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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 001-36097
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 38-3910250
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
7950 Jones Branch Drive,McLean,Virginia 22107-0910
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703854-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareGCIThe New York Stock Exchange
Preferred Stock Purchase RightsN/AThe New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes      No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes      No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                          Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                      Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).             Yes      No  
The aggregate market value of the voting common equity held by non-affiliates of the registrant based on the closing sales price of the registrant's Common Stock as reported on The New York Stock Exchange on June 30, 2020 was approximately $187,837,799. The registrant has no non-voting common equity.
As of February 19, 2021, 139,033,905 shares of the registrant's Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant's Annual Meeting of Stockholders for 2021 is incorporated by reference in Part III to the extent described therein.



Table of Contents
INDEX TO GANNETT CO., INC.
2020 FORM 10-K
 Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.

2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views regarding, among other things, our future growth, results of operations, performance, and business prospects and opportunities as well as other statements that are other than historical fact. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “target(s),” “project(s),” “believe(s),” “will,” “aim,” “would,” “seek(s),” “estimate(s)” and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties, and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance our expectations will be attained. Our actual results, liquidity, and financial condition may differ from the anticipated results, liquidity, and financial condition indicated in these forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause our actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others:

Risks and uncertainties associated with the ongoing COVID-19 pandemic;
General economic and market conditions;
Economic conditions in the various regions of the United States, the United Kingdom, and other regions in which we operate our business;
The shift within the publishing industry from traditional print media to digital forms of publication;
Risks and uncertainties associated with our Digital Marketing Solutions segment, including its significant reliance on Google for media purchases, its international operations, and its ability to develop and gain market acceptance for new products or services;
Declining print advertising revenue and circulation subscribers;
Our ability to grow our digital marketing services initiatives, digital audience, and advertiser base;
Our ability to grow our business organically;
Variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate;
The risk that we may not realize the anticipated benefits of our acquisitions;
The availability and cost of capital for future investments;
Our indebtedness may restrict our operations and/or require us to dedicate a portion of cash flow from operations to payments associated with our debt;
Our current intention not to pay dividends and our ability to pay dividends consistent with prior practice or at all;
Our ability to reduce costs and expenses;
Risks and uncertainties associated with the termination of the Amended Management Agreement (as defined below) and the transition from external management to self-management of the Company;
Our ability to remediate a material weakness in our internal control over financial reporting;
The competitive environment in which we operate; and
Our ability to recruit and retain key personnel, as well as any shortage of skilled or experienced employees, including journalists.

Additional risk factors that could cause actual results to differ materially from our expectations include, but are not limited to, the risks identified by us under the heading “Risk Factors” in Item 1A of this report and the statements made in subsequent filings. Such forward-looking statements speak only as of the date they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.

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Table of Contents
PART I

ITEM 1. BUSINESS

Overview

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") is a subscription-led and digitally focused media and marketing solutions company committed to empowering communities to thrive. We aim to be the premiere source for clarity, connections, and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. The execution of this strategy is expected to enable the Company to continue its evolution from a more traditional print media business to a digitally focused content platform. Until November 19, 2019, our corporate name was New Media Investment Group Inc. ("New Media") and Gannett Co., Inc. was a separate publicly traded company. On November 19, 2019, New Media completed its acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred to as “Legacy Gannett”). In connection with the acquisition, New Media changed its name to Gannett Co., Inc. and assumed Legacy Gannett's ticker symbol "GCI" (having previously traded under "NEWM").

Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S., and Newsquest, a wholly owned subsidiary operating in the United Kingdom ("U.K.") with more than 120 local news media brands. Gannett also owns the digital marketing services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream"), which are marketed under the LOCALiQ brand, and runs the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our local property network, and Newsquest, Gannett delivers high-quality, trusted content where and when consumers want to engage with it on virtually any device or platform. Additionally, the Company has strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite. The Company reports in two operating segments, Publishing and Digital Marketing Solutions, plus a corporate and other category. A full description of our segments is included in Note 14 — Segment reporting of the notes to the consolidated financial statements.

The Company has made both internal and external investments to align with the shift in spending habits to digital products by both consumers and marketers. In 2020, total Digital advertising and marketing services revenues were $808.4 million, or 24% of our total revenues. Our U.S. media network, which includes USA TODAY and our local properties, has more than 4,350 journalists. We expect to and are invested in growing the number of journalists, as we seek to accelerate growth of a subscription-led business model, anchored on high-quality, original, impactful journalism. Our U.S. media network averaged 150 million(1) unique visitors monthly during 2020 who access content through desktops, laptops, smartphones, and tablets. In the U.K., Newsquest is a publishing and digital leader with approximately 655 journalists and a network of websites that attracts over 39 million unique visitors monthly. As of December 31, 2020 we had approximately 1.1 million digital-only subscribers, up 29% year over year.

Publishing Segment

Our Publishing segment comprises the following core products:

253 daily media brands, including USA TODAY and our local property network in the U.S., with total paid circulation of over 2.6 million and Sunday circulation of 3.0 million;
308 weekly media brands (published up to three times per week) with total circulation of approximately 1.6 million;
375 locally-focused websites, which extend our businesses onto digital platforms;
USA TODAY Group, which includes USATODAY.com and its mobile applications, our sports network (owned and operated as well as affiliates), and Reviewed.com, an affiliate marketing business;
121 daily and weekly news media brands with related digital platforms as well as over 100 magazines in the U.K.; and
Our community events platform, USA TODAY NETWORK Ventures.

In addition to our core products, we also opportunistically produce niche publications that address specific local market interests such as recreation, sports, healthcare, and real estate. Many of our publications are located in small and mid-size markets where we are often the primary provider of comprehensive local market news and information. Our content is primarily devoted to topics we believe are highly relevant and of interest to our audiences such as local news and politics, community and regional events, youth sports, opinion and editorial pages, local schools, obituaries, weddings, and crime news.

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More than 80% of our daily media brands have been published for more than 100 years. We believe the longevity of our publications demonstrates the value and relevance of the local information we provide and has created a strong foundation of reader loyalty and a highly-recognized media brand name in each community we serve.

Since its introduction in 1982, USA TODAY has been a cornerstone of the national media landscape under its recognizable and respected brand. It also serves as the foundation for our newsroom network, the USA TODAY NETWORK, which allows for content sharing capabilities across our local and national markets. Since 1918, our USA TODAY NETWORK newsrooms have won 96 Pulitzer Prizes. Most recently, the Louisville Courier Journal won the 2020 Pulitzer Prize for breaking news reporting for its coverage of the flurry of pardons and commutations given by Kentucky Gov. Matt Bevin during his final days in office. This followed three wins in 2018, when the USA TODAY NETWORK was awarded Pulitzer Prizes for local reporting, editorial writing, and explanatory journalism, highlighting our ability to integrate in-depth reporting and cutting-edge technology.

The scale of our consumer audience across the Publishing segment makes us an attractive marketing partner to various local and national businesses trying to reach consumers. We are the leading news media publisher in the U.S. in terms of circulation and have the fifth largest digital audience in the News and Information category, based on December 2020 Comscore Media Metrics; per those metrics, our content reaches more people digitally than Fox News, CBSnews.com, New York Times Digital, BuzzFeed.com, or WashingtonPost.com.(1)

In our U.S. local property network, the combined average daily print readership is approximately 6.9 million on Sundays and 5.6 million daily Monday through Saturday, while the digital audience reached 74.6 million(1) monthly unique visitors, on average, in 2020. At USA TODAY, print readership averages 2.7 million daily Monday to Friday, while the digital audience reached approximately 105.1 million(1) monthly unique visitors, on average, in 2020. While our print audience tends to skew to an older demographic, our digital audience skews younger as evidenced by 52%(1) of the total U.S. digital millennial audience (ages 18 - 34) accessing our USA TODAY NETWORK content monthly.
In the U.K., our wholly-owned subsidiary, Newsquest, has a total average print readership of over 5.1 million every week. Newsquest’s digital audience in 2020 had an average of 39 million monthly unique users.

The Publishing segment generates revenue primarily through advertising and subscriptions to our print and digital publications and, to a lesser extent, commercial printing and distribution. The USA TODAY NETWORK has developed an efficient operating model utilizing a single content management platform and integrated shared support for back-office operations such as accounting and finance, content design and layout services, print and digital creative development, and certain sales and service platforms. We also strive to manage production and distribution efficiently across our entire newsroom network.

Advertising and marketing: In 2020, Publishing segment Advertising and marketing services revenues of $1.410 billion, which represents 46% of total Publishing segment revenues, down from 50% in 2019.

We track our Print advertising revenues in three primary categories: local, national, and classified. Below are descriptions of the three categories:

Local advertising is associated with local merchants or locally owned businesses. Ads run in our print products, such as our daily or non-daily publications, and are either run-of-press (ROP) or preprinted inserts (typically stand-alone, multiple page fliers inserted into daily and Sunday print products);
National advertising is principally associated with advertisers who are promoting national products or brands. Examples are retailers, commercial banks, airlines, and telecommunications. It also includes national brands that advertise in our local markets. Similar to local advertising, ads are either ROP or preprinted inserts; and
Classified advertising includes major categories such as legal, obituaries, automotive, employment, and real estate or rentals. Classified advertising is published in the classified or other sections within the publication.

We track Digital advertising and marketing services revenues in three main categories: digital media, digital classified, and digital marketing services. Below are descriptions of these three categories:

Digital media represents all display advertising either delivered on our products or off-platform on partner channels such as Facebook Instant Articles and Apple News;
Digital classified encompasses digital advertising revenues associated with our classified partnerships, including auto (cars.com for a portion of 2020), employment (ZipRecruiter, Recruitology), and real estate (Homes.com) as well as legal, and obituaries; and
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Digital marketing services represents our integrated marketing platform helping local businesses build their online presence, drive awareness and leads, manage and nurture leads, and measure which activities are most effective.

Our advertising teams employ a multi-platform approach to advertising sales under the LOCALiQ brand, which can be specifically tailored to the individual needs of advertisers from small, locally-owned merchants to large, complex businesses. We believe local and national advertisers find it challenging to manage the complexity of their media budgets, particularly on the digital side, and are seeking to reach a shifting audience while also desiring to influence attitudes and behavior at each stage of the purchase path. Our diverse sales force, unique industry scale, and broad portfolio of print and digital advertising and marketing products position us well to solve these challenges. Through our media planning process, we present advertisers with targeted, integrated solutions that help them reach this shifting audience.

The Publishing segment's Advertising and marketing services revenues are subject to moderate seasonality primarily due to fluctuations in advertising volumes. Our Advertising and marketing services revenues are typically highest during the fourth quarter due to holiday and seasonal advertising and lowest in the first quarter following the holiday season. The volume of advertising sales in any period is also impacted by other external factors such as competitors' pricing, advertisers' decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand, and general economic conditions.

Circulation: In 2020, Publishing segment Circulation revenues of $1.392 billion comprised 45% of total Publishing segment revenues, up from 39% in 2019, which makes it our single largest revenue category. In a trend generally consistent within the domestic publishing industry, print circulation volumes declined in 2020. Circulation revenues in the U.S. are derived from our All Access Content Subscription Model, single-copy sales, and digital-only subscriptions. Circulation revenues at Newsquest are more centered on single-copy sales, with a larger portion of weekly paid-for titles and free titles as compared to our U.S. publications.

Our All Access Content Subscription Model in our local markets includes access to our content via multiple platforms including websites, smartphone and tablet applications, and e-newspapers, with subscription prices that vary according to the frequency of delivery of the print edition. Also available to subscribers are digital-only or digital-plus Sunday subscriptions. As of December 31, 2020, we had 2.5 million daily subscribers. We offer our customers EZ Pay, a payment system which automatically deducts subscription payments from customers' credit cards or bank accounts. We see better subscriber retention with our EZ Pay customers. At the end of 2020, EZ Pay was used by 56% of all subscribers across our U.S. local property network (not including USA TODAY).

Growing our digital-only subscribers is a strategic priority and, in 2020, our digital-only subscribers increased by 29% on a total Company basis to approximately 1.1 million. Our primary digital subscriber acquisition strategies include converting our organic traffic through on-platform promotion, paywalls and dynamic meters for our premium content, conversion through our freemium funnel, paid social, and email marketing. A variety of pricing strategies are used throughout the year, including discounted introductory periods and sales, to encourage trial and habituation before transitioning to the full price rate. In the U.S. local markets, approximately 86% of Circulation revenues are derived from our All Access Content Subscription Model and digital-only subscriptions.

In addition to the subscription model in our U.S. local markets, single-copy print editions continue to be sold at retail outlets and account for approximately 11% of daily and 19% of Sunday net paid circulation volume. Approximately 66% of the net paid circulation volumes of USA TODAY are generated by single-copy sales at retail outlets, vending machines, or hotels that provide copies to their guests. The remainder is generated by home and office delivery, mail, educational, and other sales.

Events: USA TODAY NETWORK Ventures, our events and promotions business, was started in late 2015 by leveraging our local brands to create community focused events in the markets we serve. In 2020, USA TODAY NETWORK Ventures produced over 250 events for the Company with a collective attendance over 700,000. Given the COVID-19 pandemic, nearly all events in 2020 were held virtually, building digital communities for consumers to create experiences with one another. Despite the virtual pivot, USA TODAY NETWORK Ventures was able to maintain 88% of its 2019 pro forma revenue performance.

Our signature event series produced across many of our markets includes the nation's largest high school athlete recognition program and the official community's choice awards for dozens of markets across the country. We were also one of the largest active producers of endurance events in North America as well as one of the largest race timing companies in the U.S. Additional offerings include a variety of themed expos focused on target audiences, including men, women, seniors, and young families, as well as recognition awards for social influencers in categories such as beauty. USA TODAY NETWORK Ventures also offers white label event services for retailers and other media companies.
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USA TODAY NETWORK Ventures revenues are generated primarily through sponsorship sales, race registrations, ticket sales, and print and digital advertising.

Production and Distribution: Gannett Publishing Services ("GPS") owns and operates 45 print facilities. Our print facilities produce 21 publications on average and are generally located within 120 miles of the communities served. By clustering our production resources or outsourcing where cost beneficial, we are able to reduce the operating costs of our publications while increasing the quality of our small and mid-size market publications that would typically not otherwise have access to high quality production facilities. We also believe we are able to reduce future capital expenditure needs by having fewer overall pressrooms and buildings. We believe our superior production quality is critical to maintaining and enhancing our position as the leading provider of local news coverage in the markets we serve.

GPS leverages our existing assets, including employee talent and experience, physical plants and equipment, and our vast national and local distribution networks. GPS is particularly focused on maximizing our geographic footprint to most efficiently produce and transport our printed product. GPS is responsible for internal and external printing, packaging, and distribution. The distribution of our daily newspapers is typically outsourced to independent, locally based, third-party distributors that also distribute a majority of our weekly newspapers and non-newspaper publications. We continuously evaluate lower cost options for newspaper delivery. In addition, certain of our shopper and weekly publications are delivered via the U.S. Postal Service.

Newsquest operates its publishing activities in a similar manner to GPS, through regional centers to maximize the use of management, finance, printing, and personnel resources. This regional approach allows the business to leverage a variety of back-office and administrative activities to optimize financial results and enables the group to offer readers and advertisers a range of attractive products across the market.

Competition: Our U.S. and U.K. publishing operations and affiliated digital platforms compete with other media and digital companies for advertising and marketing spend. Our Publishing operations also compete for circulation and readership against other news and information outlets and amateur content creators. Each of our publications compete for advertising revenues to varying degrees with traditional media outlets such as direct mail, yellow pages, radio, outdoor advertising, broadcast and cable television, magazines, local, regional and national newspapers, shoppers, and other print and online media sources, including local blogs. We also increasingly compete with digital and social media companies for advertising revenues.

Development of opportunities in, and competition from, digital and social media, including websites, tablet, mobile, and social products continues to increase. There is very little barrier to entry and limited capital requirements for new companies to enter the market with competitive digital products. Additionally, we are generally not compensated for the use of our original content by third-party digital products and social platforms.

The Company expects to continue to expand its audience reach in the digital media industry through internal audience development efforts, content distribution programs, acquisitions, and partnerships to protect its audience market share. Additionally, the Company expects to continue to improve its suite of advertising and marketing services products through both internal development, acquisitions, and partnerships to protect its advertising market share.

Government Regulation: We are subject to a variety of laws, rules and regulations in numerous jurisdictions within the United States and in each of the countries where we conduct business. These laws, rules and regulations cover several diverse areas including environmental matters, employee health and safety, data and privacy protection and anti-trust provisions. We are committed to conducting our business in accordance with applicable laws, rules and regulations. Compliance with governmental regulations did not have during fiscal 2020, and is not expected to have, a material impact on our capital expenditures, results of operations or competitive position.

Environmental Regulation: The Company is committed to protecting the environment. Our goal is to ensure our production and distribution facilities comply with federal, state, local, and foreign environmental laws and to incorporate appropriate environmental practices and standards in our operations. We are one of the industry leaders in the use of recycled newsprint. During 2020, 14% of our domestic newsprint purchases contained recycled content, with average recycled content of 31%.

