Segment reporting

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment reporting

NOTE 12 — Segment reporting

We define our reportable segments based on the way the Chief Operating Decision Maker ("CODM"), which is our Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance. Our reportable segments include the following:

•Gannett Media is comprised of our portfolio of local, regional, national, and international newspaper publishers. The results of this segment include Advertising and marketing services revenues from local, classified, and national advertising across multiple platforms, including print, online, mobile, and tablet as well as niche publications, Circulation revenues from home delivery, digital distribution and single copy sales of our publications, and Other revenues, mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues, and third-party newsprint sales. The Gannett Media reportable segment is an aggregation of two operating segments: Domestic Gannett Media and Newsquest.

•Digital Marketing Solutions is comprised of our digital marketing services companies under the brand LocaliQ. The results of this segment include Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

In addition to the reportable segments above, we have a Corporate and other category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions, including legal, human resources, accounting, analytics, finance and marketing, as well as other general business costs.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of the segments and allocate resources. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial performance measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income, (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Management considers Adjusted EBITDA and Adjusted EBITDA margin to be important metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as they eliminate the effect of items that we do not believe are indicative of each segment's core operating performance.

The following tables present our segment information:

	Three months ended June 30, 2023
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	230,521		$	122,789		$	—	$	—	$	353,310
Advertising and marketing services - intersegment sales	37,908			—			—		(37,908)		—
Circulation	233,612			—			—		—		233,612
Other	83,762			—			1,673		—		85,435
Total operating revenues	$	585,803		$	122,789		$	1,673	$	(37,908)	$	672,357
Adjusted EBITDA (non-GAAP basis)	$	65,819		$	15,470		$	(10,138)	$	—	$	71,151
Adjusted EBITDA margin (non-GAAP basis)	11.2		%	12.6		%	NM		NM		10.6		%

NM indicates not meaningful.

	Three months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	265,596		$	118,013		$	—	$	—	$	383,609
Advertising and marketing services - intersegment sales	35,605			—			—		(35,605)		—
Circulation	274,624			—			—		—		274,624
Other	89,019			—			1,408		—		90,427
Total operating revenues	$	664,844		$	118,013		$	1,408	$	(35,605)	$	748,660
Adjusted EBITDA (non-GAAP basis)	$	50,856		$	14,306		$	(14,311)	$	—	$	50,851
Adjusted EBITDA margin (non-GAAP basis)	7.6		%	12.1		%	NM		NM		6.8		%

NM indicates not meaningful.

	Six months ended June 30, 2023
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	458,551		$	235,606		$	—	$	—	$	694,157
Advertising and marketing services - intersegment sales	72,301			—			—		(72,301)		—
Circulation	474,897			—			—		—		474,897
Other	169,149			—			3,071		—		172,220
Total operating revenues	$	1,174,898		$	235,606		$	3,071	$	(72,301)	$	1,341,274
Adjusted EBITDA (non-GAAP basis)	$	123,082		$	27,153		$	(16,182)	$	—	$	134,053
Adjusted EBITDA margin (non-GAAP basis)	10.5		%	11.5		%	NM		NM		10.0		%

NM indicates not meaningful.

	Six months ended June 30, 2022
In thousands	Gannett Media			Digital Marketing Solutions			Corporate and other		Intersegment Eliminations		Consolidated
Advertising and marketing services - external sales	$	531,001		$	227,722		$	—	$	—	$	758,723
Advertising and marketing services - intersegment sales	68,962			—			—		(68,962)		—
Circulation	563,226			—			—		—		563,226
Other	172,074			—			2,714		—		174,788
Total operating revenues	$	1,335,263		$	227,722		$	2,714	$	(68,962)	$	1,496,737
Adjusted EBITDA (non-GAAP basis)	$	119,504		$	25,486		$	(29,968)	$	—	$	115,022
Adjusted EBITDA margin (non-GAAP basis)	8.9		%	11.2		%	NM		NM		7.7		%

NM indicates not meaningful.

The following table presents our reconciliation of Net loss attributable to Gannett to Adjusted EBITDA and Net loss attributable to Gannett margin to Adjusted EBITDA margin:

	Three months ended June 30,						Six months ended June 30,
In thousands	2023			2022			2023			2022
Net loss attributable to Gannett	$	(12,677)		$	(53,688)		$	(2,333)		$	(56,655)
Provision (benefit) for income taxes	1,333			22,158			(15,996)			14,551
Interest expense	28,559			26,084			56,889			52,090
(Gain) loss on early extinguishment of debt	—			749			(496)			3,492
Non-operating pension income	(2,263)			(18,160)			(4,078)			(36,373)
Depreciation and amortization	39,784			49,530			83,482			97,313
Integration and reorganization costs	7,287			15,745			19,414			27,143
Other operating expenses	229			314			458			1,416
Asset impairments	1,177			85			1,182			939
(Gain) loss on sale or disposal of assets, net	146			372			(17,535)			(2,432)
Share-based compensation expense	5,047			5,385			8,783			8,778
Other items	2,529			2,277			4,283			4,760
Adjusted EBITDA (non-GAAP basis)	$	71,151		$	50,851		$	134,053		$	115,022
Net loss attributable to Gannett margin	(1.9)		%	(7.2)		%	(0.2)		%	(3.8)		%
Adjusted EBITDA margin (non-GAAP basis)	10.6		%	6.8		%	10.0		%	7.7		%

Asset information by segment is not a key measure of performance used by the CODM function. Accordingly, we have not disclosed asset information by segment. Additionally, equity income in unconsolidated investees, net, interest expense, other non-operating items, net, and provision (benefit) for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level.