash provided by operating activities for the nine months ended September 30, 2025, was $71 million, a decrease from the prior year, primarily due to lower deferred revenue receipts and increased interest and severance payments. However, cash provided by investing activities improved to $17.6 million, driven by increased proceeds from asset sales.

Outlook and Strategic Initiatives

Gannett's management maintains an optimistic outlook, framing 2025 as a "year of two halves" with a progressive build in performance. The company expects a strong fourth quarter, driven by the shift of large digital advertising campaigns and AI licensing revenue from Q3, the full benefit of the $100 million cost reduction program, and typical seasonal strength. For the full year 2025, digital revenue is projected to be down in the low single digits on a same-store basis, with growth in the low single digits in Q4. The company anticipates achieving full-year growth in adjusted EBITDA and a 30% increase in free cash flow.

Looking ahead to 2026, Gannett expects digital revenues to surpass 50% of total company revenue and projects overall revenue to be flat in the early stages of the year. This growth will be fueled by accelerating digital advertising trends, a return to growth in the Digital Marketing Solutions (DMS) segment, and the increasing contribution from AI licensing deals. DMS is focusing on improving client retention and ROI through AI Smart Bidding, CRM integrations, and the Dash AI voice agent. In digital-only subscriptions, the strategy emphasizes acquiring high-value, profitable subscribers, leading to record-high ARPU of $8.80 in Q3 2025 and expected sequential revenue growth.

The ongoing antitrust lawsuit against Google represents a significant strategic opportunity. A recent partial summary judgment ruling established Google's liability on certain claims, validating Gannett's long-held assertions about anticompetitive practices in the digital advertising market. This development is expected to accelerate the case towards a damages phase and could lead to a more open, transparent, and competitive marketplace, potentially unlocking higher CPMs and stronger fill rates for publishers like Gannett.

Risks and Conclusion

Despite the positive momentum, Gannett faces inherent risks. The secular decline in print advertising and circulation revenues remains a challenge, requiring continuous optimization of print operations. Macroeconomic conditions, including inflation and interest rates, can impact advertising spending and the company's debt servicing costs. Reliance on third-party platforms for content visibility and distribution, despite efforts to diversify, still poses a risk. The rapidly evolving AI ecosystem presents both opportunities and uncertainties, requiring continuous adaptation and investment. While the Google antitrust lawsuit offers significant upside, the outcome and timing remain subject to legal complexities.

Gannett's journey is one of profound transformation, marked by strategic deleveraging, aggressive cost management, and a determined pivot to digital and AI-driven monetization. The company's commitment to leveraging its vast content library, expanding its digital audience, and embracing innovative technologies like DeeperDive and Dash positions it to capitalize on the evolving media landscape. The recent legal victory against Google (GOOGL) further strengthens its long-term competitive standing. With a clear roadmap for digital growth, a strengthening balance sheet, and a proactive approach to industry disruption, Gannett is laying a robust foundation for sustainable value creation for its shareholders and the communities it serves.