Our operations use inks, solvents, and fuels. The use, management, and disposal of these substances are sometimes regulated by environmental agencies. We retain a corporate environmental legal consultant who, along with internal and outside counsel, provides advice on regulatory compliance and preventive measures. We believe we are in substantial compliance with all applicable laws and regulations for the protection of the environment and the health and safety of our employees based upon existing facts presently known to us. Compliance with federal, state, and local environmental laws and regulations relating to
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the discharge of substances into the environment, the disposal of hazardous wastes, and other related activities has had, and will continue to have, an impact on our operations but has been accomplished to date without having a material adverse effect on our operations. While it is difficult to estimate the timing and ultimate costs to be incurred due to uncertainties about the status of laws, regulations, and technology, based on information currently known to us and insurance procured with respect to certain environmental matters, we do not expect environmental costs or contingencies to be material or to have a material adverse effect on our financial performance. Our operations involve risks in these areas, however, and we cannot assure we will not incur material costs or liabilities in the future which could adversely affect us.

Raw Materials: Newsprint, which is the basic raw material used in our print publications, has been and may continue to be subject to significant price changes from time to time. For example, in the first half of 2018, many Canadian producers were subjected to significant anti-dumping and countervailing duties upon importation of newsprint into the U.S. which resulted in higher newsprint prices and tighter supply from the Canadian producers. Prices came down in the second half of the year as the duties were eliminated by the International Trade Commission in September 2018, but this example serves as a reminder of the price and supply volatility that can impact the market. Our ability to supply the needs of our publishing operations depends upon the continuing availability of newsprint at an acceptable price, and the results of operations of our Publishing segment may be impacted significantly by changes in newsprint prices. We generally maintain only a 45 to 55-day inventory of newsprint. The availability and price of newsprint is subject to numerous risks and uncertainties, which are described more fully under "Risk Factors" in this Annual Report on Form 10-K.

We purchase newsprint primarily from 16 domestic and global suppliers. During 2020, our total newsprint consumption was approximately 195,030 metric tons, including consumption by our owned and operated print sites, third-party printing sites, and Newsquest. Newsprint consumption in 2020 was 44% higher than in 2019 primarily due to the acquisition of Legacy Gannett.

Joint Operating Agencies: Our publishing subsidiaries in Detroit and York each participate in a joint operating agency ("JOA"). In each instance, the JOA performs the production, sales, distribution, and back office functions for our subsidiaries and the publisher of another publication pursuant to a joint operating agreement. Operating results for the Detroit and York JOAs are fully consolidated along with a charge for the minority partners' share of profits.

Digital Marketing Solutions Segment

The mission of our Digital Marketing Solutions ("DMS") segment is to deliver customers to local businesses. DMS is currently comprised of three brands that are expected to be integrated in 2021 under the banner LOCALiQ DMS :

ReachLocal, which was founded in 2004 and acquired in 2016, helps local businesses advertise online to find customers;
UpCurve, which provides cloud-based products with expert guidance and support; and
WordStream, which was acquired by Gannett in 2018, is a provider of cloud-based software-as-a-service (SaaS) solutions for local and regional businesses and agencies to optimize their digital advertising campaigns.

We believe local businesses want a single, unified solution to solve their digital marketing needs. Our DMS products and solutions can be separated into four main categories:

Build online presence (websites, local listings, search engine optimization, social media management, live chat);
Drive consumer awareness and business leads ("leads") with advertising (search engine marketing, social advertising, mobile advertising, display advertising, video and over the top advertising, targeted email marketing);
Manage and nurture leads (lead alert tools, lead management, lead engagement and automation, job management); and
Measure what works and optimize future marketing campaigns (conversion analytics, cross-channel optimization, lead attribution, phone tracking, campaign reporting).

We run an efficient operating model by leveraging our entire sales organization, who utilize a single customer relationship management tool and service all clients and campaigns through our LOCALiQ platform. The LOCALiQ platform has centralized post-sales functions and utilizes integrated shared support for back-office operations such as accounting and finance.

Products: Digital marketing requires a holistic view of how online presence, advertising and conversion efforts work together to get results. Our solutions work across the USA TODAY NETWORK and major online platforms such as Google, Facebook, Yahoo!, Microsoft, Snap and others. Our product portfolio offers a simple all-in-one platform powered by artificial intelligence and service experts that grows and adapts with the needs of local business owners. For example, some businesses might need to significantly improve their website and focus on converting sales leads, while others may need to focus on
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building awareness of their business and driving more leads to their site and social pages. LOCALiQ DMS identifies the biggest opportunities and provides solutions by recommending the right mix of product platform features and measures results.

We have a proprietary set of technologies that enable a business to receive a score on their overall marketing efforts, show them how they stack up against their competitors, and recommend a comprehensive set of solutions to help them achieve their goals. This customized solution is sold as a subscription to our LOCALiQ DMS platform. This platform removes the concerns of unexpected overages and misaligned goals and allows us to set performance-based pricing. The platform optimizes to produce the best results for the business and service experts are assigned to assist with each account, as needed.

Our online presence solutions offer high conversion websites, with e-commerce, custom content creation to empower businesses to look professional, and human or bot-enabled live chat which ties into our lead conversion tools. These products are designed to work in concert with our digital advertising products with a goal of enhancing clients’ marketing return on investment.
Our online advertising products include award-winning technology for bidding and budget management that cover more than 90% of the U.S. online audience. They also include patent-pending machine learning algorithms which optimize multiple advertising channels and campaigns toward a goal with a single budget. Search engine marketing, which is recorded as Advertising and marketing services revenues accounted for 56% of our DMS segment's total revenues for the year ended December 31, 2020.
Our lead conversion software is a marketing automation platform that includes tools for capturing web traffic information and converting leads into new customers for clients. We provide tools designed to significantly improve the conversion of leads to customers and to help stay top-of-mind during the prospect's decision-making process by using integrated marketing automation to send new prospects targeted e-mails and alerts reminding them to follow up on each lead. Our lead conversion software also provides reports to show how many leads they are getting from each marketing source and other important business insights.
Offer additional cloud-based software solutions, offered as a channel partner, include a customer relationship management solution tailored for small and medium-sized businesses ("SMBs"), a market-leading collaboration and productivity tool, and voice-over-IP software. Our software solutions are available in North America and our lead conversion software is available in all of our markets.

Distribution: We deliver our suite of products and solutions to local businesses through a combination of our proprietary technology platform, our sales force, and select third-party agencies and resellers. Our DMS segment has sales operations in the United States, Canada, New Zealand, and the U.K. Approximately 94% of our DMS segment revenues are generated in North America and the remaining 6% from other international markets. All DMS segment revenues are digital revenues.

Competition: The market for local online advertising solutions is intensely competitive and rapidly changing. The market is highly fragmented as there are a number of smaller companies which provide internet marketing services at highly competitive prices and, increasingly, we compete with SMB marketing providers who offer solutions tailored for specific verticals. In addition, the online publishers that we utilize for clients, such as Google, Yahoo!, and Microsoft, generally offer their products and services through self-service platforms. Many traditional offline media companies also offer online advertising solutions and have large, direct sales forces and digital publishing properties.

Termination of the Amended and Restated Management Agreement

For the year ended December 31, 2020, we were externally managed and advised by FIG LLC (the "Manager"), an affiliate of Fortress Investment Group LLC ("Fortress") pursuant to a management agreement. On August 5, 2019, in connection with the entry into the agreement to acquire Legacy Gannett, the Company and the Manager entered into the Amended and Restated Management and Advisory Agreement (the "Amended Management Agreement"), which became effective upon the closing of the acquisition on November 19, 2019. The Amended Management Agreement (i) established a termination date for the Manager’s services of December 31, 2021, in lieu of annual renewals of the term; (ii) reduced the "incentive fee" payable under the Amended Management Agreement from 25% to 17.5% for the remainder of the term; (iii) reduced by 50% the number of options that would otherwise be issuable in connection with the issuance of shares as consideration for the acquisition, and imposed a premium on the exercise price; (iv) eliminated the Manager’s right to receive options in connection with future equity raises by the Company; and (v) eliminated certain payments otherwise due at or after the end of the term of the prior management agreement.

In connection with entering into the Amended Management Agreement and the consummation of the acquisition, the Company issued to the Manager 4,205,607 shares of Company common stock, par value $0.01 per share (the "Common Stock") and granted to the Manager options to acquire 3,163,264 shares of Company Common Stock. The Manager was restricted from
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selling the issued shares until the expiration of the Amended Management Agreement, or otherwise upon a change in control and certain other extraordinary events. The options have an exercise price of $15.50 and become exercisable upon the first trading day immediately following the first 20 consecutive trading day period in which the closing price of the Company Common Stock (on its principal U.S. national securities exchange) is at or above $20 per share (subject to adjustment) and also upon a change in control and certain other extraordinary events.

On December 21, 2020, we entered into a Termination Agreement (the "Termination Agreement") with the Manager providing for the early termination of the Amended Management Agreement, effective at 11:59 p.m. Eastern Time on December 31, 2020. Upon termination of the Amended Management Agreement, the Manager ceased providing external management services to the Company, and the Manager no longer is the employer of the person serving in the role of Chief Executive Officer of the Company. In connection with the Termination Agreement, the Company made a one-time cash payment of $30.4 million to the Manager. In addition, all transfer restrictions contained in the Amended Management Agreement on shares of our Common Stock owned by the Manager, or acquired by the Manager upon the exercise of stock options to acquire Common Stock, lapsed. In connection with the termination of our relationship with the Manager, we extended offers of employment to certain employees of the Manager or its affiliates who provided services to the Company, including to our Chief Executive Officer. Certain indemnification and other obligations in the Amended Management Agreement survived the termination of our relationship with the Manager.

Strategy

Gannett’s vision is to be the premiere source for clarity, connections and solutions within our communities. We are committed to a subscription-led business strategy, that drives audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. The execution of this strategy is expected to allow the Company to continue its evolution from a more traditional print media business to a digitally focused content platform.

We intend to create stockholder value through a variety of methods including organic growth driven by our consumer and business-to-business strategies as well as through paying down the debt assumed to consummate the acquisition of Legacy Gannett. However, there is no guarantee we will be able to accomplish any of these strategic initiatives. The key elements of our strategy include:

Accelerating digital subscriber growth

The broad reach of our newsroom network, linking leading national journalism at USA TODAY, our local property network in 46 states in the U.S. and Newsquest in the U.K. with more than 120 local media brands, gives us the ability to deepen our relationships with consumers at both the national and local levels. We bring consumers local news and information that impacts their day-to-day lives while keeping them informed of the national events that impact their country. We believe this local content is not readily obtainable elsewhere, and we are able to deliver that content to our customers across multiple print and digital platforms. As such, a key element of our consumer strategy is growing our paid digital-only subscriber base. We also expect to launch new digital subscription offerings tailored to specific users.

Driving digital marketing services growth by engaging more clients in a subscriber relationship

We are now of significant digital scale, with unique reach at both the national and local community levels. We expect to leverage our integrated sales structure and lead generation strategy to continue to aggressively expand our digital marketing services business into our local markets, both domestically and internationally. Given our extensive client base and volume of digital campaigns, we will also use data and insights to inform new and dynamic advertising products that we believe will deliver superior results.

Optimizing our traditional businesses across print and advertising

We will continue to drive the profitability of our traditional print operations through economies of scale, process improvements, and optimizations. We are focused on optimizing our pricing and improving customer service for our print subscribers. Print advertising continues to offer a compelling branding opportunity across our network due to our scale and unique reach at both the national and local community levels.

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Prioritizing investments into growth businesses that have significant potential and support our vision

By leveraging our unique footprint, trusted brands, and media reach, we identify, experiment, and invest in potential growth businesses. USA TODAY NETWORK Ventures is a strong example of one such experiment that has grown significantly since its founding in 2015. During 2020, the Company was able to successfully pivot to hosting its events virtually, hosting over 250 events and maintaining 88% of USA TODAY NETWORK Venture's revenues compared to 2019.

Building on our inclusive and diverse culture to center around meaningful purpose, individual growth and customer focus

Inclusion, Diversity and Equity are core pillars of our organization and influence all that we do, from recruiting, development and retention, to day-to-day operations including hiring, onboarding, education, leadership training and professional development. We have published our inclusion goals for 2025 and our efforts underway to progress toward them and expect to publish our first workforce diversity report in the first quarter of 2021. We believe aligning our culture around empowering our communities to thrive and putting our customers at the center of everything we do will provide the foundation for our broader strategic efforts.

Challenges

As a publisher of locally-based print and online media, we face a number of challenges, including the risks that:

The growing shift within the publishing industry from traditional print media to digital may compromise our ability to generate sufficient advertising revenues;
Investments in growing our digital and marketing services and events business may not be successful, which could adversely affect our results of operations; and
Our Advertising and marketing services revenues and Circulation revenues may further decline if we are unable to compete effectively with other companies in the local media industry.

For more information about the risks and challenges we face, see "Risk Factors" under Item 1A of this Annual Report on Form 10-K.

Employees and Human Capital Resources

We believe the foundation of our business is the people and employees who make our day-to-day operations possible. A major focus in 2020 was our integration of Legacy Gannett onto a common infrastructure platform to manage all aspects of the employee experience including record keeping, communication and learning platforms, Employee Resource Group (“ERGs”) programs, benefits offerings and employment support services. This investment allowed for enhanced offerings in wellness, mental health benefits, safety and security guidance. These enhancements allowed us to deliver more consistent content and outreach to offer a social safety net to our employees as they navigated the COVID-19 pandemic, social unrest, and the U.S. political climate.

At the start of the COVID-19 pandemic, we quickly prioritized the safety of our employees, while preserving our ability to produce vital news, by asking our employees to work remotely where possible and implementing new safety procedures for our manufacturing and distribution teams. By late March of 2020, we had transitioned 95% of our non-production and delivery employees to work remotely. For our production and delivery employees, we implemented social distancing measures and hygiene best practices in line with guidelines from the Centers for Disease Control and Prevention and the World Health Organization for all our facilities. These adjustments have allowed us to maintain our news delivery without any major disruptions to our communities. We continue to monitor the situation with respect to the pandemic and the health and safety of our employees continues to be of the utmost importance to us.

Enabling a positive employee experience, within a values-based, inclusive work culture, is a top priority at Gannett. Aligned to our purpose, we provide engaging work and foster a culture that supports our employees’ ability to reach their goals and grow through learning and development. We cultivate a safe, diverse, inclusive, and equitable culture with broad promotion of ERGs. Two-way communication strategies include intersectional ERG events, monthly Town Hall meetings with our Chief Executive Officer and senior leadership, and our Together newsletter, which shares strategies on topics such as remote working, staying connected, and vaccination information and resources.
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We are committed to building a workforce that reflects our communities and providing equal opportunities for each employee to thrive. We regularly track our progress and expect to share our workforce demographics publicly in the future. In addition, we are in the process of expanding our demographic data to help us better understand and serve our workforce, by providing employees the opportunity to voluntarily self-identify certain demographic information. We are confident that our efforts will help us reach our goal in being a workforce at parity with the diversity of our nation by 2025.

We listen through bi-annual Your Voice Engagement surveys, multiple Pulse surveys targeting current concerns, and Lifecycle surveys to understand the Gannett employee experience. The performance review process includes goal setting as well as regular manager feedback and coaching to assist with the career growth of our employees, and the use of development plans for individual career growth. Due to the 2020 pandemic, we postponed the formal portion of this process. In 2021, our full process is expected to resume with an annual review and quarterly check-ins. Our learning programs have been designed to successfully orient employees, build leadership capabilities and meet individual development needs. Through our centralized Learning Experience Platform, we deliver and manage both internally developed and customized programs such as our leadership development program, as well as partner programs. To further our employees experience we offer a volunteer time benefit and community giving campaigns and have added two additional holidays beginning in 2021: Martin Luther King Jr. Day and Juneteenth.

As of December 31, 2020, we employed approximately 18,100 employees in the U.S., of which approximately 15% are represented by labor unions, most of which are affiliated with one of seven international unions. Our employee base reflects our integration of Legacy Gannett to date, which has included consolidating production and distribution facilities, integrating and centralizing back office functions, centralizing and regionalizing our publishing sales, content, and circulation marketing organizations, and consolidating our marketing solutions organizations. It also reflects our alignment to business conditions brought on by the COVID-19 pandemic. As of December 31, 2020, there were approximately 2,700 employees outside of the U.S., including approximately 2,100 employed by Newsquest in the U.K. Our U.K. subsidiaries bargain with two unions over working practices, wages, and health and safety issues only. Most of our unionized employees work under collective bargaining agreements that are under negotiation or will expire in 2022, or are negotiating towards an initial collective bargaining agreement. As of December 31, 2020, there were approximately 88 existing collective bargaining agreements and 8 bargaining units negotiating initial contracts. We believe relations with our employees are generally good, and we have had no work stoppages during 2020 at any of our publications.

