Gannett's AI Pivot: Can Technology Turn the Tide for a Media Giant?

Cyrus ColeWednesday, Jun 11, 2025 3:03 pm ET
26min read

Gannett Co., Inc. (NYSE: GCI), the owner of USA Today and over 200 local newspapers, has long been a bellwether for the struggles of traditional media in the digital age. A decade of declining print ad revenue, stagnant subscriptions, and a $1.23 billion debt burden from its 2019 merger with GateHouse Media have left the company's stock trading at near-decade lows. But a new chapter is emerging under Chief Technology and Data Officer Joe Miranda, whose AI-driven digital transformation strategy could position

to reverse its fortunes—and unlock significant undervalued equity.

The AI-Driven Playbook: From Summaries to Subscriptions

Miranda's vision, announced in June 2025, centers on AI as a productivity multiplier, not a replacement for journalists. The most visible initiative is DeeperDive, an AI-powered answer engine launched on USA Today's website. This tool uses natural language processing to generate interactive summaries, contextual deep dives, and personalized recommendations, enhancing reader engagement while creating new revenue streams via targeted ads and subscription upsells.

Beyond DeeperDive, Gannett is piloting AI tools to streamline content creation. For instance:
- AI Summarization: Trained on 1,000+ human-crafted summaries, the system generates bullet points or photo captions for articles, freeing journalists from repetitive tasks.
- Format Adaptation: Tools convert long-form stories into shorter formats (e.g., slideshows) for social platforms, boosting cross-channel reach.

Crucially, all outputs undergo human editorial review to avoid AI's “hallucination” pitfalls—a cautious approach that aligns with industry best practices seen at Reuters and The New York Times. This balance between efficiency and accountability addresses unionized journalists' concerns about job displacement, positioning AI as a collaborator rather than a competitor.

Financials: A Bottom-Up Turnaround

Gannett's first-quarter 2025 results underscore the urgency of this pivot. Operating revenue dropped 10.1% year-over-year to $571.6 million, while the net loss narrowed to $77 million—a modest improvement but still a red flag. However, Miranda's initiatives tie directly to two key pain points: cost efficiency and digital revenue growth.

The strategy's financial logic is clear:
1. Cost Reduction: AI automation could cut redundancies in content production, offsetting labor costs while retaining skilled journalists.
2. Revenue Upside: DeeperDive's interactivity could boost subscription conversion rates, while data-driven ad targeting improves yield.
3. Debt Management: Proceeds from asset sales (e.g., the Austin American-Statesman) reduce leverage, easing refinancing risks.

Analysts at JMP Securities have taken notice, assigning a “Market Outperform” rating with a $6 price target—a 50% premium to its June 2025 price of $4. Their thesis hinges on AI licensing agreements and subscription price hikes, which could add $100 million+ in annual revenue by 2026.

Risks and the Bear Case

Despite the promise, skepticism remains. Gannett's stock has languished for years due to execution missteps, including prior tech investments that failed to scale. The AI initiatives face hurdles:
- Adoption Barriers: Readers may resist interactive formats if they disrupt the “lean back” news experience.
- Competitor Race: Larger players like Meta and Alphabet are already deploying AI at scale, potentially crowding Gannett out of the innovation space.
- Labor Pushback: While AI is framed as a tool, union demands for job guarantees could strain budgets.

Investment Thesis: A Speculative Buy with High Upside

Gannett's valuation is deeply discounted relative to its asset base. With a market cap of $1.2 billion and $700 million in cash, the stock trades at roughly 6x EBITDA—a historic low. If Miranda's AI strategy achieves even a fraction of its targets—say, a 5% revenue rebound by 2026—Gannett could re-rate to 8-10x EBITDA, lifting the stock to $7-$9.

The risks are real, but the reward-to-risk ratio is compelling for investors willing to bet on a turnaround. Gannett's localized news network and USA Today's brand remain unmatched assets, and the cautious AI rollout minimizes the “bet the company” risk seen in bolder tech gambles.

Actionable Takeaway: Consider accumulating Gannett shares at current levels, with a 12-18 month horizon. Set a stop-loss at $3.50 and aim for a $7 target, with upside to $9 if AI adoption exceeds expectations. Monitor Q3 2025 earnings for early signs of DeeperDive's impact on engagement and ad revenue.

In a media landscape where “free content” has eroded profitability, Gannett's AI pivot is a bold experiment to turn data and automation into a sustainable advantage. For investors, it's a high-risk, high-reward bet on whether old media can truly reinvent itself—or if it's destined to remain a relic of the analog era.