Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934
(Amendment No. )
☐ Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of
its filing.
MNG Enterprises, Inc.,
together with the other participants in the solicitation (collectively, “MNG”), has filed a definitive proxy statement
and an accompanying BLUE proxy card with the Securities and Exchange Commission to be used to solicit proxies for the election
of its slate of director nominees at the 2019 annual meeting of stockholders of Gannett Co., Inc., a Delaware corporation.
Sends Letter to Gannett Shareholders
Soliciting Votes on the BLUE Proxy Card for ALL THREE MNG Nominees: Heath Freeman, Dana Needleman, Steven Rossi
Reaffirms That MNG Nominees Will
Serve as Immediate Catalyst for Change; Seek to Maximize Value for All Gannett Shareholders; Support A Full Review of Strategic
Alternatives
Believes Only Chance to Increase
Gannett’s Stock Price is by Electing ALL THREE MNG Nominees to the Board
May 9, 2019 – Denver, CO –
MNG Enterprises,
Inc. (“MNG”), owner and operator of one of the largest newspaper businesses in the U.S. and the largest active shareholder
in Gannett Co., Inc. (NYSE:GCI) (“Gannett” or the “Company”), with an approximate 7.4% ownership interest,
has mailed a letter to its fellow Gannett shareholders, urging them to vote on the
BLUE
Proxy card for MNG’s
three highly qualified director nominees.
MNG believes that the election of
ALL THREE
of
MNG’s nominees is needed to send a clear message to the incumbent directors that the status quo is not acceptable, and the
Board needs to explore all possible ways to enhance value for all Gannett shareholders.
The full text of the letter, which outlines the need for change
at Gannett, follows.
May 8, 2019
Dear Fellow Gannett Shareholders:
MNG ENTERPRISES URGES GANNETT SHAREHOLDERS:
VOTE FOR
CHANGE
NOW!
The annual meeting of shareholders of
Gannett Co., Inc. (“Gannett” or the “Company”) to be held on May 16, 2019 offers you a clear choice: either
endorse the Company’s current board of directors (the “Board”) and Gannett’s status quo, with its prolonged
underperformance since its 2015 spin-off and its risky, unproven and unprofitable “digital transformation”,
1
OR vote on the
BLUE
Proxy card for
ALL THREE
of MNG’s highly qualified director nominees who
will serve as an immediate catalyst for change to maximize value for all Gannett shareholders, including by supporting a full review
of strategic alternatives.
The choice is clear:
MNG NOMINEES: “VALUE CATALYST”
|
·
|
Support immediately commencing a full
review of strategic alternatives to maximize value for all shareholders
|
|
·
|
MNG’s premium $12/share cash offer
to acquire Gannett
|
|
·
|
All other offers duly considered
|
|
·
|
New perspective on running core business
profitably and sustainably
|
|
·
|
Moratorium on overpriced and value-destructive
digital acquisitions
|
GANNETT INCUMBENTS: “STATUS QUO”
|
·
|
Core business in decline
|
|
·
|
Continuing underperformance in Q1 with
no end in sight – additional declines projected for 2019
|
|
·
|
Failure to adequately explore premium
cash acquisition offer
|
|
·
|
Risky, unproven and unprofitable “digital
transformation” strategy
|
|
·
|
Leadership void: no CEO and departure
of the head of ReachLocal in early 2019
|
|
·
|
Increased leverage since 2015 spin-off
2
|
THE VERDICT IS IN:
THE INCUMBENT BOARD’S DIGITAL
TRANSFORMATION STRATEGY HAS FAILED TO GENERATE PROFITABLE GROWTH AND CONTINUES TO DESTROY VALUE FOR GANNETT SHAREHOLDERS
Gannett’s most recent earnings announcement
confirms what MNG has been saying all along – that Gannett is an underperformer and its multi-year “digital transformation”
is not working and extremely unlikely to produce a $12 per share valuation. Gannett’s key performance metrics have continued
to worsen and the Company’s performance since its 2015 spin-off looks even worse given Gannett’s first quarter 2019
results. This includes:
|
·
|
Net Income is down 98% since spin-off;
3
|
|
·
|
Diluted Earnings Per Share is down 98%
since spin-off;
3
|
|
·
|
Operating Income is down 90% since spin-off;
3
and
|
|
·
|
Free Cash Flow is down 66% since spin-off.