Corporate Governance and Public Information

The address of Gannett’s website is http://www.gannett.com/. Stockholders can access a wide variety of information on Gannett’s website, under the "Investor Relations" tab, including corporate governance information, news releases, SEC filings, information Gannett is required to post online pursuant to applicable SEC and NYSE rules, and online links. Gannett makes available via its website all filings it makes under the Securities and Exchange Act of 1934, as amended, including Forms 10-K, 10-Q, and 8-K, as well as any related amendments as soon as reasonably practicable after they are filed with, or furnished to, the SEC. All such filings are available free of charge. Neither the content of Gannett’s website nor any other website referred to in this report are incorporated by reference into this report unless expressly noted.

References

(1) 2021 Comscore Inc, US Multi-Platform, Desktop 2+ and Total Mobile 18+, December 2019-December 2020

Major Publications and Markets We Serve

Products

Our traditional media product mix consists of four publication types: (i) daily newspapers, (ii) weekly newspapers, (iii) shoppers, and (iv) niche publications. Most of these publications have a digital presence as discussed in the following table. Some of the key characteristics of each of these types of publications are also summarized in the table below:
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Daily NewspapersWeekly NewspapersShoppersNiche Publications
Cost:PaidPaid and freePaid and freePaid and free
Distribution:Distributed four to seven days per weekDistributed one to three days per weekDistributed weeklyDistributed on a weekly, bi-weekly, monthly, quarterly, or annual basis
Format:Printed on newsprint, foldedPrinted on newsprint, foldedPrinted on newsprint, folded, or bookletPrinted on newsprint or glossy, folded, booklet, magazine, or book
Content:Editorial (local news and coverage of community events, some national headlines) and ads (including classifieds)Editorial (local news and coverage of community events, some national headlines for smaller markets which cannot support a daily newspaper) and ads (including classifieds)Almost 100% ads, primarily classifieds, display, and insertsNiche content and targeted ads (e.g., city guides, tourism guides, directories, and calendars)
Income:Revenue from advertisers, subscribers, rack/box salesPaid: Revenue from advertising, subscribers, rack/box sales
Free: Advertising revenue only, provide 100% market coverage
Paid: Revenue from advertising, rack/box sales
Free: Advertising revenue only, provide 100% market coverage
Paid: Revenue from advertising, rack/box sales
Free: Advertising revenue only
Internet Availability:Maintain locally oriented websites, mobile sites, and mobile apps for most locationsMajor publications maintain locally oriented websites and mobile sites for select locationsMajor publications maintain locally oriented websitesSelectively available online

Overview of Operations

We reach a large, diverse audience through our print and digital daily and non-daily publications throughout the U.S. and Guam and the U.K. Our journalism network is powered by an integrated and award-winning news organization comprised of more than 5,000 journalists with deep roots in 252 local communities, plus USA TODAY, and across our U.K. markets. We expect to and are invested in growing the number of our journalists, as we seek to accelerate growth of a subscription-led business model, anchored on high-quality, original, impactful journalism. During 2020, our combined monthly digital reach averaged 150 million monthly unique visitors in the U.S., while our U.K. media organizations attracted over 39 million unique visitors monthly.

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The following table sets forth information regarding the number of publications and production facilities in our Publishing segment as of December 31, 2020:
LOCAL PROPERTY NETWORK MEDIA ORGANIZATIONS
PublicationsProduction Facilities
State / TerritoryDailiesWeeklies
Alabama311
Arizona11
Arkansas25
California891
Colorado351
Connecticut1
Delaware141
Florida19105
Georgia371
Guam11
Illinois11121
Indiana1072
Iowa591
Kansas10101
Kentucky21
Louisiana75
Maine2
Maryland21
Massachusetts10771
Michigan15131
Minnesota27
Mississippi211
Missouri7101
Montana1
Nebraska2
Nevada11
New Hampshire231
New Jersey9112
New Mexico61
New York12131
North Carolina1242
North Dakota11
Ohio21352
Oklahoma532
Oregon221
Pennsylvania132
Rhode Island21
South Carolina34
South Dakota331
Tennessee862
Texas9184
Utah1
Vermont1
Virginia2
Washington1
West Virginia12
Wisconsin1142
Total25230845

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The following table lists information for our major publications and their affiliated digital platforms in the U.S. as of December 31, 2020:
Combined Average Circulation
TitleRelated Website(s)Location
Daily(1)
Sunday(1)
USA TODAYwww.usatoday.comMcLean, Virginia1,064,666802,678
Detroit Free Presswww.freep.comDetroit, Michigan113,233908,802
The Columbus Dispatchwww.dispatch.comColumbus, Ohio112,739114,954
The Arizona Republicwww.azcentral.comPhoenix, Arizona116,665337,863
Milwaukee Journal Sentinelwww.jsonline.comMilwaukee, Wisconsin83,628129,887
The Oklahomanwww.oklahoman.comOklahoma City, Oklahoma56,25660,857
The Indianapolis Starwww.indystar.comIndianapolis, Indiana63,328160,031
The Cincinnati Enquirerwww.cincinnati.comCincinnati, Ohio57,396107,537
The Courier-Journalwww.courier-journal.comLouisville, Kentucky52,299127,833
The Austin American-Statesmanwww.statesman.comAustin, Texas52,86378,039
The Recordwww.northjersey.comBergen, New Jersey47,00462,057
The Des Moines Registerwww.desmoinesregister.comDes Moines, Iowa45,20698,676
Democrat and Chroniclewww.democratandchronicle.comRochester, New York46,21381,574
The Akron Beacon Journalwww.beaconjournal.comAkron, Ohio43,06854,210
The Providence Journalwww.providencejournal.comProvidence, Rhode Island40,75549,190
The Tennesseanwww.tennessean.comNashville, Tennessee38,738112,382
(1)Daily and Sunday combined average circulation is print, digital replica, digital non-replica, and affiliated publications according to the Alliance for Audited Media's September 2020 Quarterly Publisher's Statement.

Newsquest has a portfolio of over 120 news brands and more than 100 magazines, published in print and online in the U.K. With a digital audience of more than 39 million users a month and more than 5.1 million readers in print, Newsquest's content is read by a substantial portion of the U.K. population. In addition to local news brands, Newsquest owns the digital businesses s1jobs and s1Homes, Exchange & Mart, and a specialist magazine business.

The following table presents information for our major local media organizations and affiliated digital platforms operated by Newsquest in the U.K. as of December 31, 2020. All circulation figures are according to Joint Industry Currency for Regional Media Research results for the period January to June 2020.
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DAILY PAID-FOR LOCAL MEDIA ORGANIZATIONS AND AFFILIATED DIGITAL PLATFORMS / NEWSQUEST
TitleRelated Website(s)LocationCirculation
Monday - Saturday
Basildon & Southend Echowww.echo-news.co.ukBasildon, Southend on Sea14,392
Bolton Newswww.theboltonnews.co.ukBolton6,517
Bournemouth - The Daily Echowww.bournemouthecho.co.ukBournemouth9,589
Bradford Telegraph & Arguswww.thetelegraphandargus.co.ukBradford8,944
Colchester Daily Gazettewww.gazette-news.co.ukColchester6,715
Dorset Echowww.dorsetecho.co.ukDorset6,983
Glasgow - Evening Times(1)
www.eveningtimes.co.ukGlasgow15,672
Greenock Telegraph(1)
www.greenocktelegraph.co.ukGreenock7,644
Lancashire Telegraph www.lancashiretelegraph.co.ukBlackburn, Burnley5,733
Oxford Mailwww.oxfordmail.co.ukOxford7,465
South Wales Argus - Newportwww.southwalesargus.co.ukNewport7,312
Southampton - Southern Daily Echowww.dailyecho.co.ukSouthampton11,206
Swindon Advertiserwww.swindonadvertiser.co.ukSwindon6,859
The Argus Brighton www.theargus.co.ukBrighton8,948
The Herald, Scotland(1)
www.heraldscotland.co.ukGlasgow, Edinburgh22,415
The National, Scotland(1)
www.thenational.scotGlasgow, Edinburgh9,983
The Northern Echowww.thisisthenortheast.co.ukDarlington16,212
The Press - Yorkwww.yorkpress.co.ukYork9,792
Worcester Newswww.worcesternews.co.ukWorcester5,090
The Leaderwww.leaderlive.co.ukWrexham5,584
The Mailwww.nwemail.co.ukCumbria4,254
News & Starwww.newsandstar.co.ukCarlisle5,131
(1)Circulation figures are according to BPA Worldwide results for the period January to December 2019 as auditing occurs annually and is not yet available for 2020.

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Item 1A. RISK FACTORS

You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating us and our Common Stock. Any of the following risks could materially and adversely affect our results of operations, our financial condition, our ability to make distributions on our Common Stock and the market price of our Common Stock. Although the risk factors are grouped by general category, many of the risks described in a given category relate to multiple categories.

Risk Factor Summary

The following is a summary of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations, which are discussed in more detail below:

Our substantial indebtedness could materially and adversely affect our business or financial condition.
Our inability to raise funds necessary to settle conversions of, or to repurchase, the Company's 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes"), upon a fundamental change as described in the indenture governing the 2027 Notes, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.
Our business currently relies on sources of revenues that have been, and likely will continue to be, negatively affected by digital commerce and media. In addition, our strategy of growing our paid digital-only subscriber base is expected to negatively impact advertising revenues in the near term.
We may be unsuccessful in our efforts to execute our digital revenue strategy and optimize our revenue streams.
Our ReachLocal business purchases most of its media from Google, and its business could be adversely affected if Google takes actions that are adverse to our interests. Similar actions from Yahoo!, Microsoft, Facebook and other media providers could also adversely affect these businesses.
We may not achieve all the intended benefits of the acquisition of Legacy Gannett.
Our future results will suffer if we do not effectively manage the expanded scope of our operations as a result of our acquisition of Legacy Gannett.
The diversion of resources and management’s attention to the integration of Legacy Gannett could adversely affect our day-to-day business.
Our ability to generate revenues is highly sensitive to the strength of the economies in which we operate and the demographics of the local communities that we serve.
We expect the COVID-19 pandemic to have a material negative impact on our business and results of operations in the near term, and possibly longer.
Uncertainty and adverse changes in the general economic conditions of markets in which we participate, including due to the COVID-19 pandemic, may continue to negatively affect our business.
The collectability of accounts receivable under adverse economic conditions could deteriorate to a greater extent than provided for in our financial statements and in our projections of future results.
Our financial results are subject to risks associated with our international operations.
Foreign exchange variability could materially and adversely affect our consolidated operating results.
The U.K.'s exit from the European Union could adversely impact our business, results of operations, and financial condition.
Domestic and/or foreign jurisdictions may enact gross receipts taxes on our digital services which, if we are required to pay, could adversely affect our cash flows and financial condition.
Our business is subject to seasonal and other fluctuations, which affects our revenues and operating results.
The value of our intangible assets may become impaired, which could adversely affect future reported results of operations and stockholders’ equity.
Our management and independent auditors have identified a material weakness in our internal control over financial reporting, which could, if not remediated in an appropriate and timely way, result in material misstatements in our financial statements.
We may not be able to protect intellectual property rights upon which our business relies and, if we lose intellectual property protection, our assets may lose value.
We are subject to environmental and employee safety and health laws and regulations that could cause us to incur significant compliance expenditures and liabilities.
Our possession and use of personal information and the use of payment cards by our customers present risks and expenses that could harm our business. Unauthorized access to or disclosure or manipulation of such data, whether through breach of our network security or otherwise, could expose us to liabilities and costly litigation and damage our reputation.
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Privacy-related laws are constantly evolving and may increase our compliance costs and potential for liability, either of which may have an adverse effect on our business, financial condition and results of operations.
We could incur significant liability if the separation of Legacy Gannett from its former parent were determined to be a taxable transaction.
The Internal Revenue Service may disallow all or part of a worthless stock loss and bad debt deduction.
We may not be able to generate future taxable income which may prevent our realization of deferred tax assets.
We are required to use a portion of our cash flows to make contributions to our pension plans, which diverts cash flow from operations, and the amount of required future contributions may be difficult to estimate.
We depend on key personnel, and we may not be able to operate or grow our business effectively if we lose the services of any of our key personnel or are unable to attract qualified personnel in the future.
A shortage of skilled or experienced employees, including journalists, in the media industry, or our inability to retain such employees, could pose a risk to achieving improved productivity and reducing costs, which could adversely affect our profitability.
A number of our employees are unionized, and our business and results of operations could be adversely affected if current or additional labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations.
Sustained increases in costs of employee health and welfare benefits may reduce our profitability.
Our inability to successfully transition to self-management following termination of the Amended Management Agreement may result in the loss of key employees, disruptions to our business and operational inefficiencies that could hinder our business, financial condition and results of operations.
The Manager is not liable to us for certain acts or omissions performed in accordance with, and prior to the termination of, the Amended Management Agreement, and for certain matters in connection with the termination of our relationship with the Manager, and we may incur liability for such acts or omissions.
There can be no assurance that the market for our stock will provide adequate liquidity.
Our Common Stock may be delisted from the NYSE if we fail to comply with continued listing standards.
Sales or issuances of shares of our Common Stock, including upon conversion of the 2027 Notes, could adversely affect the market price of our Common Stock.
We presently have no intention to declare or pay a dividend and we may not be able to pay dividends in the future or at all.
The percentage ownership of our existing stockholders may be diluted in the future, including upon conversion of the 2027 Notes.
An "ownership change" could limit our ability to utilize our net operating loss carryforwards and other tax attributes, which could result in our payment of income taxes earlier than if we were able to fully utilize our net operating loss and other tax benefit carryforwards.
We have entered into a Section 382 Rights Agreement, and if the share purchase rights issued pursuant to such agreement are exercised, it could materially and adversely affect the market price of our Common Stock.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decrease the trading price of our Common Stock.
Future offerings of debt securities, which would rank senior to our Common Stock upon our liquidation, and future offerings of equity securities, may be senior to our Common Stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our Common Stock.

Risks Related to Our Indebtedness

Our substantial indebtedness could materially and adversely affect our business or financial condition.

On February 9, 2021, the Company entered into a five-year, senior-secured term loan facility with Citibank, N.A. in an aggregate principal amount of $1.045 billion (the "5-Year Term Loan"). The 5-Year Term Loan matures on February 9, 2026 and, at the Company's option, bears interest of the London Interbank Offered Rate plus a margin equal to 7.00% per annum or an alternate base rate plus a margin equal to 6.00% per annum. Accordingly, we are required to dedicate a substantial portion of cash flow from operations to fund interest payments. The 5-Year Term Loan amortizes at a rate equal to 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) is equal to or less than a specified ratio, 5% per annum) payable in equal quarterly installments. In addition, we are required to repay our credit facility from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events and (ii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million as of the last day of any fiscal year of the Company (beginning with the fiscal year ending December 31, 2021). Our debt service obligations reduce the amount of cash flow available to fund our working capital, capital expenditures, investments and potential distributions to
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stockholders. Moreover, there can be no assurance that we will be able to generate sufficient cash flow to satisfy our debt service obligations. Our ability to satisfy our debt service obligations depends on our ability to generate cash flow from operations, which is subject to a variety of risks, including general economic conditions and the strength of our competitors, which are outside our control.

The terms of our indebtedness impose significant operating and financial restrictions on us. The 5-Year Term Loan and the 2027 Notes require us to comply with numerous affirmative and negative covenants, including a requirement to maintain minimum liquidity of $30 million, and restrictions limiting our ability to, among other things, incur additional indebtedness, make investments and acquisitions, pay certain dividends, sell assets, merge, incur certain liens, enter into agreements with our affiliates, change our business, engage in sale/leaseback transactions, and modify our organizational documents. With respect to dividends, under the 5-Year Term Loan, we can only pay cash dividends up to an agreed-upon amount, provided the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) does not exceed a specified ratio. The indenture for the 2027 Notes (the "Indenture") contains a similar dividend restriction and also provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the Indenture) exceeds 1.5 and the Company approves the declaration of a dividend, the Company must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend. This repurchase offer requirement may make it impractical to declare and pay dividends at any time that the requirement is in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared.

A failure to satisfy our debt service obligations on the remaining 5-Year Term Loan, a breach of a covenant in our credit facility, or a material breach of a representation or warranty in our credit facility, among other events specified in the credit facility, could give rise to a default, which could give rise to the right of our lenders to declare our indebtedness, together with accrued interest and other fees, to be immediately due and payable. A failure to satisfy our debt service or conversion obligations on the 2027 Notes, among other events specified in the Indenture, could also give rise to a default, which could give rise to the right of noteholders to declare the principal of the 2027 Notes, together with accrued and unpaid interest, to be immediately due and payable. An acceleration of our indebtedness would have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.

Our inability to raise funds necessary to settle conversions of, or to repurchase, the 2027 Notes, upon a fundamental change as described in the indenture governing the 2027 Notes, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.

