Gannett and Web P.R. 2.0

What's a little 10-Q filing between friends?

Normally, not much. But Gannett's 10-Q filed on Thursday got people thinking.

There it was in section 10.1, something called a Transitional Compensation Plan. It takes a Big Four accounting firm to decipher, but Gannett is making changes to what happens to "key executives'" compensation in event of a change of control.

To quote the lead-in:

As is the case with most publicly held corporations, the possibility of a Change in Control (as defined below) of the Company exists, and that possibility, and the uncertainty and questions which it may raise among key executives concerning future employment, may result in the departure or distraction of key executives, to the detriment of the Company and its stockholders.

The filing then goes on to change the definition of change of control, lowering it apparently to an acquisition of 20% or more of the company's stock. Then it provides protections around key execs' salary, bonuses and stock options.

When the news of the filing hit the web, analysts and reporters were stumped, trying to find their decoder rings. By Friday, Gannett spokesperson Tara Connell had issued a release describing
the changes as routine, saying the idea was to "modernize language to a plan that has been in existence since 1990." Also, on Friday, Gannett CEO Craig Dubow issued a release, picked up here by Jim Romenesko, to Gannett employees, saying:

We updated plans that already were in effect. Actually, our plan for dealing with a change of control has been in place since 1990. It's been amended on occasion before and reported on over the years.

So, stand down. Relax. Gannett - along with the media industry - is facing some tough times but we are actively and aggressively moving forward with our strategic plan. We are seeing success and creating more of it everyday.

Okay, point well taken. But Dubow plainly can understand the heightened nerves of everyone in and around the press these days. Especially since a question emerging on many lips -- post Knight Ridder sale, post Tribune sale agreement, post Dow Jones sale agreement -- is: "What About Gannett?"

To the company's credit it has moved decisively and wholly, embracing newsroom restructuring and announcing on Friday a company-wide mobile plan. Kudos on both of those, as all involved work through tough execution issues.

But the question of what about Gannett still holds? Look at its financials. It is broadly doing a tad better than the industry overall, and it is known as a tough, margin-oriented operator. But classifieds revenue still fell 7.5% in the second quarter, while retail fell 5%. Online growth slowed to 12%. Those numbers mean that Gannett is facing the same mountain everyone else is.

How is America's largest newspaper company (and a major player in the U.K. with Newsquest) going to weather the intensifying storm? How is the company planning on girding itself for decreased cash flows? How is the heavily-dependent-on-newspaper-revenue company going to further diversify?

So of course there was lots of attention to the SEC filing, innocuous or not. (And isn't the 20% change of control trigger low by industry standards?)

Beyond that, it's a good lesson for Gannett and others in old media. They may be Media 1.0 but they live in Web P.R 2.0 Land with the rest of us.

Web P.R. 2.0 Land means at least a couple of things here:

Timing: Companies need to anticipate that previously unscrutinized doings will get scrutiny and immediately. In this case, given the words "change of control" and "transitional", we can now anticipate that alarm bells may go off. It's worth it for companies to get ahead of the curve, explaining their actions as they do it, rather than having to react to the reaction. It's not surprising Gannett didn't do that; it hasn't been necessary or useful until recently. But it's a good lesson for Gannett and other public news companies going forward. If you've got a clear message you want out -- in this case, reassurance -- do it, before questions are raised. A new bible for news p.r. people and others is David Scott's "New Rules of Marketing and PR," published recently. It lays out those new rules in handbook form.

Optics: Instantaneous web reaction also means companies need to understand how their actions look. In Craig Dubow's statement to employees, he reassures. But he doesn't note why Gannett felt the need to change its bylaws to further and better protect "key executives", but not apparently others among its thousands of employees. Amid buyouts and layoffs, Gannett employees are less concerned about stock options than they are about salaries, pension protection and health care. They read in their own papers that they'll be living longer and yet if they lose their jobs as the industry slumps, their chances of ever getting another professionally paying job are dropping by the week. So while it's well and good to protect the top brass, what do you think the bylaw change looks like to the rest of the company?

Call it poor optics, especially when you're under the microscope.

Comments

[muckraker]

Why do you give a blanket "congratulaions" comment to Gannett for its newsroom restructuring plans. As an insider, I can tell you some of it makes much (but very belated) sense; but much of it also is window dressing to make it look like they have a plan for the future. It's mostly B.S. And in the meantime they are losing lots and lots of excellent reporters, because quality journalism is no longer valued. Gannett still does not believe that quality sells.