3
|
Gannett’s supposed panacea –
its “digital transformation” – is highly risky and, in the words of Institutional Shareholder Services, Inc.
(“ISS”), “yet to bear fruit.” As ISS stated in its report:
4
“Moreover, it is worth noting that
GCI's digital transformation has yet to bear fruit, as evidenced by the fact that ReachLocal has had operating expenses in excess
of revenue every year since FY2016
, while the publishing segment's operating income and operating margin have declined since
2016 (despite digital sources accounting for a larger proportion of the segment's revenue mix) – these factors, along with
the earnings and revenue miss in February, suggest that there is
execution risk inherent in the standalone plan
.”
(emphasis added).
4
We believe Gannett is acting like a 1990s
dot.com internet company, touting clicks, eyeballs and selling cheap digital subscriptions instead of focusing on what truly drives
value – profitability. We believe there is little reason to believe that Gannett’s digital transformation strategy
will turn things around at Gannett, or that Gannett has the leadership team in place to execute that strategy. Starting May 7
th
,
Gannett is without a CEO and is run by a newly appointed interim COO with a predominantly legal (rather than operational) background.
Gannett’s struggles were chronicled just days ago in
The Wall Street Journal
,
5
which wrote:
“Local papers have suffered sharper
declines in circulation than national outlets and greater incursions into their online advertising businesses from tech giants
such as Alphabet Inc.’s Google and Facebook Inc.
The data also shows that they are having a much more difficult time converting
readers into paying digital customers… Gannett, which has a big audience across its local papers, is especially inefficient,
converting just 0.4% of its digital audience into paying subscribers
, according to the Journal’s analysis of digital
audience and subscription data.” (emphasis added).
5
THE BEST WAY TO ENSURE MUCH-NEEDED CHANGE
AT GANNETT
IS TO VOTE FOR
ALL THREE
MNG NOMINEES
We appreciate that leading shareholder
advisory firm ISS has recognized the need for change at Gannett. But to truly bring about change, it is imperative that shareholders
vote the
BLUE
card for
ALL THREE
of MNG’s nominees –
Heath Freeman, Dana Needleman and
Steven Rossi
. The election of
ALL THREE
of MNG’s nominees is needed to send a clear message to the incumbent
directors that the status quo is not acceptable, and the Board needs to explore all possible ways to enhance value for all Gannett
shareholders. Without the election of
ALL THREE
of MNG’s nominees, the incumbent directors may continue to
resist any change to the Company’s current strategy, despite severe declines in profitability and value destruction since
Gannett’s 2015 spin-off.
VOTE THE
BLUE
CARD FOR
FREEMAN,
NEEDLEMAN & ROSSI
MNG’s nominees will be strong advocates
for change and have the right mix of newspaper turnaround, real estate, and capital allocation expertise to improve the Gannett
Board; would provide the objective perspective, experience and oversight required to put Gannett on the path to a profitable and
sustainable future; and are committed to maximizing value for all Gannett shareholders now before further value is destroyed.
MNG’s nominees are committed to
listening to all Gannett shareholders and exploring all possible ways to enhance value at Gannett. As seen by MNG’s switch
to a minority slate that was based on feedback from other Gannett shareholders who wanted meaningful Board change but also wanted
to preserve continuity at the Board, MNG and its nominees embrace and respect the views of all Gannett shareholders. Our sole focus
is to maximize value for all shareholders, and if elected, our three nominees will aim to serve as a true shareholder voice on
the Gannett Board.
Sincerely,
/s/ R. Joseph Fuchs
On behalf of the Board of Directors, MNG Enterprises, Inc.