If we settle the 2027 Notes by cash, or by a combination of cash and shares of our Common Stock, upon a fundamental change as described in the Indenture, we will be required to make cash payments with respect to the 2027 Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of the 2027 Notes being surrendered or converted. In addition, our ability to repurchase the 2027 Notes or to pay cash upon conversion of the 2027 Notes is limited by the agreements governing our existing indebtedness (including the 5-Year Term Loan) and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness. Our failure to repurchase 2027 Notes at a time when the repurchase is required by the Indenture or to pay cash payable on future conversions of the 2027 Notes as required by the Indenture would constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness (including the 5-Year Term Loan).

Risks Related to Digital Commerce and Media

Our business currently relies on sources of revenues that have been, and likely will continue to be, negatively affected by digital commerce and media. In addition, our strategy of growing our paid digital-only subscriber base is expected to negatively impact advertising revenues in the near term.

In recent years, we have experienced declining revenue (on a same-store basis). The majority of our revenues are from (i) advertising and marketing services and (ii) paid circulation (in each case, both in print and digital mediums). Print advertising alone accounted for approximately 26% of our total revenues for the year ended December 31, 2020.

To date, our revenue declines have been driven primarily by a pronounced decline across all categories of print advertising revenue (national, local and classified) related to the rise of digital media and commerce. The increased popularity of digital media and commerce has shifted demand from print advertising to digital advertising, and large digital platforms, such as Facebook, Google and Amazon, which have extensive audience reach, data and targeting capabilities, command a large share of the digital advertising market. Further, media companies generally charge much lower rates for digital advertising than for print
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advertising due to the range of advertising choices across digital products and platforms and the large inventory of available digital advertising space, and mobile advertising rates typically are even lower than desktop digital rates. Additionally, brick-and-mortar businesses are significant consumers of print advertising and with the rise of digital commerce many of these types of businesses have, and continue to, close retail outlets, which adversely affects the demand for print advertising.

Circulation revenue has been affected to a lesser extent, but more marked future declines in circulation revenue are possible. Revenue from paid circulation is a function of the volume of subscribers and the price of subscriptions. In recent years, we have experienced significant declines in the number of subscribers to our newspapers, as a result of competition from digital media and the demographic shift of traditional print newspaper readers getting older while younger generations tend to consume media through digital platforms. We have also focused on growing the volume of digital subscribers, but there can be no assurance that we will be able to grow, or even retain, our current digital subscriber volume, especially at rates similar to the rates we are able to charge for our print products.

A key element of our consumer strategy is growing our paid digital-only subscriber base which initially is expected to lead to declines in our existing advertising revenue. To implement our strategy and grow our paid digital-only subscriber base, we may need to restrict certain content from non-subscriber access or limit the amount of content non-subscribers can view in an effort to encourage non-subscribers to become paid digital subscribers. In the short-term, this strategy is expected to reduce the number of unique visitors accessing our content and, in turn, reduce our digital advertising revenue. Over time, the anticipated increase in the number of paid digital-only subscribers is expected to increase our circulation revenue derived from paid digital-only subscribers as well as our digital advertising revenues. However, there can be no assurance that we will be able to increase the number of our digital-only subscribers and, if we are unable to grow or retain the volume of such subscribers, our circulation and advertising revenues could decline adversely affecting our results of operations and financial condition.

Declining subscriber volume can also lead to more marked declines in advertising revenue. Print subscriber volume declines directly impact preprint and other print revenues that are linked to number of subscribers. In terms of digital advertising revenues, news aggregation websites and customized news feeds (often free to users) reduce traffic on our websites and related digital advertising revenues. These types of websites also compete with us in selling digital-only subscriptions to our websites, which reduces our ability to monetize our content digitally. If traffic levels stagnate or decline, and/or print subscriber volume continues to decline, we may not be able to maintain or increase the advertising rates or attract new advertising customers. Further, we are generally not compensated for the consumption of our original content on third-party digital products and social platforms.

We also generate revenues from a commercial printing and distribution business that manages printing and distribution of publications for third parties, which generated approximately 5% of our total revenues in 2020. Our commercial and/or printing businesses could also be adversely affected by the same secular trends that are affecting our core advertising and circulation revenues. These third parties are experiencing the same print volume declines our business experiences and, as such, our commercial printing and distribution revenues could experience declines in the future. In addition, our relationships with these third parties are generally pursuant to short-term contracts, and a decision by any of the three largest national publications or the major local publications to cease publishing in those markets or seek alternatives to their current business practice of partnering with us could have an additional adverse effect on our revenue trends. For all of the foregoing reasons, we may experience persistent declines in revenue, which could adversely affect our results of operations and financial condition, our ability to make distributions on our Common Stock and the market price of our Common Stock.

We may be unsuccessful in our efforts to execute our digital revenue strategy and optimize our revenue streams.

Print-related revenue streams have continued to decline at a significant pace. We have focused on offsetting traditional print advertising and circulation revenue declines in part by diversifying our sources of revenue through the development and acquisition of complementary businesses with growth potential. For example, our business USA TODAY NETWORK Ventures produces local events. In addition, with the acquisition of Legacy Gannett, we expanded our digital marketing solutions businesses to include ReachLocal and WordStream.

There can be no assurance that we will be able to grow revenue from these or other complementary businesses we may develop internally or acquire, or that any revenue generated by new business lines will be adequate to offset revenue declines from our legacy businesses. For example, technological developments could adversely affect the availability, applicability, marketability and profitability of the suite of SMB services we offer. Technological developments and any changes we make to our business strategy may require significant capital investments, and such investments may be restricted by the 5-Year Term Loan.

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These complementary businesses also face competition from various digital media providers, such as Google and Yahoo!, which may have more resources to invest in product development and marketing. Our salesforce may not be able to utilize the relationships we have throughout our local property network to effectively sell these products. If we are unable to diversify our traditional revenues with revenues from complementary businesses, we may experience persistent declines in revenue which could adversely affect our results of operations and financial condition.

Our ReachLocal business purchases most of its media from Google, and its business could be adversely affected if Google takes actions that are adverse to our interests. Similar actions from Yahoo!, Microsoft, Facebook and other media providers could also adversely affect these businesses.

Most of ReachLocal and WordStream's cost of sales relates to the purchase of media, and a substantial majority of the media it purchases is from Google. Google accounts for a large majority of all U.S. searches, and Google's share in certain foreign markets is often even greater. As a result, we expect our ReachLocal and WordStream businesses will depend upon media purchases from Google for the foreseeable future. This dependence makes that business vulnerable to actions Google may take to change the manner in which it sells AdWords or otherwise conducts its business. In addition, any new developments or rumors of developments regarding Google's business practices that affect the local online advertising industry may adversely affect our products or create perceptions with clients that our ability to compete in the online marketing industry has been impaired. These risks also apply to other publishers with whom we do business, including Yahoo!, Facebook and Microsoft.

Risks Related to Our Acquisition and Integration of Legacy Gannett

We may not achieve all the intended benefits of the acquisition of Legacy Gannett.

We completed the acquisition of Legacy Gannett in November 2019 and have already begun experiencing many of the benefits from the acquisition. However, there can be no assurance that we will be able to realize every intended benefit of the transaction. There are many challenges associated with integrating a material acquisition, such as our acquisition of Legacy Gannett, including the integration of executive and other employee teams with historically different cultures and priorities; the coordination of personnel located across multiple geographic locations; retaining key management and other employees; consolidating corporate and administrative infrastructures and eliminating duplicative operations; the diversion of management’s attention from ongoing business concerns; retaining existing business and operational relationships, including customers, suppliers and other counterparties, and attracting new business and operational relationships; unanticipated issues in integrating information technology, communications and other systems; as well as unforeseen expenses associated with the acquisition. Although we have already realized a number of anticipated synergies and benefits from the acquisition of Legacy Gannett, we may not achieve every expected benefit in the expected timeframe or at all.

If we fail to realize anticipated synergies in the amount and within the timeframe expected, our actual financial condition and results of operations may differ materially from the illustrative financial information disclosed in connection with the acquisition, which was based on various assumptions and estimates that may prove to be incorrect. Such illustrative financial information did not constitute management’s projections of future financial performance or results of operations; however, any material variance from such illustrative financial information could result in negative investor reactions that materially and adversely affect the market price of our Common Stock. Our actual financial condition and results of operations may differ materially even if synergies are realized, due to macroeconomic and other external factors or a variety of other risks to our business that are independent of the acquisition.

Our future results will suffer if we do not effectively manage the expanded scope of our operations as a result of our acquisition of Legacy Gannett.

With completion of the Legacy Gannett acquisition, the size and geographical scope of our business has increased significantly. Our continued success depends, in part, upon our ability to manage these expanded business operations, including across the U.S. and the United Kingdom, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. As part of managing the expanded business, we are in the process of implementing a strategic initiative expected to achieve cost-savings and efficiencies. The initiative includes outsourcing certain of our administrative operations to outside the U.S. There can be no assurance that we will be successful in managing the scope of our expanded operations or that we will realize the expected operating efficiencies, cost savings, and other benefits from the combined business that we currently anticipate.

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The diversion of resources and management’s attention to the integration of Legacy Gannett could adversely affect our day-to-day business.

The integration of Legacy Gannett places a significant burden on our management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could adversely affect our financial results.

Risks Related to Macroeconomic Factors

Our ability to generate revenues is highly sensitive to the strength of the economies in which we operate and the demographics of the local communities that we serve.

Our advertising revenues and, to a lesser extent, circulation revenues, depend upon a variety of factors specific to the communities that our publications serve. These factors include, among others, the size and demographic characteristics of the local population, local economic conditions in general and the economic condition of the retail segments of the communities that our publications serve. The effects of the COVID-19 pandemic, including mandatory business closures, have generally worsened the economic condition of many retail segments. If the local economy, population or prevailing retail environment of a community we serve experiences a downturn, our publications, revenues and profitability in that market could be adversely affected. Our advertising revenues are also susceptible to negative trends in the general economy that affect customer spending. The advertisers in our newspapers and other publications and related websites are primarily retail businesses that can be significantly affected by regional or national economic downturns and other developments. For example, many traditional retail companies continue to face greater competition from online retailers and face uncertainty in their businesses, which has reduced and may continue to reduce their advertising spending. Declines in the U.S. economy could also significantly affect key advertising revenue categories, including classified ads such as help wanted, real estate, and automotive. The effects of the COVID-19 pandemic have generally exacerbated these circumstances.

We expect the COVID-19 pandemic to have a material negative impact on our business and results of operations in the near term, and possibly longer.

While we are generally exempt from governmental mandates requiring closures of non-essential businesses in response to the COVID-19 pandemic, actions taken to mitigate the pandemic could materially and adversely affect our business. Our ability to generate revenues is highly sensitive to the strength of the economies in which we operate, and actions taken to mitigate the COVID-19 pandemic, including widespread business closures and social distancing measures, could lead to an economic recession. During the year ended December 31, 2020, we experienced revenue and profitability declines in connection with the COVID-19 pandemic. Since March 2020, we have experienced decreasing demand for our advertising and digital marketing services as well as reductions in the single copy and commercial distribution of our newspapers. Declining revenue may impair our ability to generate sufficient cash flows to service the 5-Year Term Loan and the 2027 Notes. Accordingly, the COVID-19 pandemic has had the effect of heightening various risks described in this Form 10-K.

While we have implemented, and continue to implement, measures intended to reduce costs and preserve cash flow in response to the COVID-19 pandemic (including, but not limited to, employee furloughs, decreases in employee compensation and reductions in discretionary spending), there can be no assurance that we will be able to offset the negative impacts of the pandemic and that we will have sufficient cash flow to satisfy our commitments. In addition, measures taken to preserve cash flow and defer payments into future periods, such as the deferral of pension obligations, may have a greater impact on cash flow in future periods as we also incur such payments in the normal course of business. Moreover, such measures, and further measures we may implement in the future in response to the COVID-19 pandemic, may negatively impact our reputation and our ability to attract and retain employees. See "Risks Related to Pension Obligations and Employees" below.

In the long-term, the ultimate impact of the COVID-19 pandemic on our business and results of operations will depend on the severity and length of the pandemic, the duration, effectiveness, and extent of the mitigation measures and governmental actions designed to combat the pandemic, including the development and availability of effective treatments or vaccines, as well as changes in customer behavior as a result of the pandemic, all of which are highly uncertain. The COVID-19 pandemic and mitigation measures could continue to, depending upon the duration of the pandemic, have a material negative impact on our business and results of operations.

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Uncertainty and adverse changes in the general economic conditions of markets in which we participate, including due to the COVID-19 pandemic, may continue to negatively affect our business.

Current and future conditions in the economy have an inherent degree of uncertainty, which has been magnified by the COVID-19 pandemic. As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole. It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the markets in which we participate. In particular, the COVID-19 pandemic and related measures to contain its spread have created significant volatility and economic uncertainty, which is expected to continue in the near term. In addition, advertisers may respond to such uncertainty by reducing their budgets or shifting priorities or spending patterns, which could have a material adverse impact on our business.

Adverse changes may also occur as a result of weak global economic conditions, declining oil prices, wavering customer confidence, increasing unemployment, volatility in stock markets, contraction of credit availability, declines in real estate values, natural disasters, or other factors affecting economic conditions in general. These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, or increase costs associated with publishing and distributing our publications.

The collectability of accounts receivable under adverse economic conditions could deteriorate to a greater extent than provided for in our financial statements and in our projections of future results.

Adverse economic conditions in the U.S. may increase our exposure to losses resulting from financial distress, insolvency and the potential bankruptcy of our advertising customers. We have recorded write-offs of accounts receivable relating to recent bankruptcies of national retailers. Our accounts receivable is stated at net estimated realizable value, and our allowance for doubtful accounts has been determined based on several factors, including receivable agings, significant individual credit risk accounts and historical experience. If such collectability estimates prove inaccurate, adjustments to future operating results could occur.

Risks Related to International Operations

Our financial results are subject to risks associated with our international operations.

Newsquest operates in the U.K., and ReachLocal has international sales operations in Australia, New Zealand and Canada, as well as campaign support services in India. Revenue from Newsquest accounted for 6% of our Publishing segment's total revenues for the year ended December 31, 2020. Revenue from international operations outside North America accounted for 5% of our Digital Marketing Solutions segment's total revenue for the year ended December 31, 2020. Our ability to manage these international operations successfully is subject to numerous risks inherent in foreign operations, including:

Challenges or uncertainties arising from unexpected legal, political, or systemic events, including the COVID-19 pandemic;
Difficulties or delays in developing a network of clients in international markets;
Restrictions on the ability of U.S. companies to do business in certain foreign countries;
Compliance with legal or regulatory requirements, including with respect to internet services, privacy and data protection, censorship, banking and money transfers, and sale transactions, which may limit or prevent the offering of our products in some jurisdictions or otherwise harm our business;
International intellectual property laws that may be insufficient to protect our intellectual property or permit us to successfully defend our intellectual property in international lawsuits;
Difficulties in staffing and managing foreign operations, as well as the existence of workers' councils and labor unions, which could make it more difficult to terminate underperforming employees;
Currency fluctuations and price controls or other restrictions on foreign currency; and
Potential adverse tax consequences, including difficulties in repatriating earnings generated abroad.

Any of the foregoing factors could adversely impact our international operations, which could harm our overall business, operating results, and financial condition.

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Foreign exchange variability could materially and adversely affect our consolidated operating results.

Our financial statements are denominated in U.S. dollars. Newsquest operates in the U.K., and its operations are conducted in foreign currency, primarily the British pound sterling. Weakening in the British pound sterling to U.S. dollar exchange rate has in the past, and could in the future, diminish Newsquest's contributions to our results of operations. In addition, ReachLocal conducts operations in several foreign jurisdictions. If the value of currency in any of those jurisdictions weakens as compared with the U.S. dollar, ReachLocal’s operations in those jurisdictions similarly will contribute less to our results.

The U.K.'s exit from the European Union could adversely impact our business, results of operations, and financial condition.

The U.K. left the European Union on January 31, 2020 ("Brexit") and on January 1, 2021, left the European Union single market and customs union. On December 24, 2020, the U.K. and European Union entered into the EU-UK Trade and Cooperation Agreement ("TCA"). The TCA went into effect on January 1, 2021 and is being applied provisionally from that date until it is fully ratified or rejected by the European Parliament, or until February 28, 2021. The TCA provides, among other things, for a duty- and quota-free trade agreement between the U.K. and the European Union with respect to goods originating in the free trade area, however, custom formalities went into effect upon the U.K.’s exit from the single market and customs union. The TCA does not address a number of important aspects of the new relationship between the U.K. and the European Union, including providing for the free movement of services, which ended on December 31, 2020. As a result, uncertainty remains regarding the future relationship between the U.K. and the European Union, which could result in a decline in trade among them and other countries. Such a decline in trade could affect the attractiveness of the U.K. as a global investment center and, as a result, could have a detrimental impact on economic growth in the country. Furthermore, there are likely to be changes in the legal rights and obligations of commercial parties across all industries following Brexit, and British regulatory requirements could be subject to significant change. Any of the foregoing could result in an economic downturn in Newsquest’s markets, which could depress the demand for our products and services.

