In a report to stockholders filed Tuesday with the SEC, Reed outlined his five-point initiative for transforming the company, which owns The Carthage Press, Neosho Daily News, Pittsburg Morning Sun, and more than 300 newspapers across the United States. The text of the report is printed below.
The beginning of 2011 started with considerable uncertainty surrounding the U.S. economy. It was not unusual to hear commentators and economic pundits talk about the possibility of a “double-dip” recession. While the economy did shrug off some first quarter jitters and is beginning to show some signs of life, the recovery has been slow.
Our year mirrored the overall economic trend. We started out of the gate a little slower than we expected but finished the year on a strong note. Total revenues were $525.8 million for the full year, a decrease of 5.9% over the prior year and 6.7% on a same reporting period basis, as we continued to face headwinds on both the secular and economic fronts. Our trends showed improvement throughout the year and we were encouraged by the improvements we saw across many of our revenue categories as the year came to a close. The broad-based improvement in the fourth quarter resulted in revenue declines of 4.8%, our best comparison of the year.
Our digital revenues grew a healthy 23.5% in 2011 on a same reporting period basis. Our digital initiatives continue to drive total audience growth as well, as we saw increases in average monthly unique visitors and average monthly page views in 2011 while also implementing pay meters on many of our sites in the second half of the year. We also saw our mobile audience grow significantly as we rolled out mobile web platforms. At GateHouse Media, we continue to believe it is critical that we remain focused on producing and providing the highest quality content across multiple platforms.
We remained vigilant in implementing additional permanent expense reductions and resource realignment toward growth opportunities. Our efforts on the expense front helped to offset some of the revenue declines and we continue to evaluate centralization and outsourcing opportunities to develop a more efficient operating model. Full year 2011 operating costs and SG&A expense declined $25.5 million or 5.5% compared to the prior year, and 6.4% on a same reporting period basis.
As Adjusted EBITDA for the year was $90.4 million, a decrease of $8.6 million or 8.7% on a same reporting period basis. I was encouraged that the overall As Adjusted EBITDA trends improved during the year and particularly our fourth quarter where we generated $32.9 million of As Adjusted EBITDA, with a margin of 22.9%. This represented growth over the prior year of 4.3% and was also our largest quarter in terms of As Adjusted EBITDA since the third quarter of 2008.
While I believe we delivered solid performance under the current operating environment, 2011 may best be known as the year we laid the foundation for a major transformation at GateHouse Media. Recently, we embarked on a strategic initiative to reevaluate our traditional business model and transform the company into a truly multi-media enterprise. This project resulted in five major transformational initiatives that address long-term structural and organizational issues and that we believe will enable us to evolve into a local multi-media company better positioned for growth. The five fundamental initiatives are:
|1.||Accelerate digital growth in terms of both revenue and audience.|
|2.||Grow consumer revenues, including circulation, in both print and digital through new products, new services and pricing strategies.|
|3.||Preserve the power of print by stabilizing our print advertising revenue and improving the value of our products.|
|4.||Drive permanent structural cost reduction and realignment to fund growth and innovation.|
|5.||Develop and launch new businesses by leveraging our core strengths and being positioned to grow beyond our existing footprint.|
By repositioning our operations and organizational structure, we believe we can best align our resources and focus on the opportunities that present the most potential for growth. This effort includes a leaner, more vertical management design, a lower cost structure, more efficient processes and the alignment of leadership skill sets with the best growth opportunities. We are excited about the progress being made to date in these areas.
We are starting to see some positive changes in our trends since we began rolling out these initiatives in late 2011. I am pleased with the implementation of a more structured approach to many of the functional areas of our business and the impact it is having on our results. We also adopted a new company-wide organizational structure in January 2012 that we believe is better aligned to support our new initiatives.
In 2011, many hours were spent analyzing and evaluating the needs of the organization by a diverse group of individuals from all areas of the GateHouse Media organization. In 2012, we will be focusing on implementing and executing on the plans developed. There is still much work to be done, but I am confident that we are heading in the right direction. I want to thank all of our employees for their continued commitment to GateHouse Media as we go through this transformation.