Chairman, R. Joseph Fuchs
Okapi Partners LLC is assisting us with
the solicitation of proxies. If you have any questions or require assistance in authorizing a proxy or voting your shares of Common
Stock, please contact:
Okapi Partners LLC
1212 Avenue of the Americas, 24
th
Floor
New York, New York 10036
(212) 297-0720 (Main)
Stockholders Call Toll-Free: (888) 785-6668
Email: info@okapipartners.com
www.SaveGannett.com
We encourage all shareholders
to carefully review
this letter
to understand
more about why change is needed now and why MNG’s nominees are best positioned to Save Gannett. Additional information about
MNG, its proposal to acquire Gannett, and its nominees is available at
www.SaveGannett.com
.
We urge all shareholders to
VOTE THE
BLUE
CARD “FOR” MNG’s independent slate of Director Nominees
.
Your vote is important, no matter how
many shares you own!
Please remember NOT TO RETURN the Company’s WHITE PROXY
CARD! If you return a Gannett proxy card – even by simply indicating “withhold” on the Company’s slate
– you will revoke any vote you had previously submitted for the MNG nominees on the BLUE proxy card.
Moelis & Company LLC is acting as
financial advisor to MNG. Akin Gump Strauss Hauer & Feld LLP and Olshan Frome Wolosky LLP are serving as its legal counsel.
Okapi Partners LLC is acting as MNG’s proxy solicitor.
About MNG Enterprises
MNG Enterprises, Inc. is one of the largest
owners and operators of newspapers in the United States by circulation, with approximately 200 publications including The Denver
Post, The Mercury News, The Orange County Register and The Boston Herald. MNG is a leader in local, multi-platform news and information,
distinguished by its award-winning original content and high quality, diversified portfolio of both print and local news and information
web sites and mobile apps offering rich multimedia experiences across the nation. For more information, please visit www.medianewsgroup.com.
Additional Information
MNG Enterprises, Inc., together with the
other participants in its proxy solicitation (collectively, “MNG”), have filed a definitive proxy statement and an
accompanying BLUE proxy card with the Securities and Exchange Commission (the “SEC”) to be used to solicit votes for
the election of MNG’s slate of highly-qualified director nominees at the 2019 annual meeting of stockholders (the “Annual
Meeting”) of Gannett Co., Inc. (the “Company”). Stockholders are advised to read the proxy statement and any
other documents related to the solicitation of stockholders of the Company in connection with the Annual Meeting because they contain
important information, including additional information relating to the participants in MNG’s proxy solicitation. These materials
and other materials filed by MNG in connection with the solicitation of proxies are available at no charge on the SEC’s website
at www.sec.gov. The definitive proxy statement and other relevant documents filed by MNG with the SEC are also available, without
charge, by directing a request to MNG’s proxy solicitor, Okapi Partners LLC, at its toll-free number (888) 785-6668 or via
email at info@okapipartners.com.
MEDIA CONTACT:
Reevemark
Paul Caminiti / Hugh Burns / Renée Soto
+1 212.433.4600
MNGInquiries@reevemark.com
INVESTOR CONTACT:
Okapi Partners LLC
Bruce Goldfarb/Pat McHugh
+ 212.297.0720
info@okapipartners.com
1
Since spin-off, Gannett has spent $350mm on digital acquisitions while diluted EPS has declined 98% (represents decline in trailing
12 months diluted EPS from June 28, 2015 to March 31, 2019).
2
Gannett moved from a net cash position of $62mm as of June 28, 2015 to a net debt position of $211mm as of March 31, 2019.
3
Changes in Gannett financial results since its 2015 spin-off from its former parent company reflect changes in trailing 12-month
financials from June 28, 2015 to March 31, 2019.
4
Gannett Co., Inc. – ISS report published on May 2, 2019; permission to quote from report was neither sought nor obtained.
5
In News Industry, a Stark Divide Between Haves and Have-Nots
,
Local newspapers are failing to make the digital
transition larger players did — and are in danger of vanishing
, Keach Hagey, Lukas I. Alpert and Yaryna Serkez, Wall
Street Journal, 4 May 2019.