Domestic and/or foreign jurisdictions may enact gross receipts taxes on our digital services which, if we are required to pay, could adversely affect our cash flows and financial condition.

On July 22, 2020, a Digital Services Tax ("DST") was enacted in the United Kingdom. This 2% tax became effective April 1, 2020. The DST applies to gross revenue of specified digital business models deriving value from participation of their U.K.-based users. While the tax is intended to apply to search engines, social media platforms, and online marketplaces, it may be applied to online advertising when users of our publications receive advertising based on their participation with the publications. If that is the case, we may have to pay additional cash taxes, which could adversely affect our results of operations, financial condition, and cash flows.

On February 12, 2021, Maryland enacted the first tax targeting digital advertising in the United States. The scaled rate between 2.5% and 10% Digital Advertising Gross Revenues Tax will be imposed on annual gross revenues derived from digital advertising services in Maryland. The rate of tax varies depending on the amount of revenue a company earns. However, pending legislation would exempt digital advertising by a ‘broadcast entity’ or a ‘news media entity.’ Maryland’s new digital advertising tax could be the beginning of a wave of similar new taxes on digital advertising enacted by other states that are experiencing budget shortfalls and economic distress as a result of the COVID-19 pandemic

Additional Risks Related to Our Business

Our business is subject to seasonal and other fluctuations, which affects our revenues and operating results.

Our business is subject to seasonal fluctuations that we expect to continue to be reflected in our operating results in future periods. Our first fiscal quarter of the year tends to be our weakest quarter because advertising volume is at its lowest levels following the December holiday season. Correspondingly, our second and fourth fiscal quarters tend to be our strongest because they include heavy holiday and seasonal advertising. Other factors that affect our quarterly revenues and operating results may be beyond our control, including changes in the pricing policies of our competitors, the hiring and retention of key personnel, wage and cost pressures, distribution costs, changes in newsprint prices and general economic factors.

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The value of our intangible assets may become impaired, which could adversely affect future reported results of operations and stockholders’ equity

Our goodwill and indefinite-lived intangible assets, which include mastheads, are subject to annual impairment testing, and more frequent testing upon the occurrence of certain events or significant changes in our circumstances, to determine whether the fair value of such assets is less than their carrying value. In such a case, a non-cash charge to earnings may be necessary in the relevant period, which could adversely affect future reported results of operations and stockholders’ equity. At December 31, 2020, the carrying value of our goodwill, indefinite-lived intangible assets and amortizable intangible assets was $534.1 million, $171.4 million and $653.2 million, respectively.

Consistent with past practice, we performed our annual impairment test in the second quarter of 2020. In connection with our review, we noted that the market capitalization of the Company declined significantly during the six months ended June 30, 2020 and there was widespread stock-market volatility, resulting from the COVID-19 pandemic. As a result, in the second quarter of 2020, we recognized impairment charges of $362.4 million, $8.0 million, and $23.0 million related to goodwill, indefinite-lived intangible assets (mastheads) and amortizable intangible assets, respectively.

Management assumptions used to calculate fair value are highly subjective and involve forecasts of future economic and market conditions and their impact on operating performance. Changes in key assumptions impacting the analyses could result in the recognition of additional impairment. The severity and length of the COVID-19 pandemic, the duration and extent of the mitigation measures and governmental actions designed to combat the pandemic, as well as the changes in customers behavior as a result of the pandemic, all of which are highly uncertain and difficult to predict at the current time, could negatively impact our future assessment of projected results of operations and the underlying assumptions utilized in the determination of the estimated fair values of the reporting units and related mastheads.

Our management and independent auditors have identified a material weakness in our internal control over financial reporting, which could, if not remediated in an appropriate and timely way, result in material misstatements in our financial statements.

The Sarbanes-Oxley Act and related rules and regulations require that management report annually on the effectiveness of our internal control over financial reporting and assess the effectiveness of our disclosure controls and procedures on a quarterly basis. Maintaining and adapting our internal controls is expensive and requires significant management attention. Moreover, as we continue to grow, our internal controls may become more complex and require additional resources to ensure they remain effective amid dynamic regulatory and other guidance.

As described in Item 9A, "Controls and Procedures" of this Annual Report on Form 10-K, we concluded that our disclosure controls and procedures were not effective as of December 31, 2020 and December 31, 2019 and that we had, as of such date, a material weakness in our internal control over financial reporting related to internal control deficiencies over the revenue recognition process; specifically, the Company did not maintain effective controls due to the aggregation of control deficiencies related to inadequate manual preventative and detective controls and information technology general controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected on a timely basis. This material weakness identified did not result in any adjustments or restatements of our audited and unaudited consolidated financial statements or disclosures for any prior period previously reported by the Company. However, until the material weakness is remediated, and our associated disclosure controls and procedures improved, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting occur in the future, our future consolidated financial statements or other information filed with the SEC may contain material misstatements.

We are in the process of remediating the material weakness, however if we are unable to remediate the material weakness in an appropriate and timely manner, or if we identify additional control deficiencies that individually or together constitute significant deficiencies or material weaknesses, our ability to accurately record, process, and report financial information and consequently, our ability to prepare financial statements within required time periods, could be adversely affected. Failure to establish and maintain effective internal control over financial reporting could result in material misstatements in our financial statements, violations of applicable securities laws, stock exchange listing requirements, and the covenants under our debt agreements, subject us to litigation and investigations, negatively affect investor confidence in our financial statements, and adversely impact our stock price and ability to access capital markets.

We are evaluating and developing a plan, which will include the implementation of appropriate processes and controls to remediate the material weakness described above. While we work toward the design and implementation of these processes and
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controls, we may rely significantly on manual procedures to assist us with meeting the objectives otherwise fulfilled by an effective control environment. The implementation of new procedures and controls could be costly and distract management from other activities.

We may not be able to protect intellectual property rights upon which our business relies and, if we lose intellectual property protection, our assets may lose value.

Our business depends on our intellectual property, including, but not limited to, our titles, mastheads, content and proprietary software, which we may attempt to protect through patents, copyrights, trade laws and contractual restrictions, such as confidentiality agreements. We believe our proprietary and other intellectual property rights are important to our success and our competitive position.

Despite our efforts to protect our proprietary rights, unauthorized third parties may attempt to copy or otherwise obtain and use our content, services and other intellectual property, and we cannot be certain that the steps we have taken will prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of these rights. If we are unable to procure, protect and enforce our intellectual property rights, we may not realize the full value of these assets, and our business may suffer. If we must litigate to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of third parties, such litigation may be costly and divert the attention of our management from day-to-day operations.

We are subject to environmental and employee safety and health laws and regulations that could cause us to incur significant compliance expenditures and liabilities.

Our operations are subject to federal, state and local laws and regulations pertaining to the environment, storage tanks and the management and disposal of wastes at our facilities. Under various environmental laws, a current or previous owner or operator of real property may be liable for contamination resulting from the release or threatened release of hazardous or toxic substances or petroleum at that property. Such laws often impose liability on the owner or operator without regard to fault, and the costs of any required investigation or cleanup can be substantial. Although in connection with certain of our acquisitions we have rights to indemnification for certain environmental liabilities, these rights may not be sufficient to reimburse us for all losses that we might incur if a property acquired by us has environmental contamination. In addition, although in connection with certain of our acquisitions we have obtained insurance policies for coverage for certain potential environmental liabilities, these policies have express exclusions to coverage as well as express limits on amounts of coverage and length of term. Accordingly, these insurance policies may not be sufficient to provide coverage for us for all losses that we might incur if a property acquired by us has environmental contamination.

Our operations are also subject to various employee safety and health laws and regulations, including those pertaining to occupational injury and illness, employee exposure to hazardous materials and employee complaints. Environmental and employee safety and health laws tend to be complex, comprehensive and frequently changing. As a result, we may be involved from time to time in administrative and judicial proceedings and investigations related to environmental and employee safety and health issues. These proceedings and investigations could result in substantial costs to us, divert our management’s attention and adversely affect our ability to sell, lease or develop our real property. Furthermore, if it is determined that we are not in compliance with applicable laws and regulations, or if our properties are contaminated, it could result in significant liabilities, fines or the suspension or interruption of the operations of specific printing facilities.

Future events, such as changes in existing laws and regulations, new laws or regulations or the discovery of conditions not currently known to us, may give rise to additional compliance or remedial costs that could be material.

Our possession and use of personal information and the use of payment cards by our customers present risks and expenses that could harm our business. Unauthorized access to or disclosure or manipulation of such data, whether through breach of our network security or otherwise, could expose us to liabilities and costly litigation and damage our reputation.

Our online systems store and process confidential subscriber and other sensitive data, such as names, email addresses, addresses, and other personal information. Therefore, maintaining our network security is critical. Additionally, we depend on the security of our third-party service providers. Unauthorized use of or inappropriate access to our, or our third-party service providers’ networks, computer systems and services could potentially jeopardize the security of confidential information, including payment card (credit or debit) information, of our customers. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Non-technical means, for example actions by an employee, can also result in a data breach. A party that is able to circumvent our security measures could misappropriate our proprietary information or the information of our
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customers or users, cause interruption in our operations, or damage our computers or those of our customers or users. As a result of any such breaches, customers or users may assert claims of liability against us and these activities may subject us to legal claims, adversely impact our reputation, and interfere with our ability to provide our products and services, all of which may have an adverse effect on our business, financial condition and results of operations. The coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

A significant number of our customers authorize us to bill their payment card accounts directly for all amounts charged by us. These customers provide payment card information and other personally identifiable information which, depending on the particular payment plan, may be maintained to facilitate future payment card transactions. Under payment card rules and our contracts with our card processors, if there is a breach of payment card information that we store, we could be liable to the banks that issue the payment cards for their related expenses and penalties. In addition, if we fail to follow payment card industry data security standards, even if there is no compromise of customer information, we could incur significant fines or lose our ability to give our customers the option of using payment cards. If we were unable to accept payment cards, our business would be seriously harmed.

There can be no assurance that any security measures we, or our third-party service providers, take will be effective in preventing a data breach. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose customers or users. Failure to protect confidential customer data or to provide customers with adequate notice of our privacy policies could also subject us to liabilities imposed by United States federal and state regulatory agencies or courts. We could also be subject to evolving state laws that impose data breach notification requirements, specific data security obligations, or other customer privacy-related requirements. Our failure to comply with any of these laws or regulations may have an adverse effect on our business, financial condition and results of operations.

Privacy-related laws are constantly evolving and may increase our compliance costs and potential for liability, either of which may have an adverse effect on our business, financial condition and results of operations.

Many jurisdictions have enacted or are considering enacting privacy or data protection laws and regulations that apply to the processing or protection of personal information. These laws and regulations may impose additional security breach notification requirements, notice and consent requirements and specific data security obligations, and may also provide for a private right of action or statutory damages. The compliance costs and operational burdens imposed by these laws and regulations could be significant. Failure to protect confidential data, provide individuals with adequate notice of our privacy policies or obtain required valid consent, could subject us to liabilities imposed by the jurisdictions where we operate. Further, because some of our products and services are available on the internet, we may be subject to laws or regulations exposing us to liability or compliance obligations even in jurisdictions where we do not have a substantial presence.

Existing privacy-related laws and regulations are evolving and are subject to potentially differing interpretations. Various federal and state legislative and regulatory bodies, as well as foreign legislative and regulatory bodies, may expand current laws or enact new laws regarding privacy and data protection. For example, the General Data Protection Regulation adopted by the European Union imposes stringent data protection requirements and significant penalties for noncompliance; California’s Consumer Privacy Act creates new data privacy rights; and the European Union’s anticipated ePrivacy Regulation is expected to impose, with respect to electronic communications, stricter data protection and data processing requirements. Any failure, or perceived failure, by us or the third parties upon which we rely to comply with laws and regulations that govern our business operations, as well as any failure, or perceived failure, by us or the third parties upon which we rely to comply with our own posted policies, could result in claims against us by governmental entities or others, negative publicity and a loss of confidence in us by our users and advertisers. Each of these potential consequences could adversely affect our business and results of operations.

We could incur significant liability if the separation of Legacy Gannett from its former parent were determined to be a taxable transaction.

In connection with the separation of Legacy Gannett from its former parent, Legacy Gannett’s former parent received an opinion from outside tax counsel to the effect that the requirements for tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code") would be satisfied. The opinion relied on certain facts, assumptions, representations, and undertakings from Legacy Gannett's former parent and Legacy Gannett regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations, or undertakings were incorrect or not satisfied, we and our stockholders may not be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities. Further, notwithstanding the opinion of tax counsel, the IRS could determine upon
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audit that the separation is taxable if it determines that any of these facts, assumptions, representations, or undertakings were incorrect or violated, if it disagrees with the conclusions in the opinion, or for other reasons, including as a result of certain significant changes in the share ownership of Legacy Gannett or its former parent after the separation. If the separation were determined to be taxable for U.S. federal income tax purposes, Legacy Gannett’s former parent and its stockholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities, and we could incur significant liabilities.

The Internal Revenue Service may disallow all or part of a worthless stock loss and bad debt deduction.

The IRS could challenge an election made in 2017 to treat one of our ReachLocal international subsidiaries as a disregarded entity for U.S. federal income tax purposes, which resulted in worthless stock and bad debt deductions of $101.0 million, yielding a tax benefit of $32.0 million. These tax deductions are subject to audit and possible adjustment by the IRS, which could result in the reversal of all or part of the income tax benefit. To account for this uncertainty, a reserve of $11.0 million has been established to reduce the benefit to an estimated realizable value of $21.0 million. While we believe this represents our best estimate of the benefit to be realized upon final acceptance of our tax return, the IRS could reject or reduce the amount of tax benefit related to these deductions. If the IRS rejects or reduces the amount of this income tax benefit, we may have to pay additional cash income taxes, which could adversely affect our results of operations, financial condition, and cash flows. We cannot guarantee what the ultimate outcome or amount of the benefit we receive, if any, will be.

We may not be able to generate future taxable income which may prevent our realization of deferred tax assets.

We have deferred tax assets reported on our balance sheet, net of valuation allowances of $83.4 million. If we do not have taxable income in future years, we may be required to reestablish a valuation allowance against the remaining deferred tax assets.

Risks Related to Pension Obligations and Employees

We are required to use a portion of our cash flows to make contributions to our pension plans, which diverts cash flow from operations, and the amount of required future contributions may be difficult to estimate.

We, along with our subsidiaries, sponsor various defined benefit retirement plans, including plans established under collective bargaining agreements. Our retirement plans include (i) the Gannett Retirement Plan ("GR Plan"), (ii) the Newsquest and Romanes Pension Schemes in the U.K. ("U.K. Pension Plans"), (iii) the Newspaper Guild of Detroit Pension Plan, (iv) the George W. Prescott Publishing Company Pension Plan (the "GWP Plan") and (v) the Times Publishing Company Defined Benefit Pension Plan (the "TPC Plan").

Our pension plans invest in a variety of equity and debt securities. Future volatility and disruption in the equity and bond markets could cause declines in the asset values of our pension plans. As of December 31, 2020, the value of our pension assets exceeded our pension benefit obligations and our retirement plans were overfunded by a total of $64.2 million on a U.S. generally accepted accounting principles ("GAAP") basis.

As of December 31, 2020, we made a $5.0 million contribution to the GR Plan and we have committed to make quarterly contributions of $5.0 million to the GR Plan through September 2022. Our ability to make contribution payments will depend on our future cash flows, which are subject to general economic, financial, competitive, business, legislative, regulatory, and other factors beyond our control. Various factors, including future investment returns, interest rates, and potential pension legislative changes, may impact the timing and amount of future pension contributions. In addition, decreases in the discount rate used to determine minimum funding requirements could result in increased future contributions. As a result, we may need to make additional pension contributions above what is currently estimated, which could reduce the cash available for our businesses.

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We depend on key personnel, and we may not be able to operate or grow our business effectively if we lose the services of any of our key personnel or are unable to attract qualified personnel in the future.

The success of our business is heavily dependent on our ability to retain our management and other key personnel and to attract and retain qualified personnel in the future. Competition for senior management personnel is intense, and we may not be able to retain our key personnel. Although we have entered into employment agreements with certain of our key personnel, these agreements do not ensure that our key personnel will continue in their present capacity with us for any particular period of time. We do not have key employee insurance for any of our current management or other key personnel. The loss of any key personnel would require our remaining key personnel to divert immediate and substantial attention to seeking a replacement. An inability to find a suitable replacement for any departing executive officer on a timely basis could adversely affect our ability to operate or grow our business.

A shortage of skilled or experienced employees, including journalists, in the media industry, or our inability to retain such employees, could pose a risk to achieving improved productivity and reducing costs, which could adversely affect our profitability.

Production and distribution of our various publications requires skilled and experienced employees, including journalists. A shortage of such employees, or our inability to retain such employees, could have an adverse impact on our productivity and costs, our ability to expand, develop and distribute new products and our entry into new markets. The cost of retaining or hiring such employees could exceed our expectations, which could adversely affect our results of operations.

