MNG Enterprises Seeks to Elect Six Highly Qualified Director Nominees to Gannett’s Board

We Urge Gannett Shareholders to Vote For All Six MNG Nominees on the Blue Proxy Card to Send a Clear Message that Gannett’s Board Must Act Now to Maximize Value Before Further Value is Destroyed

Gannett’s entrenched Board rejected a 41%
premium,1 cash acquisition proposal.

Now it’s time for shareholders to have their say.

On January 14, MNG made a proposal to acquire Gannett for $12.00 per share in cash, which represented a 41% premium to Gannett’s 2018 year-end share price. On February 4, Gannett rejected our all-cash proposal and refused to extend the deadline for director nominations without even first meeting with MNG and its advisors. While it remains our strong preference to engage cooperatively with Gannett’s board to work toward a mutually beneficial transaction, MNG’s only option to preserve its rights was to submit a slate of six highly qualified director nominees to Gannett’s Board.   MNG’s nominees have a combination of newspaper operational expertise and transactional experience, and are committed to maximizing value for all Gannett shareholders.

Gannett’s Annual Meeting scheduled for Thursday, May 16, 2019, is an opportunity for shareholders to make their voices heard on the best path forward for Gannett by electing directors that are committed to running a full and fair process to maximize shareholder value and qualified to successfully run the business in the interim. We urge you to vote For all six of our highly qualified nominees on the Blue proxy card to protect and maximize the value of your investment!

What would happen to the share price if there were no $12.00 proposal?

The incumbent Board has overseen:

x A 93% decline in Net Income since spin-off;2

x A 93% decline in Diluted EPS since spin-off;2

x An 87% decline in Operating Income since spin-off;2

x A 52% decline in Free Cash Flow since spin-off;2

x A 41% decline in market value since spin-off;3

x A 24% decline in Adjusted EBITDA since spin-off;2

x Undisciplined capital allocation, spending ~$350mm4 on digital acquisitions while Diluted EPS has declined by 93% since spin-off;2

x An increase in capital structure risk, moving from a net cash position of $62mm as of June 28, 2015 to a net debt position of $211mm as of December 31, 2018;

x Underperforming its peers,5 the S&P 500, and the Russell 2000 by 15%, 51%, and 37%, respectively, since spin-off;6 and

x Granting the highest CEO compensation over the past 3 years compared to peers5,7 despite Gannett’s underperformance.

On February 20th, 2019, Gannett announced its Q4 and full year 2018 results which included missing 2018 analyst consensus Revenue and Adjusted EBITDA. Gannett’s disappointing year-end results and guidance underscore MNG’s concerns about the health and direction of the business and lack of trust of GCI’s Board as they continue to reject a premium, all-cash proposal when further declines and value destruction are on the horizon.

Under Gannett’s Board and management, the Company’s value destructive operating strategy and highly questionable capital allocation decisions have directly reduced net income by 93%. We believe Gannett has been moving in the wrong direction for quite some time and as shown below, Gannett’s stock has significantly underperformed peers and the market since spinoff. This has to stop!

“Gannett has attempted to diversify from the challenging print business and into digital advertising in recent years, but results have been lackluster. We view MNG Enterprises interest as a potentially favorable exit strategy given the uncertainty in the long-term outlook for the print advertising, with softness in revenue and adj. EBITDA likely to continue for GCI."

– J.P.Morgan Research Report, January 14, 2019

“We note management’s continued strategy to shift the business to a higher-growth digital advertising model, but the transition remains a work in progress and results thus far have been uninspiring."

– J.P. Morgan Research Report, February 20, 2019


1 Based on Gannett’s December 31, 2018 closing share price.

2 Changes in Gannett financial results since its 2015 spin-off from its former parent company reflect changes in trailing 12-month financials from June 28, 2015 to December 31, 2018.

3 Based on change in market capitalization from June 29, 2015 to January 11, 2019 per S&P Capital IQ.

4 Digital acquisitions include ReachLocal, SweetIQ and WordStream.

5 Peers include Graham Holdings Company, Lee Enterprises, Incorporated, Meredith Corporation, The McClatchy Company, New Media Investment Group Inc., The New York Times Company, Scholastic Corporation, and Tribune Publishing Company; selected by MNG based on criteria including revenue, exposure to print publishing and footprint across multiple markets.

6 Represents total shareholder return from June 29, 2015 to January 11, 2019 per S&P Capital IQ.

7 Excludes New Media Investment Group Inc. due to CEO compensation not disclosed.