A number of our employees are unionized, and our business and results of operations could be adversely affected if current or additional labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations.

As of December 31, 2020, we employed 18,141 employees, of whom 2,356 (or approximately 15%) were represented by seven unions. 43% of the unionized employees are in four states: Michigan, Ohio, Wisconsin and Indiana and represent 14%, 7%, 13% and 10% of all our union employees, respectively.

Although our newspapers have not experienced a union strike in the recent past nor do we anticipate a union strike to occur, we cannot preclude the possibility that a strike may occur at one or more of our newspapers at some point in the future. We believe that, in the event of a newspaper strike, we would be able to continue to publish and deliver to subscribers, which is critical to retaining advertising and circulation revenues, although there can be no assurance of this. Further, settlement of actual or threatened labor disputes or an increase in the number of our employees covered by collective bargaining agreements can have unknown effects on our labor costs, productivity and flexibility.

Sustained increases in costs of employee health and welfare benefits may reduce our profitability.

In recent years, we have experienced significant increases in the cost of employee benefits because of economic factors beyond our control, including increases in health care costs. Some of these factors may continue to put upward pressure on the cost of providing medical benefits. Although we have actively sought to control increases in these costs, there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce the profitability of our businesses.

Risks Related to the Termination of our Relationship with our Former Manager

Our inability to successfully transition to self-management following termination of the Amended Management Agreement may result in the loss of key employees, disruptions to our business and operational inefficiencies that could hinder our business, financial condition and results of operations.

On December 21, 2020, we terminated the Amended Management Agreement, effective as of 11:59 p.m., Eastern Time, on December 31, 2020. Until the termination of the Amended Management Agreement, we were dependent on the Manager and its affiliates to manage our operations, and acquire and manage our investments. After the termination, we are self-managing our operations and investments. Achieving the anticipated benefits from the termination of the Amended Management Agreement is subject to a number of uncertainties related to our successful transition to self-management.

In connection with the Termination Agreement, we extended offers of employment to certain employees of the Manager or its affiliates who provided services to us prior to the termination, including our Chief Executive Officer. While the extension of
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such offers of employment are intended to mitigate any disruption in the transition from being Manager-operated to self-managed, this transition has inherent risks, including, but not limited to, whether we can successfully retain key employees and successfully transition our management from external to in-house.

Transitioning to self-management may be more difficult, costly or time-consuming than anticipated. We may experience business disruptions and operational inefficiencies during such transition if such transition is more difficult or more costly than we anticipate or if the transition is otherwise inefficient or unsuccessful to any degree. As a result, we could experience material adverse effects to our business, financial condition and results of operations.

The Manager is not liable to us for certain acts or omissions performed in accordance with, and prior to the termination of, the Amended Management Agreement, and for certain matters in connection with the termination of our relationship with the Manager, and we may incur liability for such acts or omissions.

Pursuant to, and prior to the termination of, the Amended Management Agreement, the Manager assumed no responsibility other than to render the services called for thereunder in good faith and was not responsible for any action of our Board of Directors in following or declining to follow its advice or recommendations. The Manager, its members, managers, officers and employees are not liable to us or any of our subsidiaries, to our Board of Directors, or our or any subsidiary’s stockholders or partners for any acts or omissions by the Manager, its members, managers, officers or employees, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Manager’s duties under the Amended Management Agreement that occurred prior to its termination. Pursuant to the Termination Agreement, our indemnification obligations to the Manager and its affiliates under the Amended Management Agreement survive its termination indefinitely. In addition, pursuant to the Termination Agreement, the Manager will be held harmless with respect to certain acts and omissions performed in connection with the Termination Agreement except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Manager’s performance under the Termination Agreement. As a result, we may incur liabilities as a result of certain acts or omissions by the Manager, which could materially and adversely impact our business and results of operations.

Risks Related to our Common Stock

There can be no assurance that the market for our stock will provide adequate liquidity.

The market price of our Common Stock may fluctuate widely, depending upon many factors, some of which may be beyond our control. These factors include, without limitation:

Risks and uncertainties associated with the ongoing COVID-19 pandemic;
Our business profile and market capitalization may not fit the investment objectives of any stockholder;
A shift in our investor base;
Our quarterly or annual earnings, or those of other comparable companies;
Actual or anticipated fluctuations in our operating results;
Changes in accounting standards, policies, guidance, interpretations or principles;
Risks relating to our ability to meet long-term forecasts;
Announcements by us or our competitors of significant investments, acquisitions or dispositions;
The failure of securities analysts to cover our Common Stock;
Changes in earnings estimates by securities analysts or our ability to meet those estimates;
The operating and stock price performance of other comparable companies;
Negative public perception of us, our competitors, or industry;
Overall market fluctuations; and
General economic conditions.

Stock markets in general and recently have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our Common Stock. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our Common Stock to fluctuate, which may limit or prevent investors from readily selling their shares of Common Stock and may otherwise negatively affect the liquidity of our Common Stock.

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Our Common Stock may be delisted from the NYSE if we fail to comply with continued listing standards.

Our Common Stock currently trades on the New York Stock Exchange ("NYSE"), and the continued listing of our Common Stock on the NYSE is subject to our compliance with a number of listing standards, including minimum share price requirements. If we fall out of compliance with NYSE’s listing standards and fail to regain compliance within the applicable cure periods, our Common Stock may be delisted from the NYSE. Failure to maintain our NYSE listing could negatively impact us and our stockholders by reducing the willingness of investors to hold our Common Stock because of the resulting decreased price, liquidity and trading of our Common Stock, and analyst coverage, among others.

Sales or issuances of shares of our Common Stock, including upon conversion of the 2027 Notes, could adversely affect the market price of our Common Stock.

Sales or issuances of substantial amounts of shares of our Common Stock in the public market, or the perception that such sales or issuances might occur, could adversely affect the market price of our Common Stock. The issuance of our Common Stock in connection with property, portfolio or business acquisitions or the settlement of awards that may be granted under our Incentive Plans (as defined below) or otherwise could also have an adverse effect on the market price of our Common Stock.

In accordance with the Investor Agreement among the Company and the holders of the 2027 Notes (the “Holders”) establishing certain terms and conditions concerning the rights and restrictions on the Holders with respect to the Holders’ ownership of the Notes, the Holders have certain registration rights with respect to the shares of Common Stock to be issued upon conversion of the 2027 Notes. In addition, Holders who receive Common Stock upon conversion of the 2027 Notes may be able to sell these shares of Common Stock pursuant to any applicable exemption under the Securities Act of 1933, as amended, or the rules promulgated thereunder, including Rule 144, if applicable. If significant quantities of the Common Stock are sold, or if it is perceived that they may be sold, the trading price of the Common Stock could be adversely affected.

We presently have no intention to declare or pay a dividend and we may not be able to pay dividends in the future or at all.

On April 1, 2020, we announced that our Board of Directors determined that it is in the best interests of our stockholders for the Company to preserve liquidity by suspending our quarterly dividend. We presently have no intention to reinstate the dividend, and there can be no assurance that we will resume paying dividends on a regular basis.

Our credit facility contains terms that restrict our ability to pay dividends or other distributions. In addition, under the 5-Year Term Loan, we can only pay cash dividends up to an agreed-upon amount and provided that the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) does not exceed a specified ratio. The Indenture contains a similar dividend restriction and also provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the Indenture) exceeds 1.5 and the Company approves the declaration of a dividend, the Company must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend. This repurchase offer requirement may make it impractical to declare and pay dividends at any time that the requirement is in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared.

Any determination by our Board of Directors regarding dividends will depend on a variety of factors, including the Company’s GAAP net income, free cash flow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future financial results. There can be no guarantee regarding the timing and amount of any dividends. Our ability to resume payment of dividends in the future will depend on our future financial performance, which, in turn, depends on the successful implementation of our strategy and on financial, competitive, regulatory, technical and other factors, general economic conditions, demand and selling prices for our products and other factors specific to our industry or specific projects, many of which are beyond our control. Therefore, our ability to generate free cash flow depends on the performance of our operations and could be limited by decreases in our profitability or increases in costs, capital expenditures, or debt servicing requirements.

The percentage ownership of our existing stockholders may be diluted in the future, including upon conversion of the 2027 Notes.

We have issued and may continue to issue equity in order to raise capital or in connection with future acquisitions and strategic investments, which would dilute investors’ percentage ownership in Gannett. In addition, a stockholder's percentage ownership may be diluted if we issue equity instruments such as debt and equity financing.
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To the extent that we raise additional capital through the sale of equity or convertible debt securities (such as the 2027 Notes), a stockholder's ownership interest in our Company may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as redeeming our shares, making investments, incurring additional debt, making capital expenditures, declaring dividends or placing limitations on our ability to acquire, sell or license intellectual property rights.

The percentage ownership of our existing stockholders may be diluted in the future as result of the issuance of Common Stock due to conversion of the 2027 Notes. Each 2027 Note may be converted into shares of Common Stock at an initial conversion rate of 200 shares of Common Stock per $1,000 principal amount of Notes (subject to adjustment as provided in the Indenture, the “Conversion Rate”). Based on the number of shares outstanding on February 19, 2021, conversion of all of the 2027 Notes into Common Stock (assuming no adjustments to the Conversion Rate) would result in the issuance of an aggregate of 99,418,800 shares of the Common Stock representing approximately 42% of the shares outstanding as of February 19, 2021 and conversion of all of the 2027 Notes into Common Stock (assuming the maximum increase in the Conversion Rate as a result of certain events, including, subject to exceptions as described in the Indenture, the acquisition of 50% or more of voting power of our securities by a person or group, a stockholder-approved liquidation of us, the delisting of our common stock, or certain changes of control, but no other adjustments to the Conversion Rate) would result in the issuance of an aggregate of 294,153,187 shares of the Common Stock representing approximately 68% of the shares outstanding as of February 19, 2021. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the 2027 Notes may encourage short selling by market participants because the conversion of the 2027 Notes could be used to satisfy short positions. Further, the anticipated conversion of the 2027 Notes into shares of our common stock could depress the price of our common stock.

The percentage ownership of our existing stockholders may also be diluted in the future as result of the issuance of Common Stock upon the exercise of outstanding 10-year warrants (the "Gannett Warrants"). As of December 31, 2020, the Gannett Warrants, if exercised, would represent approximately 0.6% of our Common Stock outstanding at a strike price of $46.35.

Furthermore, the percentage ownership in Gannett may be diluted in the future because of options issued to our Manager. As of December 31, 2020, there were 6,068,075 options outstanding at a weighted average exercise price of $13.97 held by our Manager and/or its affiliates.

Dilution may also result from the issuances of shares under our equity compensation plans (our "Incentive Plans"), which provide for the grant of equity and equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards, and other equity-based and non-equity based awards, in each case to our directors, officers, employees, among others. As of December 31, 2020, the number of shares remaining available for future issuance under our Incentive Plans, excluding shares to be issued upon exercise of outstanding options, warrants and rights, was 18.6 million.

An "ownership change" could limit our ability to utilize our net operating loss carryforwards and other tax attributes, which could result in our payment of income taxes earlier than if we were able to fully utilize our net operating loss and other tax benefit carryforwards.

Federal and state tax laws impose restrictions on the utilization of net operating loss ("NOL") carryforwards and other tax attributes in the event of an "ownership change" as defined by Section 382 of the Code ("Section 382"). Generally, an "ownership change" occurs if the percentage of the value of the stock that is owned by one or more direct or indirect "five percent stockholders" increases by more than 50% over their lowest ownership percentage at any time during an applicable testing period (typically, three years). Under Section 382, if a corporation undergoes an "ownership change," such corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. While no "ownership change" has resulted in annual limitations, future changes in our stock ownership, which may be outside of our control, may trigger an "ownership change." In addition, future equity offerings or acquisitions that have equity as a component of the consideration could result in an "ownership change." Furthermore, the issuance of Common Stock upon the conversion of the 2027 Notes (in the event we elect to issue Common Stock upon any such conversions, rather than cash), may trigger an "ownership change." If an "ownership change" occurs in the future, utilization of our NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us. We have adopted a Section 382 Rights Agreement, discussed below, to protect our utilization of our NOL carryforwards and other tax attributes.

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We have entered into a Section 382 Rights Agreement, and if the share purchase rights issued pursuant to such agreement are exercised, it could materially and adversely affect the market price of our Common Stock.

We entered into a Section 382 Rights Agreement on April 6, 2020 (the "Rights Agreement"), with American Stock Transfer & Trust Company, LLC, a federally chartered trust company, as Rights Agent. The Rights Agreement is intended to discourage acquisitions of our Common Stock which could result in a cumulative "ownership change" as defined under Section 382, thereby preserving our current ability to utilize NOL carryforwards to offset future income tax obligations, which would become subject to limitations if we were to experience an "ownership change," as defined under Section 382. While the Rights Agreement is intended to preserve our current ability to utilize NOL carryforwards, it effectively deters current and future purchasers from accumulating more than 4.99% of our Common Stock, which could delay or discourage takeover attempts that our stockholders may consider favorable. An Acquiring Person, as defined in the Rights Agreement, that acquires 4.99% or more of our Common Stock could suffer substantial dilution of its ownership interest under the terms of the Rights Agreement through the issuance of Common Stock or common stock equivalents to all stockholders other than the Acquiring Person. In addition, if the share purchase rights issued pursuant to the Rights Agreement are exercised, additional shares of our Common Stock will be issued, which could materially and adversely affect the market price of our Common Stock. Moreover, sales in the public market of any shares of our Common Stock issued upon such exercise, or the perception that such sales may occur, could also adversely affect the market price of our Common Stock. These issuances may also cause our per share net income, if any, to decrease in future periods.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decrease the trading price of our Common Stock.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. These provisions provide for:

Amendment of provisions in our amended and restated certificate of incorporation and amended and restated bylaws regarding the election of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
Amendment of provisions in our amended and restated certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
Removal of directors only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote in the election of directors;
Our Board to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval, including in connection with our Rights Agreement;
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders;
Advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings;
A prohibition, in our amended and restated certificate of incorporation, stating that no holder of shares of our Common Stock will have cumulative voting rights in the election of directors, which means that the holders of majority of the issued and outstanding shares of our Common Stock can elect all the directors standing for election; and
Action by our stockholders outside a meeting, in our amended and restated certificate of incorporation and our amended and restated bylaws, only by unanimous written consent.

Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or a change in our management and Board and, as a result, may adversely affect the market price of our Common Stock and your ability to realize any potential change of control premium.

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Future offerings of debt securities, which would rank senior to our Common Stock upon our liquidation, and future offerings of equity securities, may be senior to our Common Stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our Common Stock.

We may raise additional capital through the issuance of debt or equity securities (including preferred stock) from time to time. Upon liquidation, holders of our debt securities (including holders of our 2027 Notes) and preferred stock and lenders with respect to other borrowings (including the lenders under our existing senior secured credit facility with Apollo) will be entitled to our available assets prior to the holders of our Common Stock. Preferred stock could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to pay dividends to the holders of our common stock. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our Common Stock bear the risk of our future offerings reducing the market price of our Common Stock and diluting the value of their stock holdings in us.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate headquarters are in McLean, VA, where we lease approximately 175,758 square feet. The lease provides for an initial term of 15 years with two five-year renewal options. We also have executive offices located in Pittsford, NY, where we lease approximately 25,870 square feet under a lease terminating in October 2022.

Our domestic facilities occupy approximately 9.5 million square feet in the aggregate, of which approximately 3.9 million square feet are leased from third parties. Many of our local media organizations also have outside news bureaus, sales offices, and distribution centers that are leased from third parties. A listing of publishing centers and key locations can be found in Item 1. Business, under "Major Publications and Markets We Serve." We own some of the plants that house most aspects of the publication process but in certain locations have outsourced printing or combined the printing of multiple publications.

Newsquest, our subsidiary headquartered in London, occupies approximately 0.9 million square feet in the U.K. spread over 70 locations. Of this, 0.2 million square feet (or 41 locations) are leased from third parties. Newsquest's owned premises include three printing facilities. A fourth printing facility is leased.

ReachLocal, our subsidiary headquartered in Woodland Hills, CA, has sales and other offices in 19 locations in 13 states - California, Colorado, Florida, Georgia, Louisiana, Maryland, Massachusetts, Minnesota, New York, North Carolina, Texas, Virginia, and Washington. Our UpCurve subsidiary has sales and other offices in two locations in California and Massachusetts. In addition, ReachLocal has 11 locations in four additional countries - Australia, Canada, India, and New Zealand. These properties, which total approximately 55,886 square feet, include leased buildings and data centers. Excluded from total square footage but included in location counts are serviced office spaces.

All of our material real properties owned by our material domestic subsidiaries are mortgaged as collateral for our 5-Year Term Loan. We believe our current facilities, including the terms and conditions of the relevant lease agreements, are adequate to operate our businesses as currently conducted.

ITEM 3. LEGAL PROCEEDINGS

Information regarding legal proceedings in connection with acquisition of Legacy Gannett may be found in Note 13 — Commitments, contingencies and other matters of the notes to the Consolidated financial statements, which is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock trades on the New York Stock Exchange (the "NYSE") under the trading symbol "GCI." As of February 19, 2021, there were approximately 4,707 holders of record of our Common Stock.

Dividends

On April 1, 2020, we announced that our Board of Directors determined that it is in the best interests of our stockholders for the Company to preserve liquidity by suspending our quarterly dividend. We presently have no intention to reinstate the dividend, and there can be no assurance that we will resume paying dividends on a regular basis. In addition, the terms of our indebtedness, including our credit facility, the 5-Year Term Loan, and the Indenture for the 2027 Notes have terms that restrict our ability to pay dividends.

Issuer Purchases of Equity Securities

See "Share Repurchase Program" in Note 12 — Supplemental equity information of the notes to the Consolidated financial statements.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a subscription-led and digitally focused media and marketing solutions company committed to empowering communities to thrive. We aim to be the premiere source for clarity, connections and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. The execution of this strategy is expected to allow the Company to continue its evolution from a more traditional print media business to a digitally focused content platform.

Until November 19, 2019, our corporate name was New Media Investment Group Inc. ("New Media") and Gannett Co., Inc. was a separate publicly traded company. On November 19, 2019, New Media completed its acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred to as "Legacy Gannett"). In connection with the acquisition, New Media changed its name to Gannett Co., Inc. and assumed Legacy Gannett's ticker symbol "GCI" (having previously traded under "NEWM"). As a result of the acquisition, historical results for 2019 represents legacy New Media’s results up to and through the date of the acquisition plus the new consolidated company’s results of operations for the approximately six-week period between the date of acquisition and the 2019 fiscal year end.

Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S. and Guam, and Newsquest, a wholly owned subsidiary operating in the United Kingdom ("U.K.") with more than 120 local news media brands. Gannett also owns the digital marketing services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream"), which are marketed under the LOCALiQ brand, and runs the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our local property network, and Newsquest, Gannett delivers high-quality, trusted content where and when consumers want to engage with it on virtually any device or platform. Additionally, the Company has strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite. The Company reports in two operating segments, Publishing and Digital Marketing Solutions ("DMS"). We also have a corporate and other category that includes activities not directly attributable to a specific operating segment and includes broad corporate functions such as legal, human resources, accounting, analytics, finance, and marketing. A full description of our operating segments is included in Note 14 — Segment reporting of the notes to the Consolidated financial statements.

A discussion regarding our results of operations and changes in financial condition for 2019 as compared to 2018 is included in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the "2019 Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on March 2, 2020, and is incorporated by reference herein.

Business Trends

We have considered several industry trends when assessing our business strategy:

Print advertising continues to decline as the audience increasingly moves to digital platforms. We look to optimize our print operations to efficiently manage for this declining print audience. We are focused on converting the growing digital audience into digital-only subscribers to our publications.
Small and medium-sized businesses ("SMBs") are facing an increasingly complex marketing environment and need to create digital presence to capture audience online. We offer a broad suite of DMS products that offer a single, unified solution to meet their digital marketing needs.
Consumers are looking for experience-based, emotional connections and communities. USA TODAY NETWORK Ventures was designed to celebrate local communities and create opportunities for meaningful in-person and virtual experiences.

When evaluating public company publishing peers for revenue trends, we include Legacy Gannett (and legacy New Media for the period when they were separate companies), Lee Enterprises, Inc., A. H. Belo Corporation, and Tribune Publishing Company. We have tracked average revenue trends for this peer group for 2018 – 2020 across the print advertising, digital
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advertising, and circulation categories, which is available through the third quarter of 2020. The COVID-19 pandemic had a significant impact on revenue trends across the industry during 2020, which we have described below:

Print advertising revenues were down 13%-19% annually prior to the pandemic, worsening to down 26%-47% during the second and third quarters of 2020;
Digital advertising revenues (which often includes digital marketing services products) performed between down 5% to up 5% annually prior to the pandemic. The majority of companies did not provide digital advertising breakouts during the second and third quarters of 2020; and
Circulation revenues were down 3%-10% annually prior to the pandemic, performing at the lower end of that range, down 9%, during the second and third quarters of 2020.

Certain matters affecting comparability

Reclassifications

Certain amounts in prior period consolidated financial statements have been reclassified to conform to the current year presentation. Pursuant to our acquisition of Legacy Gannett, in the fourth quarter of 2019 we realigned the presentation of marketing services revenues generated by our UpCurve subsidiary from Other revenues to Advertising and marketing services revenues on the Consolidated statements of operations and comprehensive income (loss). As a result of this updated presentation, Advertising and marketing services revenues increased and Other revenues decreased $58.2 million for the year ended December 30, 2018. Operating revenues, net income, retained earnings, and earnings per share remained unchanged.

Acquisitions

In November 2019, we acquired substantially all of the assets, properties, and business of Legacy Gannett for an aggregate purchase price of $1.315 billion. The acquisition was funded by a five-year, senior-secured term loan facility with Apollo Capital Management, L.P. ("Apollo") in an aggregate principal amount of approximately $1.792 billion (the "Acquisition Term Loan") and available cash on hand.

During 2019 prior to the acquisition of Legacy Gannett, we acquired substantially all the assets, properties, and business of certain publications and businesses (the "2019 Acquisitions"), including 11 daily newspapers, 11 weekly publications, nine shoppers, a remnant advertising agency, five events production businesses, and a business community and networking platform for an aggregate purchase price of $53.4 million, including estimated working capital. As part of one of the 2019 Acquisitions, we also acquired a 58% equity interest in the acquiree, and the minority equity owners retained a 42% interest, which has been classified as a redeemable non-controlling interest on the Consolidated statements of operations and comprehensive income (loss). The 2019 Acquisitions were financed from available cash on hand.

Dispositions

On October 30, 2020, we completed the sale of BridgeTower Media, LLC. As a result of the sale, we recognized a pre-tax gain of approximately $8.2 million, net of selling expenses which is included in Net (gain) loss on sale or disposal of assets on the Consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2020.

Integration and reorganization costs

For the year ended December 31, 2020, we incurred Integration and reorganization costs of $145.7 million. Of the total costs incurred, $86.3 million were related to severance activities and $59.4 million were related to other costs incurred to consolidate and streamline our operations in connection with the acquisition of Legacy Gannett and ongoing implementation of our plans to reduce costs and preserve cash flow, including a $30.4 million expense related to the early termination of the Amended and Restated Management and Advisory Agreement (the "Amended Management Agreement") with FIG LLC (the "Manager").

For the year ended December 31, 2020, we ceased operations of 40 printing facilities as part of the synergy and ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $49.6 million during the year ended December 31, 2020.

For the year ended December 31, 2019, we incurred Integration and reorganization costs of $52.2 million. Of the total costs incurred, $40.6 million were related to severance activities and $11.7 million were related to other costs incurred to streamline our operations.

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For the year ended December 31, 2019, we ceased operations of three printing publications and 12 printing operations as part of the ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $7.9 million during the year ended December 31, 2019.

Asset impairments

For the year ended December 31, 2020, we recognized Asset impairments of $11.0 million, primarily related to the Publishing segment as a result of the annual impairment analysis as well as fixed asset disposals related to the continued consolidation of operations and as a result of our recoverability test for long-lived asset groups performed as of June 30, 2020.

For the year ended December 31, 2019, we recognized Asset impairments of $3.0 million recorded within the Publishing segment as a result of fixed asset disposals.

Goodwill and intangible impairments

For the year ended December 31, 2020, we recognized $393.4 million of Goodwill and intangible impairments primarily due to the impact of the COVID-19 pandemic on the Company’s operations.

For the year ended December 31, 2019, we recognized $100.7 million in Goodwill and intangible impairments, as a result of softening business conditions which led to the decline in revenue projections that negatively impacted the fair value of our reporting units and newspaper mastheads.

Foreign currency

The Company's U.K. publishing operations are conducted through its Newsquest subsidiary. In addition, the Company's ReachLocal subsidiary has foreign operations in regions such as Canada, Australia/New Zealand and India. Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Translation fluctuations impact revenue, expense, and operating income results for international operations.

Outlook for 2021

Strategy

Our areas of strategic focus for 2021 include:

Accelerating digital subscriber growth

The broad reach of our newsroom network, linking leading national journalism at USA TODAY, our local property network in 46 states in the U.S. and Newsquest in the U.K. with more than 120 local media brands, gives us the ability to deepen our relationships with consumers at both the national and local levels. We bring consumers local news and information that impacts their day-to-day lives while keeping them informed of the national events that impact their country. We believe this local content is not readily obtainable elsewhere, and we are able to deliver that content to our customers across multiple print and digital platforms. As such, a key element of our consumer strategy is growing our paid digital-only subscriber base. We also expect to launch new digital subscription offerings tailored to specific users.

Driving digital marketing services growth by engaging more clients in a subscriber relationship

We are now of significant digital scale, with unique reach at both the national and local community levels. We expect to leverage our integrated sales structure and lead generation strategy to continue to aggressively expand our digital marketing services business into our local markets, both domestically and internationally. Given our extensive client base and volume of digital campaigns, we will also use data and insights to inform new and dynamic advertising products that we believe will deliver superior results.

Optimizing our traditional businesses across print and advertising

We will continue to drive the profitability of our traditional print operations through economies of scale, process improvements, and optimizations. We are focused on optimizing our pricing and improving customer service for our print
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subscribers. Print advertising continues to offer a compelling branding opportunity across our network due to our scale and unique reach at both the national and local community levels.

Prioritizing investments into growth businesses that have significant potential and support our vision

By leveraging our unique footprint, trusted brands, and media reach, we identify, experiment, and invest in potential growth businesses. USA TODAY NETWORK Ventures is a strong example of one such experiment that has grown significantly since its founding in 2015. During 2020, USA TODAY NETWORK Ventures was able to successfully pivot to hosting its events virtually, hosting over 250 events and maintaining 88% of USA TODAY NETWORK Venture's revenues compared to 2019 pro forma revenue performance.

Building on our inclusive and diverse culture to center around meaningful purpose, individual growth and customer focus

Inclusion, Diversity and Equity are core pillars of our organization and influence all that we do, from recruiting, development and retention, to day-to-day operations including hiring, onboarding, education, leadership training and professional development. We have published our inclusion goals for 2025 and our efforts underway to progress toward those goals and expect to publish our first workforce diversity report in the first quarter of 2021. We believe aligning our culture around empowering our communities to thrive and putting our customers at the center of everything we do will provide the foundation for our broader strategic efforts.

Impacts of COVID-19

The ongoing COVID-19 pandemic and related measures to contain its spread have resulted in significant volatility and economic uncertainty, which is expected to continue in the near term. While we have generally been exempt from mandates requiring closures of non-essential business and have been able to continue operations, these circumstances are expected to continue to create volatility and unfavorable trends in our financial results as individuals and businesses rationalize expenditures during this time of uncertainty.

During the year ended December 31, 2020, the Company experienced decreased demand for its advertising and digital marketing services, commercial print and distribution services, as well as reductions in events and the single copy and commercial distribution of its newspapers. The Company currently expects that the COVID-19 pandemic will continue to have a negative impact on the Company’s business and results of operations in the near-term. Longer term, the ultimate impact of the COVID-19 pandemic on the Company’s business and results of operations will depend on the severity and length of the pandemic, the duration and extent of the mitigation measures and governmental actions designed to combat the pandemic, as well as the changes in customer behavior as a result of the pandemic, all of which remain highly uncertain.

As a result, the Company has implemented, and continues to implement, measures to reduce costs and preserve cash flow. These measures include suspension of the quarterly dividend and refinancing of our debt, as well as reductions in discretionary spending. In addition, the Company has deferred certain payroll tax remittance as permitted under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and negotiated the deferral of pension contributions, as well as continuing with its previously disclosed plan to monetize non-core assets.

Seasonality

Our revenues are subject to moderate seasonality, due primarily to fluctuations in advertising volumes. Advertising and marketing services revenues for our Publishing segment are typically highest in the Company's fourth quarter, due to holiday and seasonal advertising, and lowest in the first quarter, following the holiday season. The volume of advertising sales in any period is also impacted by other external factors such as competitors' pricing, advertisers' decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand, and general economic conditions.

Recent Developments

Senior Secured Convertible Notes due 2027

On November 17, 2020, the Company entered into an Exchange Agreement (the "Exchange Agreement") with certain of the lenders (the "Exchanging Lenders") under the Acquisition Term Loan pursuant to which the Company and the Exchanging Lenders agreed to exchange $497.1 million in aggregate principal amount of the Company’s newly issued 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes") for the retirement of an equal amount of term loans under the Acquisition Term Loan (the "Exchange"). Following the Exchange, the outstanding balance under the Acquisition Term Loan as of December 31,
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2020 was $1.019 billion (the "Remaining Term Loan"). The 2027 Notes were issued pursuant to an Indenture (the "Indenture") dated as of November 17, 2020, between the Company and U.S. Bank National Association, as trustee. The Indenture, as supplemented by the Second Supplemental Indenture (the "Second Supplemental Indenture") dated as of February 9, 2021, between the Company and U.S. Bank National Association as trustee, includes affirmative and negative covenants that are substantially consistent with the 5-Year Term Loan, as well as customary events of default. Please see the disclosure below under "Liquidity and Capital Resources - Senior Secured Convertible Notes due 2027" and Note 8 — Debt for additional information regarding the 2027 Notes.

Termination of the Amended and Restated Management Agreement

For the year ended December 31, 2020, we were externally managed and advised by the Manager. On August 5, 2019, in connection with the entry into the agreement to acquire Legacy Gannett, the Company and the Manager entered into the Amended Management Agreement, which became effective upon the closing of the acquisition on November 19, 2019. On December 21, 2020, we entered into a Termination Agreement (the "Termination Agreement") with the Manager providing for the early termination of the Amended Management Agreement, effective at 11:59 p.m. Eastern Time on December 31, 2020. Upon termination of the Amended Management Agreement, the Manager ceased providing external management services to the Company, and the Manager no longer is the employer of the person serving in the role of Chief Executive Officer of the Company. In connection with the Termination Agreement, the Company made a one-time cash payment of $30.4 million to the Manager. In addition, all transfer restrictions contained in the Amended Management Agreement on shares of our Common Stock owned by the Manager, or acquired by the Manager upon the exercise of stock options to acquire Common Stock, lapsed. In connection with the termination of our relationship with the Manager, we extended offers of employment to certain employees of the Manager or its affiliates who provided services to the Company, including to our Chief Executive Officer. Certain indemnification and other obligations in the Amended Management Agreement survived the termination of our relationship with the Manager.

Term Loan Refinancing

On February 9, 2021, the Company entered into a five-year, senior-secured term loan facility with Citibank, N.A. in an aggregate principal amount of $1.045 billion (the "5-Year Term Loan"). The 5-Year Term Loan matures on February 9, 2026 and, at the Company's option, bears interest at the rate of the London Interbank Offered Rate plus a margin equal to 7.00% per annum or an alternate base rate plus a margin equal to 6.00% per annum. Accordingly, we are required to dedicate a substantial portion of cash flow from operations to fund interest payments. Please see the disclosure below under "Liquidity and Capital Resources - Term Loan Refinancing" and Note 16 — Subsequent events for additional information regarding the 5-Year Term Loan.

Special Meeting of Stockholders

At the special meeting of stockholders of the Company, held on February 26, 2021 (the "Special Meeting"), our stockholders approved, for purposes of Rule 312.03(c) of the New York Stock Exchange, of the issuance of the maximum number of shares of Common Stock issuable upon conversion of the 2027 Notes. Following receipt of the stockholder approval, the Company has the flexibility to settle conversion of the 2027 Notes with shares of Common Stock in full (rather than cash of an equivalent value).
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RESULTS OF OPERATIONS

Consolidated summary

The following table summarizes results of operations for the Company by segment for the years ended December 31, 2020 and 2019.
Year ended December 31,
In thousands, except per share amounts20202019Change% Change
Operating revenues:
Publishing$3,080,447 $1,792,652 $1,287,795 72 %
Digital Marketing Solutions428,605 149,242 279,363 ***
Corporate and other10,960 4,554 6,406 ***
Intersegment eliminations(114,342)(78,539)(35,803)46 %
Total operating revenues3,405,670 1,867,909 1,537,761 82 %
Operating expenses:
Publishing3,268,911 1,772,323 1,496,588 84 %
Digital Marketing Solutions481,177 164,023 317,154 ***
Corporate and other217,812 157,079 60,733 39 %
Intersegment eliminations(114,342)(78,539)(35,803)46 %
Total operating expenses3,853,558 2,014,886 1,838,672 91 %
Operating income (loss)(447,888)(146,977)(300,911)***
Non-operating (income) expense257,959 60,207 197,752 ***
Income (loss) before income taxes(705,847)(207,184)(498,663)***
Provision (benefit) for income taxes(33,450)(85,994)52,544 (61 %)
Net income (loss)$(672,397)$(121,190)$(551,207)***
Net loss attributable to redeemable noncontrolling interests(1,918)(1,348)(570)42 %
Net income (loss) attributable to Gannett$(670,479)$(119,842)$(550,637)***
Earnings (loss) per share attributable to Gannett - basic$(5.09)$(1.77)$(3.32)***
Earnings (loss) per share attributable to Gannett - diluted$(5.09)$(1.77)$(3.32)***
*** Indicates an absolute value percentage change greater than 100.

Intersegment eliminations in the preceding table represent digital marketing services revenues and expenses associated with products sold by our U.S. local publishing sales teams but which are fulfilled by our DMS segment. When discussing segment results, these revenues and expenses are presented gross and are eliminated in consolidation.

Operating revenues

Total Operating Revenues were $3.406 billion for the year ended December 31, 2020, an increase of $1.538 billion from 2019. Acquired revenues related to Legacy Gannett were $2.185 billion for the year ended December 31, 2020 compared to $299.2 million for the six-week period ended December 31, 2019.

For the Publishing segment, Operating revenues increased $1.288 billion, driven by higher Advertising and marketing services revenues of $511.9 million, including both print and digital, higher Circulation revenues of $687.2 million and higher Other revenues of $88.7 million. Advertising and marketing services revenues are generated by the sale of local, national, and classified print advertising products, digital advertising offerings such as digital classified advertisements, digital media such as display advertisements run on our platforms as well as third-party sites, and digital marketing services such as search advertising offered through and delivered by our DMS segment. Circulation revenues are derived principally from home delivery and single copy sales of our publications and distribution of our publications on our digital platforms. Other revenues are derived mainly from commercial printing and distribution arrangements and our events business.

For the DMS segment, Operating revenues increased $279.4 million, driven by higher Advertising and marketing services revenues of $280.9 million and lower Other revenues of $1.6 million. Our DMS segment generates 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, Google-suite offerings, and software-as-a-service solutions. Other revenues in our DMS segment are derived from systems integration services, cloud offerings, and software licensing.

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For the Corporate and Other category, Operating revenues increased $6.4 million, driven by higher Other revenues of $5.9 million. Other revenues at our Corporate and Other category are driven by third party newsprint sales.

Operating expenses

Total Operating expenses were $3.854 billion for the year ended December 31, 2020, an increase of $1.839 billion, compared to 2019. Operating expenses consist primarily of the following:

Operating costs at the Publishing segment include labor, newsprint and delivery costs and at the DMS segment include the cost of online media acquired from third parties and costs to manage and operate our marketing solutions and technology infrastructure;
Selling, general and administrative expenses include labor, payroll, outside services, and benefits costs;
Depreciation and amortization;
Integration and reorganization costs include severance charges and facility consolidation expenses as well as integration-related costs;
Acquisition related costs;
Impairment charges, including costs incurred related to goodwill, intangible assets and property, plant and equipment; and
Gains or losses on the sale or disposal of assets.

For the year ended December 31, 2020, Operating expenses at our Publishing segment increased $1.497 billion, reflecting an increase in Operating costs of $797.0 million, an increase in Selling, general and administrative expenses of $294.4 million, an increase in Depreciation and amortization of $119.9 million, an increase in Integration and reorganization costs of $37.4 million, an increase in Asset impairments of $7.3 million, and an increase in Goodwill and intangible impairments of $252.2 million, partially offset by an increase in the Gain on the sale or disposal of assets of $11.6 million.

For the year ended December 31, 2020, Operating expenses at our DMS segment increased $317.2 million, reflecting an increase in Operating costs of $177.6 million, an increase in Selling, general and administrative expenses of $72.8 million, an increase in Depreciation and amortization of $19.3 million, an increase in Integration and reorganization costs of $4.5 million, an increase in Goodwill and intangible impairments of $40.5 million, and an increase in the Loss on the sale or disposal of assets of $1.7 million.

For the year ended December 31, 2020, Operating expenses at Corporate and other an increase $60.7 million, due to an increase in Operating costs of $20.4 million, an increase in Selling, general and administrative expenses of $25.9 million, an increase in Depreciation and amortization expenses of $12.7 million, and an increase in Integration and reorganization costs of $51.7 million, partially offset by a decrease in Acquisition costs of $49.5 million.

Refer to the discussion of segment results below for further information.

Non-operating (income) expense

Interest expense: For the year ended December 31, 2020, Interest expense was $228.5 million compared to $63.7 million for 2019. The increase in interest expense was mainly due to a full year of interest expense on the Acquisition Term Loan in 2020 compared to 2019.

Loss on early extinguishment of debt: For the year ended December 31, 2020, Loss on early extinguishment of debt was $43.8 million compared to $6.1 million for 2019. The increase was mainly due to the Exchange of the Acquisition Term Loan in 2020.

Non-operating pension income: For the year ended December 31, 2020, Non-operating pension income was $72.1 million compared to $9.1 million for 2019. The increase in Non-operating pension income was primarily due to the increased expected return on plan assets held by the Gannett Retirement Plan (the "GR Plan") in excess of interest costs on benefit obligations compared to the prior year.

Unrealized loss on Convertible notes derivative: For the year ended December 31, 2020, Unrealized loss on Convertible notes derivative was $74.3 million, representing the increase in the fair value of the derivative liability as a result of the increase in the Company's stock price from the original issue date through December 31, 2020.

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Gain on sale of investments: For the year ended December 31, 2020, Gain on sale of investments was $8.0 million, compared to none for 2019. The increase in the Gain on sale of investments was due to the disposal of a cost-method investment held by the DMS segment during 2020.

Other non-operating items, net: Our non-operating items, net, are driven by certain items that fall outside of our normal business operations. For the year ended December 31, 2020, Non-operating items, net, was income of $8.5 million compared to $0.4 million in for 2019.

Provision (benefit) for income taxes

The following table summarizes our Income (loss) before income taxes and income tax accounts.
Year ended December 31,
In thousands20202019
Income (loss) before income taxes$(705,847)$(207,184)
Provision (benefit) for income taxes(33,450)(85,994)
Effective tax rate4.7 %41.5 %

Our effective tax rate for the year ended December 31, 2020, was 4.7%. The rate was primarily impacted by the tax effect of non-deductible asset impairments, non-deductible officers' compensation, disallowed loss on the Convertible notes derivative and the increase in valuation allowances against non-deductible interest expense and capital losses carryforwards. Without the federal and foreign valuation allowance activity, our effective tax rate would have been 18.5%, which is lower than the statutory rate primarily due to non-deductible asset impairments, nondeductible officers' compensation and disallowed loss on Convertible notes derivative. Our effective tax rate for the year ended December 31, 2019, was 41.5%. The rate was primarily impacted by the release of a valuation allowance for $46.9 million related to legacy New Media's U.S. federal deferred tax assets and federal net operating losses. If we do not have taxable income in future years, we may be required to reestablish a valuation allowance against our federal net operating loss deferred tax assets.

Net loss attributable to Gannett and diluted loss per share attributable to Gannett

For the year ended December 31, 2020, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were $670.5 million and $5.09, respectively, compared to $119.8 million and $1.77 for the year ended December 31, 2019, respectively. The change reflects the various items discussed above.

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Publishing segment

A summary of our Publishing segment results is presented below:
Year ended December 31,
In thousands20202019Change% Change
Operating revenues:
Advertising and marketing services$1,409,500 $897,585 $511,915 57 %
Circulation1,391,983 704,811 687,172 97 %
Other278,964 190,256 88,708 47 %
Total operating revenues3,080,447 1,792,652 1,287,795 72 %
Operating expenses:
Operating costs1,842,825 1,045,807 797,018 76 %
Selling, general and administrative expenses787,770 493,360 294,410 60 %
Depreciation and amortization221,746 101,881 119,865 ***
Integration and reorganization costs60,852 23,487 37,365 ***
Asset impairments10,312 3,009 7,303 ***
Goodwill and intangible impairments352,947 100,743 252,204 ***
Net (gain) loss on sale or disposal of assets(7,541)4,036 (11,577)***
Total operating expenses3,268,911 1,772,323 1,496,588 84 %
Operating income (loss)$(188,464)$20,329 $(208,793)***
*** Indicates an absolute value percentage change greater than 100.

Operating revenues

The following table provides the breakout of Total operating revenues by category:
Year ended December 31,
In thousands20202019Change% Change
Local and national print advertising$584,929 $477,707 $107,222 22 %
Classified print advertising316,392 211,099 105,293 50 %
Print advertising901,321 688,806 212,515 31 %
Digital media341,259 125,756 215,503 ***
Digital classified57,990 30,717 27,273 89 %
Digital marketing services108,930 52,306 56,624 ***
Digital advertising and marketing services508,179 208,779 299,400 ***
Advertising and marketing services1,409,500 897,585 511,915 57 %
Print circulation1,316,695 683,529 633,166 93 %
Digital-only circulation75,288 21,282 54,006 ***
Circulation1,391,983 704,811 687,172 97 %
Other278,964 190,256 88,708 47 %
Total operating revenues$3,080,447 $1,792,652 $1,287,795 72 %
*** Indicates an absolute value percentage change greater than 100.

The increase in Local and national print advertising revenues and Classified print advertising revenues was due to acquired revenues related to Legacy Gannett of $327.5 million and $174.3 million, respectively, for the year ended December 31, 2020 compared to $61.7 million and $23.1 million, respectively, for the six-week period ended December 31, 2019. Excluding the acquisition of Legacy Gannett, Local and national print advertising revenues and Classified print advertising revenues
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decreased $158.6 million and $45.9 million, respectively, for the year ended December 31, 2020. The decline in Print advertising was driven by secular industry trends and the negative impact of the COVID-19 pandemic on all categories. The decline in Local and national print advertising revenues was driven by lower advertising volume and a decline in advertiser inserts. Classified print advertising revenues declined due to reduced spend in legal, automotive and real estate classified advertisements.

The increase in Digital media, Digital classified and Digital marketing services revenues was due to acquired revenues related to Legacy Gannett, which were $266.0 million, $38.2 million and $75.7 million, respectively, for the year ended December 31, 2020 compared to $35.1 million, $5.7 million, and $10.4 million, respectively, for the six-week period ended December 31, 2019. Excluding the acquisition of Legacy Gannett, Digital media, Digital classified and Digital marketing services revenues decreased $15.5 million, $5.3 million and $8.6 million, respectively, for the year ended December 31, 2020 due to lower local digital media spend, a reduction in spend in automotive and employment classified advertisements and lower client counts for Digital marketing services, as well as the negative impact of the COVID-19 pandemic.

The increase in Print circulation revenues and Digital-only circulation revenues was due to acquired revenues related to Legacy Gannett of $801.8 million and $55.3 million, respectively, for the year ended December 31, 2020 compared to $102.4 million and $4.9 million, respectively, for the six-week period ended December 31, 2019. Excluding the acquisition of Legacy Gannett, for the year ended December 31, 2020, Print circulation revenues decreased $66.3 million due to declines driven by a reduction in the volume of home delivery due to subscriber declines and single copy sales, reflecting the impact of COVID-19 on businesses that buy and sell copies of our publications and Digital-only circulation revenues increased $3.6 million due to an increase in digital only subscribers. Digital-only subscribers for the total company increased 29% to approximately 1.1 million as of December 31, 2020.    

The increase in Other revenues was due to acquired revenues related to Legacy Gannett which were $156.2 million for the year ended December 31, 2020 compared to $21.0 million for the six-week period ended December 31, 2019. Excluding the acquisition of Legacy Gannett, Other revenues decreased $46.5 million due to declines in the commercial print and delivery business as a result of the overall secular trends and the COVID-19 pandemic as well as the absence of revenues related to the disposition of BridgeTower Media LLC in the fourth quarter of 2020.

Operating expenses

For the year ended December 31, 2020, Operating costs increased $797.0 million. The following table provides the breakout of the increase in Operating costs:
Year ended December 31,
In thousands20202019Change% Change
Newsprint and ink$130,912 $100,911 $30,001 30 %
Distribution406,784 185,256 221,528 ***
Compensation and benefits629,643 348,744 280,899 81 %
Outside services333,435 149,020 184,415 ***
Other342,051 261,876 80,175 31 %
Total operating costs$1,842,825 $1,045,807 $797,018 76 %
*** Indicates an absolute value percentage change greater than 100.

For the year ended December 31, 2020, Newsprint and ink costs increased $30.0 million as a result of acquired newsprint and ink costs related to Legacy Gannett operations. The Company's Newsprint and ink benefited $32.7 million from declines in print circulation and print advertising volumes, lower paper prices, and page count reductions driven by efficiency initiatives in printing operations.

For the year ended December 31, 2020, Distribution costs increased $221.5 million due to higher acquired hauling and delivery costs. The Company's Distribution costs benefited $14.1 million from declines in print circulation and print advertising volumes.

For the year ended December 31, 2020, Compensation and benefits increased $280.9 million due to costs related to Legacy Gannett operations. The Company's Compensation and benefits benefited $66.3 million from cost-containment initiatives implemented in connection with the COVID-19 pandemic and ongoing integration efforts, including employee furloughs and headcount reductions.

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For the year ended December 31, 2020, Outside services, which includes outside printing, professional and outside services, paid search and ad serving, feature services, and credit card fees, increased $184.4 million due to acquired costs associated with the Legacy Gannett operations. Outside services benefited $8.0 million as a result of declines in activity driven by lower revenues and cost containment initiatives, as well as a decline in third-party printing activity.

For the year ended December 31, 2020, Selling, general and administrative expenses increased by $294.4 million. The following table provides the breakout of the increase in Selling, general and administrative expenses:
Year ended December 31,
In thousands20202019Change% Change
Compensation and benefits$396,017 $269,825 $126,192 47 %
Outside services45,972 35,780 10,192 28 %
Other345,781 187,755 158,026 84 %
Total selling, general and administrative expenses$787,770 $493,360 $294,410 60 %

For the year ended December 31, 2020, Compensation and benefits costs increased $126.2 million due to acquired costs associated with the acquisition of Legacy Gannett. Overall, Compensation and benefits benefited $54.9 million from cost-containment initiatives implemented in connection with the COVID-19 pandemic and ongoing integration efforts, including employee furloughs and headcount reductions.

For the year ended December 31, 2020, Outside services costs, which include outside printing as well as professional and outside services, increased $10.2 million due to acquired costs. Outside services benefited $10.0 million from declines in activity and cost containment initiatives.

For the year ended December 31, 2020, Other costs increased $158.0 million due to acquired costs and benefited $14.3 million from declines in activity and cost containment initiatives.

For the year ended December 31, 2020, Depreciation and amortization expense increased $119.9 million compared to 2019, due to acquired property and intangible assets from the Legacy Gannett acquisition, an increase in accelerated depreciation of $41.7 million as a result of ongoing cost-reduction programs and an increase in the number of printing facilities closed in 2020 compared to 2019.

For the year ended December 31, 2020, Integration and reorganization costs increased $37.4 million compared to 2019 due to an increase in severance costs of $36.1 million driven by our voluntary severance program and our plan to outsource certain processes to a third party, as well as the continued consolidation of our operations as a result of the ongoing implementation of our plans to reduce costs and preserve cash flow.

For the year ended December 31, 2020, Asset impairments increased $7.3 million compared to 2019, due to an increase in the number of printing facilities closed in 2020 compared to 2019.

For the year ended December 31, 2020, Goodwill and intangible impairments increased $252.2 million compared to 2019, due to the write-off of Goodwill and Indefinite-lived intangible assets during 2020 as a result of the impact of the COVID-19 pandemic on our operations.

For the year ended December 31, 2020, the increase in the Gain on the sale or disposal of assets of $11.6 million was driven by gains related to the sale of assets in 2020, including BridgeTower Media, LLC, compared to losses incurred in 2019 related to various asset sales.

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Publishing segment Adjusted EBITDA
Year ended December 31,
In thousands20202019Change% Change
Net income (loss) attributable to Gannett$(108,606)$22,523 $(131,129)***
Interest expense142 123 19 15 %
Non-operating pension income(71,858)(2,486)(69,372)***
Gain on sale of investments(195)— (195)***
Other non-operating (income) expense, net(6,029)1,517 (7,546)***
Depreciation and amortization221,746 101,881 119,865 ***
Integration and reorganization costs60,852 23,487 37,365 ***
Asset impairments10,312 3,009 7,303 ***
Goodwill and intangible impairments352,947 100,743 252,204 ***
Net (gain) loss on sale or disposal of assets(7,541)4,036 (11,577)***
Other items7,425 14,083 (6,658)(47 %)
Adjusted EBITDA (non-GAAP basis)$459,195 $268,916 $190,279 71 %
*** Indicates an absolute value percentage change greater than 100.

For the year ended December 31, 2020, Adjusted EBITDA for our Publishing segment increased 71% compared to 2019 primarily attributable to acquired Adjusted EBITDA for Legacy Gannett and ongoing operating efficiencies, offset by lower demand beginning near the end of the first quarter of 2020, which was impacted by the ongoing economic effects of COVID-19.

Digital Marketing Solutions segment

A summary of our Digital Marketing Solutions segment results is presented below: