10-K 1 d143702d10k.htm FORM 10-K Form 10-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 27, 2015

OR

 

¨ 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

New Media Investment Group 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.)

1345 Avenue of the Americas,

New York, New York

 

10105

(Address of principal executive offices)   (Zip Code)

Telephone: (212) 479-3160

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each class:

 

Name of each exchange on which registered:

Common stock, par value $0.01 per share   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  x    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  x

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  x

   Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting common equity held by non-affiliates of the registrant on June 28, 2015, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $795.9 million. The market value calculation was determined using a per share price of $18.23, the price at which the registrant’s common stock was last sold on the New York Stock Exchange on such date. For purposes of this calculation, shares held by non-affiliates excludes only those shares beneficially owned by the registrant’s executive officers, directors, and stockholders owning 10% or more of the registrant’s outstanding common stock (and, in each case, their immediate family members and affiliates).

As of February 22, 2016, 44,710,497 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our definitive proxy statement, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days of the Company’s fiscal year-end, are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K.

 

 

 


Table of Contents

NEW MEDIA INVESTMENT GROUP INC.

FORM 10-K

FOR THE YEAR ENDED DECEMBER 27, 2015

TABLE OF CONTENTS

 

        Page  
 

PART I

 

Item 1

 

Business

    1   

Item 1A

 

Risk Factors

    50   

Item 1B

 

Unresolved Staff Comments

    67   

Item 2

 

Properties

    67   

Item 3

 

Legal Proceedings

    68   

Item 4

 

Mine Safety Disclosures

    68   
 

PART II

 

Item 5

 

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    69   

Item 6

 

Selected Financial Data

    71   

Item 7

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

    75   

Item 7A

 

Quantitative and Qualitative Disclosures About Market Risk

    101   

Item 8

 

Financial Statements and Supplementary Data

    103   

Item 9

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    160   

Item 9A

 

Controls and Procedures

    160   

Item 9B

 

Other Information

    163   
 

PART III

 

Item 10

 

Directors, Executive Officers and Corporate Governance

    164   

Item 11

 

Executive Compensation

    164   

Item 12

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

    164   

Item 13

 

Certain Relationships and Related Transactions, and Director Independence

    165   

Item 14

 

Principal Accountant Fees and Services

    165   
 

PART IV

 

Item 15

 

Exhibits, Financial Statement Schedules

    166   

 

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CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

Certain statements in this 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 that 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:

 

   

general economic and market conditions;

 

   

economic conditions in the Northeast, Southeast and Midwest regions of the United States;

 

   

our ability to grow our digital business and digital audience and advertiser base;

 

   

the growing shift within the publishing industry from traditional print media to digital forms of publication;

 

   

our ability to acquire local media print assets at attractive valuations;

 

   

declining advertising and circulation revenues;

 

   

the risk that we may not realize the anticipated benefits of our recent or potential future 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 the payment of principal and interest;

 

   

our ability to pay dividends consistent with prior practice or at all;

 

   

our ability to realize the benefits of the Management Agreement (as defined below);

 

   

the impact of any material transactions with the Manager (as defined below) or one of its affiliates, including the impact of any actual, potential or predicted conflicts of interest;

 

   

the competitive environment in which we operate;

 

   

our ability to recruit and retain key personnel.

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. Such forward-looking statements speak only as of the date on which 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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PART I

 

Item 1. Business

General Overview

New Media Investment Group Inc. (“New Media,” “Company,” “us,” or “we”), was formed as a Delaware corporation on June 18, 2013. Pursuant to the Restructuring (as defined below), Newcastle Investment Corp. (“Newcastle”) owned approximately 84.6% of New Media until February 13, 2014, upon which date Newcastle distributed the shares that it held in New Media to its shareholders on a prorata basis. New Media had no operations until November 26, 2013, when it assumed control of GateHouse Media, LLC (formerly known as GateHouse Media, Inc.) (“GateHouse” or “Predecessor”) and Local Media Group Holdings LLC (“Local Media Parent”). GateHouse was determined to be the predecessor to New Media, as the operations of GateHouse comprise substantially all of the business operations of the combined entities. Both New Media and Newcastle are externally managed and advised by an affiliate of Fortress Investment Group LLC (“Fortress”).

New Media is a company that owns, operates and invests in high quality local media assets. We have a particular focus on owning and acquiring strong local media assets in small to mid-size markets. With our collection of assets, we focus on two large business categories; consumers and small to medium size businesses (“SMBs”).

Our portfolio of media assets today spans across 489 markets and 31 states. Our products include 564 community print publications, 489 websites, 476 mobile sites and six yellow page directories. We reach over 19 million people per week and serve over 193,000 business customers.

We are focused on growing our consumer revenues primarily through our penetration into the local consumer market that values comprehensive local news and receives their news primarily from our products. We believe our rich local content, our strong media brands, and multiple platforms for delivering content will impact our reach into the local consumers leading to growth in subscription income. We also believe our focus on smaller markets will allow us to be a dominant provider of valuable, unique local news to consumers in those markets. We believe that one result of our local consumer penetration in these smaller markets will be transaction revenues as we link consumers with local businesses. For our SMB business category, we focus on leveraging our strong local media brands, our in-market sales force and our high consumer penetration rates with a variety of products and services that we believe will help SMBs expand their marketing, advertising and other digital lead generation platforms. We also believe our strong position in our local markets will allow us to develop other products that will be of value to our SMBs in helping them run and grow their businesses.

Our business strategy is to be the preeminent provider of local news, information, advertising and digital services in the markets we operate in today. We aim to grow our business organically through both our consumer and SMB strategies. We also plan to pursue strategic acquisitions of high quality local media assets at attractive valuation levels. Finally, we intend to distribute a substantial portion of our free cash flow as a dividend to stockholders through a quarterly dividend, subject to satisfactory financial performance, approval by our board of directors (the “Board of Directors” or “Board”) and dividend restrictions in the New Media Credit Agreement (as defined below). The Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s U.S. generally accepted accounting principles (“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.

We believe that our focus on owning and operating dominant local-content-oriented media properties in small to mid-size markets puts us in a position to better execute our strategy. We believe that being the dominant provider of local news and information in the markets in which we operate and distributing that content across multiple print and digital platforms, gives us an opportunity to grow our audiences and reach. Further, we believe our strong local media brands and our in-market sales presence gives us the opportunity to expand our advertising and lead generation products with local business customers.

 

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Central to our business strategy are our digital marketing services products called Propel Marketing (“Propel”). We launched the products in 2012 and have seen rapid growth since then. Revenues have grown from $1 million in 2012 to $31.3 million in 2015. We believe Propel and our other digital marketing service products, combined with our strong local brands and in market sales force, position this product group to be a key component to our overall organic growth strategy.

We believe that Propel will allow us to capitalize on the following opportunities in the marketplace:

There are approximately 27.9 million SMBs in the U.S. according to the 2011 U.S. Census data. Of these, approximately 26.7 million have 20 employees or less.

Many of the owners and managers of these SMBs do not have resources or expertise to navigate the fast evolving digital marketing sector, but are increasingly aware of the need to establish and maintain a digital presence in order to stay connected with current and future customers.

Propel is designed to offer a complete set of turn-key digital marketing services to SMBs that provides transparent results to the business owners. Propel provides four broad categories of services: building businesses a presence, helping businesses to be located by consumers online, engaging with consumers, and growing their customer base.

We believe our local media properties and local sales infrastructure are uniquely positioned to sell these digital marketing services to local business owners and give us distinct advantages, including:

 

   

our strong and trusted local brands, with 85% of our daily newspapers having been publishing local content for more than 100 years;

 

   

our ability to market through our print and online properties, driving branding and traffic; and

 

   

our more than 1,480 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve.

Our core products include:

 

   

124 daily newspapers with total paid circulation of approximately 1.5 million;

 

   

322 weekly newspapers (published up to three times per week) with total paid circulation of approximately 321,000 and total free circulation of approximately 2.0 million;

 

   

118 “shoppers” (generally advertising-only publications) with total circulation of approximately 2.8 million;

 

   

489 locally focused websites and 476 mobile sites, which extend our businesses onto the internet and mobile devices with approximately 226 million page views per month;

 

   

six yellow page directories, with a distribution of approximately 348,000, that cover a population of approximately 620,000 people; and

 

   

Propel digital marketing services.

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. Similarly, GateHouse Live, our events business, concentrates on local markets and interests.

Our print and online products focus on the local community from a content, advertising, and digital marketing perspective. As a result of our focus on small and midsize markets, we are usually the primary, and sometimes, the sole provider of comprehensive and in-depth local market news and information in the communities we serve. Our content is primarily devoted to topics that we believe are highly relevant and of interest to our audience such as local news and politics, community and regional events, youth sports, opinion and editorial pages, local schools, obituaries, weddings and police reports.

 

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More than 85% of our daily newspapers have been published for more than 100 years and 100% have been published for more than 50 years. We believe that the longevity of our publications demonstrates the value and relevance of the local information that we provide and has created a strong foundation of reader loyalty and a highly recognized media brand name in each community we serve. As a result of these factors, we believe that our publications have high local audience penetration rates in our markets, thereby providing advertisers with strong local market reach.

We believe the large number of publications we have, our focus on smaller markets, and our geographic diversity also provide the following benefits to our strategy:

 

   

Diversified revenue streams, both in terms of customers and markets;

 

   

Operational efficiencies realized from clustering of business assets;

 

   

Operational efficiencies realized from centralization of back office functions;

 

   

Operational efficiencies realized from improved buying power for key operating cost items through our increased size and scale;

 

   

Ability to provide consistent management practices and ensure best practices; and

 

   

Less competition and high barriers to entry.

The newspaper industry has experienced declining revenue and profitability dating back to 2007 due to, among other things, advertisers’ shift from print to digital media and general market conditions. Our Predecessor was affected by this trend and experienced a history of net operating losses.

The revenues derived from our SMB category come from a variety of print and digital advertising products, digital service products we offer through Propel, and commercial printing services. Our consumer category revenue comes primarily from subscription income as consumers pay for our deep, rich local contents, both in print and online, however primarily print today.

Our operating costs consist primarily of labor, newsprint, and delivery costs. Our selling, general and administrative expenses consist primarily of labor costs. Compensation represents just under 50% of our operating expenses. Over the last few years, we have worked to drive efficiencies through centralization of back office functions, outsourcing and leveraging our scale to purchase more effectively. Additionally, we have taken steps to cluster our operations, thereby increasing the usage of facilities and equipment while increasing the productivity of our labor force. We expect to continue to employ these steps as part of our business and clustering strategy.

Local Media Acquisition

Newcastle acquired Local Media Group Inc. (formerly known as Dow Jones Local Media Group, Inc.) (“Local Media”) on September 3, 2013 from News Corp. Inc. and contributed to New Media 100% of the stock of Local Media Parent (which owns all of Local Media’s stock) on GateHouse’s emergence from bankruptcy on November 26, 2013 (the “Effective Date”). In exchange for the contribution of Local Media, Newcastle received shares of common stock, par value $0.01 per share, of New Media (“New Media Common Stock” or our “Common Stock”), equal in value to the cost of the acquisition of Local Media by Newcastle (“Local Media Acquisition”). Local Media Parent became a wholly owned subsidiary of New Media.

GateHouse managed the assets of Local Media pursuant to a management and advisory agreement (“Local Media Management Agreement”). The agreement had a two-year term, with automatic renewal for successive two-year periods unless terminated. While the agreement was in effect, GateHouse received an annual management fee of $1.1 million, subject to adjustments (up to a maximum annual management fee of $1.2 million), and an annual incentive compensation fee based on exceeding EBITDA targets of Local Media. The Local Media Management Agreement was terminated effective June 4, 2014.

 

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Restructuring and Spin-off from Newcastle Investment Corp.

We acquired our operations as part of the restructuring (the “Restructuring”) of our Predecessor, GateHouse. On September 27, 2013, GateHouse commenced the Restructuring in which it sought confirmation of its bankruptcy plan sponsored by Newcastle, as the holder of the majority of the Outstanding Debt (as defined as follows). The Plan relates to the Restructuring of our Predecessor’s obligations under the amended and restated credit agreement by and among certain affiliates of GateHouse, the lenders from time to time thereto and Cortland Products Group, as administrative agent, dated February 27, 2007 (as amended, the “2007 Credit Facility”) and certain interest rate swaps (collectively, the “Outstanding Debt”). The U.S. Bankruptcy Court for the District of Delaware confirmed the reorganization plan (the “Plan”) on November 6, 2013 and GateHouse consequently emerged from Chapter 11 protection on November 26, 2013.

Pursuant to the Restructuring, Newcastle offered to purchase the Outstanding Debt in cash and at 40% of (i) $1,167 million of principal claims under the 2007 Credit Facility, plus (ii) accrued and unpaid interest at the applicable contract non-default rate with respect thereto, plus (iii) all amounts, excluding any default interest, arising from transactions in connection with interest rate swaps secured under the 2007 Credit Facility (the “Cash-Out Offer”) on the Effective Date. The holders of the Outstanding Debt had the option of receiving, in satisfaction of their Outstanding Debt, their pro rata share of the (i) Cash-Out Offer or (ii) New Media Common Stock and net proceeds, if any, of the GateHouse Credit Facilities. All pensions, trade and all other unsecured claims will be paid in the ordinary course.

On the Effective Date (1) GateHouse became our wholly-owned subsidiary as a result of (a) the cancellation and discharge of the currently outstanding equity interests in GateHouse (the holders of which received warrants issued by New Media) and (b) the issuance of equity interests in the reorganized GateHouse to New Media; (2) Local Media Parent, which was a wholly-owned subsidiary of Newcastle, following the Local Media Acquisition became a wholly-owned subsidiary of New Media as a result of Newcastle’s transfer of Local Media Parent to New Media; (3) New Media entered into the Management Agreement (as defined below) with our Manager (as defined below), (4) New Media entered into the GateHouse Management and Advisory Agreement (the “GateHouse Management Agreement”) with GateHouse; and (5) all of GateHouse’s Outstanding Debt was cancelled and discharged and the holders of the Outstanding Debt received, at their option, their pro rata share of the (i) Cash-Out Offer or (ii) New Media Common Stock and the net proceeds of the two certain Term Loan and Security Agreements dated November 26, 2013 (the “GateHouse Credit Facilities”). Pursuant to the Cash-Out Offer, Newcastle offered to buy the claims of the holders of the Outstanding Debt. As a result of these transactions, Newcastle owned 84.6% of New Media as of the Effective Date. The GateHouse Management Agreement was terminated effective June 4, 2014.

On the Effective Date, New Media entered into a management agreement with FIG LLC (the “Manager”) (the “Management Agreement”) pursuant to which the Manager will manage the operations of New Media. The annual management fee is 1.50% of New Media’s Total Equity (as defined in the Management Agreement) and the Manager is eligible to receive incentive compensation.

On September 27, 2013, Newcastle announced that its board of directors unanimously approved a plan to spin-off our Company. Newcastle’s board of directors made the determination to spin-off our assets because it believed that our value can be increased over time through a strategy aimed at acquiring local media assets and organically growing our digital marketing business.

In order to effect the separation and spin-off of our Company, we filed a registration statement on Form S-1, as amended, which was declared effective by the Securities and Exchange Commission (the “SEC”) on January 30, 2014.

Each share of Newcastle common stock outstanding as of 5:00 PM, Eastern Time, on February 6, 2014, the Record Date, entitled the holder thereof to receive 0.07219481485 shares of our Common Stock (the

 

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“Distribution” or the “spin-off”). The spin-off was completed on February 13, 2014. Immediately thereafter, we became a publicly traded company independent from Newcastle trading on the New York Stock Exchange (the “NYSE”) under the ticker symbol “NEWM.”

Acquisitions

On February 28, 2014, we completed the acquisition of five publications from Freedom Communications for a total purchase price of $7.9 million, including working capital. The acquisition included two daily and three weekly publications serving Southern California with an aggregate circulation of approximately 56,000.

On June 30, 2014, we completed two acquisitions of 20 publications with a total purchase price of $15.9 million, including working capital. The acquisitions included six daily, ten weekly publications, and four shoppers serving areas of Texas, Oklahoma, Kansas and Virginia with an aggregate circulation of approximately 54,000.

On September 3, 2014, we completed the acquisition of The Providence Journal with a total purchase price of $48.7 million, including working capital. The acquisition included one daily and two weekly publications serving areas of Rhode Island with a daily circulation of approximately 72,000 and 96,000 on Sunday.

On December 1, 2014, we completed the acquisition of Foster’s Daily Democrat along with other publications and related assets for $5.4 million in cash, including working capital, from the Foster family. The publications are located around Dover, NH, and the daily newspaper has a circulation of approximately 12,000.

On January 9, 2015, we completed the acquisition of substantially all of the assets from Halifax Media Group for an aggregate purchase price of $285.4 million, including working capital and net of assumed debt. The acquisition included 24 daily publications, thirteen weekly publications, and five shoppers serving areas of Alabama, Florida, Louisiana, Massachusetts, North Carolina, and South Carolina with a daily circulation of approximately 635,000 and 752,000 on Sunday.

On March 18, 2015, we completed the acquisition of the assets of Stephens Media, LLC (“Stephens Media”) for an aggregate purchase price of $110.8 million, including working capital. The acquisition includes nine daily newspapers, 35 weekly publications and fifteen shoppers serving communities throughout the United States with a combined average daily circulation of approximately 221 and 244 on Sunday.

On June 15, 2015 and September 23, 2015, we acquired substantially all the assets, properties and business of publishing/operating certain newspapers for an aggregate purchase price of $52.0 million, including estimated working capital. The acquisitions included two daily newspapers, twenty-eight weekly publications, and two shoppers serving Central Ohio and Southern Michigan.

Dispositions

On December 10, 2015, we completed the sale of the Las Vegas Review-Journal and related publications (initially acquired in the Stephens Media acquisition), which are located in Las Vegas, Nevada for an aggregate sale price of $140,000 plus working capital adjustment of $1,000. As a result, a gain of $57.0 million is included in (gain) loss on sale or disposal of assets on the consolidated statement of operations and comprehensive income (loss) for this period.

Subsequent Events

Acquisitions

On December 31, 2015, we completed the acquisition of the Business Information Division of Dolan LLC (“Dolan”) for $35.0 million in cash, plus working capital. We funded the acquisition with cash on the balance sheet. Dolan is a leading provider of industry-specific news with 39 print and online publications and an audience of over 46,000 paid subscribers.

 

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On January 12, 2016, we completed the acquisition of substantially all of the publishing operations of the Times Publishing Company, including the Erie Times-News daily newspaper, for $11.5 million in cash, plus the assumption of the assumed liabilities. We funded the acquisition with cash on the balance sheet. Erie Times-News is a dominant source of local news and advertising in Erie, PA with an average weekday circulation of over 39,000 and 55,000 on Sunday.

Dividends

On February 25, 2016, the Company announced a fourth quarter 2015 cash dividend of $0.33 per share of New Media Common Stock. The dividend will be paid on March 17, 2016, to shareholders of record as of the close of business on March 9, 2016.

Corporate Entity Structure

The chart below sets forth our entity structure and that of our direct and indirect subsidiaries. This chart does not include all of our affiliates and subsidiaries or our Manager and, in some cases, we have combined separate entities for presentation purposes.

 

 

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Industry Overview

We operate in what is sometimes referred to as the “hyper-local” or community news market and market within the media industry. Media companies that serve this segment provide highly focused local content and advertising that is generally unique to each market they serve and is not readily obtainable from other sources. Local publications include community newspapers, websites, shoppers, traders, real estate guides, special interest magazines and directories. Due to the unique local nature of their content and audience, community publications compete for advertising customers with other forms of traditional media, including direct mail, directories, radio, television, and outdoor advertising. They also compete with new local and national digital and social media businesses for advertising, digital services and customers. We believe that local print and online publications in smaller markets are the most effective medium for local retail advertising, which emphasizes the price of goods in an effort to move inventory on a regular basis, in contrast to radio, broadcast and cable, television, and the internet, which are generally used for image or branding advertising. In addition, we believe local print and online publications generally have the highest local audience penetration rates, which allows local advertisers to get their message to a large portion of the local audience. Finally, national digital competitors tend to have no local in-market sales presence which we believe gives the local community publications an advantage when selling these types of products and services.

Locally focused media in small and midsize communities is distinct from national and urban media delivered through outlets such as television, radio, metropolitan and national newspapers and the internet. Larger media outlets tend to offer broad based information to a geographically scattered audience, which tends to be more of a commodity. In contrast, locally focused media delivers a highly focused product that is often the only source of local news and information in the market it serves. Our segment of the media industry is also characterized by high barriers to entry, both economic and social. Small and midsize communities can generally only sustain one newspaper. Moreover, the brand value associated with long-term reader and advertiser loyalty, and the high start-up costs associated with developing and distributing content and selling advertisements, help to limit competition.

We also believe there is a growing need among small to mid-size businesses to be able to generate leads and interact with consumers across all the digital platforms, which takes many forms including websites, mobile sites, tablets and social media. These local business owners and managers lack the time, expertise and resources to capitalize on the potential of these new consumer-reaching channels. National competitors in this category do not generally have a local in-market presence. Newly formed competitors lack a known and credible brand name in addition to generally not having a local in-market presence. We believe this represents a substantial opportunity for our local media business.

Advertising Market

The primary sources of advertising revenue for local publications are small businesses, corporations, government agencies and individuals who reside in the market that a publication serves. By combining paid circulation publications with total market coverage (“TMC”) publications such as shoppers and other specialty publications (tailored to the specific attributes of a local community), local publications are able to reach nearly 100% of the households in a distribution area. As macroeconomic conditions in advertising change due to increasing internet and mobile usage and the wide array of available information sources, we have seen advertisers shift their focus to incorporate a digital advertising and services component into their overall local marketing strategy. To that end, in addition to printed products, the majority of our local publications have an online presence that further leverages the local brand, ensures higher penetration into the market, and provides a digital alternative for local advertisers to reach consumers. We also have strong digital marketing services, Propel.

Digital Media

The time spent online and on mobile devices each day by media consumers continues to grow and newspaper web and mobile sites offer a wide variety of content providing comprehensive, in-depth and up to the

 

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minute coverage of news and current events. The ability to generate, publish and archive more news and information than most other sources has allowed newspapers to produce some of the most visited sites on the internet. Newspaper websites have proven to be some of the most visited websites by online media news consumers.

We believe that our local publications are well positioned to capitalize on their existing market presence and grow their total audience base by publishing proprietary local content digitally: via the internet, mobile websites and mobile applications. Local digital media include traditional classifieds, directories of business information, local advertising, databases, audience-contributed content and mobile applications. We believe this additional community-specific content will further extend and expand both the reach and the brand of our publications with readers and advertisers. We believe that building a strong local digital business extends the core audience of a local publication.

The opportunity created by the digital extension of the core audience makes local digital advertising an attractive complement for existing print advertisers, while opening up opportunities to attract new local advertisers that have not previously advertised with local publications. In addition, we believe that national advertisers have an interest in reaching buyers on a hyper-local level and, although they historically have not been significant advertisers in community publications, we believe the digital media offers them a powerful medium to reach local audiences. This opportunity is further enhanced by our behavioral targeting products, which allow advertisers to reach specific demographics of our audience and follow that audience across multiple websites, delivering advertisements across the platforms. Further, digital marketing services businesses are poised to benefit from the rise in internet marketing spend, which grew 16% between 2013 and 2014, and 294% between 2005 and 2014, according to the 2014 IAB Internet Advertising Revenue Report issued in April 2015.

We believe that a strong digital business will enhance our revenues. In addition, we believe that we have the expertise and sales resources to help other businesses maximize their digital opportunities. Accordingly, we have launched our digital marketing services business, including Propel, which is designed to help SMBs utilize the digital space to generate leads, interact with consumers and grow their businesses. New Media’s digital revenue derived from advertising, circulation, and other revenue has grown since the launch of Propel in 2012. New Media’s digital revenue was $106.9 million for the year ended December 27, 2015, an 85% growth as compared with the same period in 2014, which had digital revenue of $57.9 million. Of this, $31.3 million, or 29% of digital revenue for the year ended December 27, 2015 was attributable to Propel. See “Risk Factors—Risks Related to Our Business—We have invested in growing our digital business, including Propel, but such investments may not be successful, which could adversely affect our results of operations.”

We anticipate that the digital marketing services sector will continue to grow as SMBs move from print to digital marketing in connection with consumers spending more time online. According to the 2011 U.S. Census data, there are approximately 27.9 million SMBs in the US, 26.7 million of the SMBs have 20 employees or less, and these businesses are expected to spend $42.6 billion on digital marketing by 2016 (according to the 2015 U.S. Local Media Forecast by BIA/Kelsey). Owners of these businesses often lack the resources and expertise to navigate the digital marketing services sector. A recent study done by SCORE Association in 2014 indicated that 97% of consumers search for local businesses online, 49% of SMBs do not have a website, 93% are not mobile compatible, and 27% of SMBs with websites were found to not have a phone number on their home page. Propel offers SMBs digital services, including website design, search engine optimization, mobile websites, social media, retargeting and other advertising services. Our Predecessor believed, and we too believe, that Propel is well positioned to assist SMBs in the digital space and expect Propel to contribute meaningfully to future revenue growth. Propel is also able to leverage our local media properties and local sales infrastructure and give us distinct advantages, including:

 

   

our strong and trusted local brands, with 85% of our daily newspapers having been publishing local content for more than 100 years;

 

   

our ability to market through our print and online properties, driving branding and traffic; and

 

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our more than 1,480 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve.

Circulation

Overall daily newspaper print circulation, including national and urban newspapers, has been declining slowly over the past several years. Small and midsize local market newspapers have generally had smaller declines and more stability in their paid print circulation volumes due to the relevant and unique hyper-local news they produce combined with less competition than larger markets. In addition, we believe this unique and valuable hyper-local content along with multiple delivery platforms now available will allow smaller market newspapers to continue to raise prices, leading to stable circulation revenues. Data and technology now available to newspapers allow them to target pricing more at the household level rather than purely by market. This will lead to more effective pricing strategies and enhance stability for circulation revenues. According to the Newspaper Association of America, pay meters and pricing helped the newspaper industry grow circulation revenue by 9% from 2011 to 2013.

Our Strengths

High Quality Assets with Leading Local Businesses. Our publications benefit from a long history in the communities we serve as one of the leading, and often sole, providers of comprehensive and in-depth local content. More than 85% of our daily newspapers have been published for more than 100 years and 100% have been published for more than 50 years. This has resulted in brand recognition for our publications, reader loyalty and high local audience penetration rates, which are highly valued by local advertisers. We continue to build on long-standing relationships with local advertisers and our in-depth knowledge of the consumers in our local markets. We believe our local news content is unique and highly valued by consumers who live in our markets, and there are limited, and in some cases no competing sources of local content for our target customers.

Large Locally Focused Sales Force. We have large and well known “in-market” local sales forces in the markets we serve, consisting of over 1,480 sales representatives, including 42 dedicated to Propel and 17 third party sales affiliations. Our sales forces are generally among the largest locally oriented media sales forces in their respective communities. We have long-standing relationships with many local businesses and have the ability to be face to face with most local businesses due to these unique characteristics we enjoy. We believe our strong brands combined with our “in-market” presence give us a distinct advantage in selling and growing in the digital services sector given the complex nature of these products. We also believe that these qualities provide leverage for our sales force to grow additional future revenue streams in our markets, particularly in the digital sector.

Ability to Acquire and Integrate New Assets. We have created a national platform for consolidating local media businesses and have demonstrated an ability to successfully identify, acquire and integrate local media asset acquisitions. Together with our Predecessor, we have acquired over $2.2 billion of assets since 2006, including both traditional newspaper and directory businesses. We have a scalable infrastructure and platform to leverage for future acquisitions.

Scale Yields Operating Profit Margins and Allows Us to Realize Operating Synergies. We believe we can generate higher operating profit margins than our publications could achieve on a stand-alone basis by leveraging our operations and implementing revenue initiatives, especially digital initiatives, across a broader local footprint in a geographic cluster and by centralizing certain back office production, accounting, administrative and corporate operations. We also benefit from economies of scale in the purchase of insurance, newsprint and other large strategic supplies and equipment. Finally, we have the ability to further leverage our centralized services and buying power to reduce operating costs when making future strategic accretive acquisitions.

Local Business Profile Generates Significant Cash Flow. Our local business profile allows us to generate significant recurring cash flow due to our diversified revenue base and high operating profit margins and

 

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maintain our low capital expenditure and working capital requirements. As a result of the Restructuring, which extinguished GateHouse’s obligations under the 2007 Credit Facility and certain interest rate swaps secured thereunder on November 6, 2013, the confirmation date of the Plan, our interest and debt servicing expenses are significantly lower than our Predecessor’s interest and debt servicing expenses. As of December 27, 2015, our debt structure consists of the New Media Credit Agreement and Advantage Credit Agreements (as defined below). We currently estimate that we will have significant free cash flow totaling $115.0 million to $135.0 million in 2016, which we believe will lead to stockholder value creation through our investments in organic growth, investments in accretive acquisitions and the return of cash to stockholders in the form of dividends, subject to satisfactory financial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit Agreement. We further believe the strong cash flows generated and available to be invested will lead to consistent future dividend growth.

Experienced Management Team. Our senior management team is made up of executives who have an average of over 20 years of experience in the media industry, including strong traditional and digital media expertise. Our executive officers have broad industry experience with regard to both growing new digital business lines and identifying and integrating strategic acquisitions. Our management team also has key strengths in managing wide geographically disbursed teams, including the sales force, and identifying and centralizing duplicate functions across businesses leading to reduced core infrastructure costs.

Our Strategy

We intend to create stockholder value through a variety of factors including organic growth driven by our consumer and SMB strategies, pursuing attractive strategic acquisitions of high quality local media assets, and through the distribution of a substantial portion of our free cash flow as a dividend, subject to satisfactory financial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit Agreement. However, there is no guarantee that we will be able to accomplish any of these strategic initiatives.

A key component of our strategy is to acquire and operate traditional local media businesses and transform them from print-centric operations to dynamic multi-media operations through our existing online advertising and digital marketing services businesses. We will also leverage our existing platform to operate these businesses more efficiently. We believe all of these initiatives will lead to revenue and cash flow growth for New Media and will enable us to pay dividends to our stockholders. We intend to distribute a substantial portion of our free cash flow as a dividend to stockholders, through a quarterly dividend, subject to satisfactory financial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit Agreement. The Board of Directors’ determinations 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. The key elements of our strategy include:

Maintain Our Leading Position in the Delivery of Proprietary Local Content in Our Communities. We seek to maintain our position as a leading provider of unique local content in the markets we serve and to leverage this position to strengthen our relationships with both readers and local businesses, thereby increasing penetration rates and market share. A critical aspect of this approach is to continue to provide local content that is not readily obtainable elsewhere and to be able to deliver that content to our customers across multiple print and digital platforms.

Grow Our New Digital Marketing Services Business. We plan to scale and expand our digital marketing services, including Propel. We believe Propel will allow us to sell digital marketing services to SMBs both in and outside existing New Media markets. The SMB demand for digital service solutions is great and represents a rapidly expanding opportunity. According to the 2011 U.S. Census data, there are approximately 27.9 million SMBs in the U.S. and, according to a 2015 U.S. Local Media Forecast by BIA/Kelsey, digital revenues are expected to grow to $42.6 billion in 2016, representing a 3.8% growth rate. Owners of SMBs often lack the

 

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resources and expertise to navigate the digital marketing services sector, with 49% of SMBs not having a website and 93% not having mobile-friendly websites according to a SCORE Association Small Business Study in 2014. We believe local SMBs will turn to our trusted local media brands to help them navigate through developing their digital marketing presence and strategy. We believe our local media properties and local sales infrastructure gives us a distinct advantage to being the leading local provider of digital marketing services, through Propel.

Pursue Strategic Accretive Acquisitions. We intend to capitalize on the highly fragmented and distressed local print industries which have greatly reduced valuation levels. We initially expect to focus our investments primarily in the local newspaper sector in small to mid-size markets. We believe we have a strong operational platform as well as scalable digital marketing services, including Propel. This platform, along with deep industry specific knowledge and experience that our management team has can be leveraged to reduce costs, stabilize the core business and grow digital revenues at acquired properties. The size and fragmentation of the addressable print media market place in the United States, the greatly reduced valuation levels that exist in these industries, and our deep experience make this an attractive place for our initial consolidation focus and capital allocation. Over the longer term we also believe there may be opportunity to diversify and acquire these types of assets internationally, as well as other traditional local media assets such as broadcast TV, out of home advertising (billboards) and radio, in the United States and internationally. We also believe there may be opportunities to acquire other strong businesses that have strong local brands and local sales infrastructure or digital product companies, both of which could quickly scale for Propel.

Stabilize Our Core Business Operations. We have four primary drivers in our strategic plans to stabilize our core business operations, including: (i) identifying permanent structural expense reductions in our traditional business cost infrastructure and re-deploying a portion of those costs toward future growth opportunities, primarily on the digital side of our business; (ii) accelerating the growth of both our digital audiences and revenues through improvements to current products, new product development, training, opportunistic changes in hiring to create an employee base with a more diversified skill set and sharing of best practices; (iii) accelerating our consumer revenue growth through subscription pricing increases, pay meters for digital content and growth in our overall subscriber base; and (iv) stabilizing our core print advertising revenues through improvements to pricing, packaging of products for customers that will produce the best results for them, and more technology and training for sales management and sales representatives.

The newspaper industry has experienced declining revenue and profitability over the past several years due to, among other things, advertisers’ shift from print to digital media following the consumer shift, and general market conditions. The Restructuring significantly reduced New Media’s interest expense. In addition, New Media intends to focus its business strategy on building its digital marketing business and growing its online advertising business, which we believe will offset some of the challenges experienced by GateHouse. With its improved capital structure and digital focus, combined with its strengths and strategy and dividend strategy, we believe that New Media will be able to grow stockholder value. However, there can be no assurance of this. See “Risk Factors” under Item 1A of this Annual Report on Form 10-K.

Challenges

We will likely face challenges commonly encountered by recently reorganized entities, including the risk that even under our improved capital structure, we may not be profitable.

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

 

   

the growing shift within the publishing industry from traditional print media to digital forms of publication may compromise our ability to generate sufficient advertising revenues;

 

   

investments in growing our digital business may not be successful, which could adversely affect our results of operations;

 

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our advertising and circulation revenues may decline if we are unable to compete effectively with other companies in the local media industry; and

 

   

we may not be able to successfully acquire local print media assets at attractive valuations due to a rise in valuations from a more competitive landscape of acquirors.

For more information about New Media’s risks and challenges, see “Risk Factors” under Item 1A of this Annual Report on Form 10-K.

Products

Our 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.

 

    

Daily Newspapers

  

Weekly Newspapers

  

Shoppers

  

Niche Publications

Cost:

   Paid    Paid and free    Paid and free    Paid and free

Distribution:

   Distributed four to seven days per week    Distributed one to three days per week    Distributed weekly    Distributed weekly, monthly or on annual basis

Format:

   Printed on newsprint, folded    Printed on newsprint, folded    Printed on newsprint, folded or booklet    Printed on newsprint or glossy, folded, booklet, magazine or book

Content:

   50% editorial (local news and coverage of community events, some national headlines) and 50% ads (including classifieds)    50% editorial (local news and coverage of community events, some national headlines for smaller markets which cannot support a daily newspaper) and 50% ads (including classifieds)    Almost 100% ads, primarily classifieds, display and inserts    Niche content and targeted ads (e.g., Chamber of Commerce city guides, tourism guides and special interest publications such as, seniors, golf, real estate, calendars and directories)

Income:

   Revenue from advertisers, subscribers, rack/box sales    Paid: Revenue from advertising, subscribers, rack/box sales    Paid: Revenue from advertising, rack/box sales    Paid: Revenue from advertising, rack/box sales
      Free: Advertising revenue only, provide 100% market coverage.    Free: Advertising revenue only, provide 100% market coverage    Free: Advertising revenue only

Internet Availability:

   Maintain locally oriented websites, mobile sites and mobile apps, for select locations    Major publications maintain locally oriented websites and mobile sites for select locations    Major publications maintain locally oriented websites    Selectively available online

Overview of Operations

We operate in three publication groups: Eastern US Publishing, Central US Publishing and Western US Publishing. We also operate over 489 related websites and 360 mobile sites.

 

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The following table sets forth information regarding our publications.

 

     Number of Publications      Circulation (1)  

Operating Group

   Dailies      Weeklies      Shoppers      Paid      Free      Total
Circulation
 

Eastern US Publishing

     38         135         15         972,914         1,261,140         2,234,054   

Central US Publishing

     42         86         42         507,002         2,322,001         2,829,003   

Western US Publishing

     44         101         61         327,279         1,215,305         1,542,584   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     124         322         118         1,807,195         4,798,446         6,605,641   

 

(1) Circulation statistics are estimated by our management as of December 27, 2015.

Eastern US Publishing. Eastern US Publishing operates in six publication group clusters: the (1) New England Publishing Group, (2) Cape Publishing Group, (3) Providence Publishing Group, (4) Mid-Atlantic Publishing Group, (5) South Atlantic Publishing Group, and (6) Coastal Publishing Group.

New England Publishing Group. We are one of the largest community newspaper publishers in Massachusetts by number of daily publications and also publish a large concentration of weekly newspapers, serving 113 communities in markets across eastern Massachusetts. The three largest daily newspapers in this region are: The Patriot Ledger (founded in 1837 with circulation of 23,800), the Enterprise (founded in 1880 with circulation of 13,314) and the MetroWest Daily News (founded in 1897 with circulation of 11,783). We also have over 170 web sites, with more than 3.5 million combined monthly unique visitors in Massachusetts.

Many of the towns within our Massachusetts footprint were founded in the 1600s and our daily and weekly newspapers in the region have long been institutions within these communities. In fact, our Massachusetts publications have 29 daily and weekly newspapers that are over 100 years old. The Boston designated market area (“DMA”) is the eighth largest market in the United States with 2.5 million households and 6.5 million people, and ranks first nationally in concentration of colleges and universities. Massachusetts has more than 1.0 million households in the region earning greater than $75,000, and a substantial homeownership rate. We reach 1.4 million readers in the eastern Massachusetts market. Eastern Massachusetts is also an employment center for technology, biotechnology, healthcare and higher education.

Cape Publishing Group. This cluster includes Worcester, Massachusetts, the Cape Cod Media Group, the Southcoast Media Group, and the Seacoast Media Group.

In Worcester, Massachusetts, the Telegram & Gazette has been the premier daily newspaper in Central Massachusetts since 1866. The Telegram & Gazette, with daily circulation of 46,634 and its website, telegram.com, covers all of Worcester county, as well as surrounding areas including editorial coverage and distribution in over 60 towns which represents over 20% of the towns in the state of Massachusetts. Coverage is in our primary market of Worcester county with secondary focus in Middlesex and Hampden counties.

The Cape Cod Media Group publishes one paid daily, one paid weekly newspaper and one shopper. The flagship publication of the Cape Cod Media Group is the Cape Cod Times. The Cape Cod Times, with a daily circulation of 29,750 is the premier daily and Sunday local paper on Cape Cod. The Barnstable Patriot, the paid weekly newspaper, has a weekly circulation of 2,068.

The Southcoast Media Group publishes one paid daily newspaper, four paid weekly newspapers and two shoppers. The flagship publication of the Southcoast Media Group is the Standard-Times. The Standard-Times, with a daily circulation of 16,993, is the premier daily and Sunday local paper in the New Bedford, MA area. The other paid weeklies, the Spectator, the Chronicle, the Middleboro Gazette and the Advocate, have weekly circulations of 3,096, 1,429, 2,697 and 640, respectively.

Seacoast Media Group publishes two paid daily and seven paid weekly newspapers. The flagship publication of the Seacoast Media Group is the Portsmouth Herald. The Portsmouth Herald, with a daily

 

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circulation of 8,438, is the premier daily and Sunday local paper in coastal New Hampshire. The Hampton Union and the Exeter News-Letter are weeklies with circulations of 2,442 and 1,973, respectively. The York County Coast Star and the York Weekly in southern Maine have weekly circulations of 2,181 and 1,450, respectively. In addition, the group publishes Foster’s Daily Democrat, 7,374 circulation, and the Rochester (NH) Times and Sanford (ME) News, both paid weeklies. Seacoast Sunday is a regional Sunday newspaper for the entire market with circulation of 11,581 and is the second largest Sunday paper in New Hampshire.

In addition, Coulter Press, publishers of two paid weeklies, The Item and The Banner, is older than Clinton, Massachusetts, the town it calls home. The Item, covering Clinton, Lancaster, Sterling, Bolton, Berlin and Boylston, was founded in July 1893, more than 120 years ago.

Providence Publishing Group. This cluster includes the Providence Journal Group, the Nantucket Island Media Group, and Norwich, Connecticut.

In Providence, Rhode Island, is our Pulitzer Prize winning publication The Providence Journal, which publishes one paid daily newspaper and one shopper. The Providence Journal is the preeminent newspaper in its market and the oldest continuously-published daily newspaper in the United States. Its market includes all of Rhode Island as well as seven cities and towns in Bristol county Massachusetts with a daily circulation of 85,323. With an evolving digital platform, the market’s top local media website providencejournal.com offers an online source for award-winning news, sports, lifestyles, entertainment, editorials, and more and has monthly page views of over 9.7 million.

The Nantucket Island Media Group publishes The Inquirer and Mirror. With a weekly circulation of 6,339, it has the largest circulation of any island newspaper.

Our Norwich, Connecticut publication, The Bulletin, with a daily circulation of 10,219, diversifies this group as the eastern Connecticut economy differs from the nation and New England markedly. Primary economic drivers include casinos, military submarine manufacture and pharmaceutical research. Major industrial employers in the region include General Dynamics, Pfizer, Dow Chemical, Dominion Resources and the United States Navy.

Mid-Atlantic Publishing Group. This cluster includes the Hudson Valley Media Group and the Pocono Mountains Media Group.

The Hudson Valley Media Group publishes one paid daily, two free weekly newspapers, and one shopper. The flagship publication of the Hudson Valley Media Group is the Times Herald-Record. With a daily circulation of 46,260, the Times Herald-Record is the premier daily newspaper serving Orange, Ulster and Sullivan counties in New York and Pike county, Pennsylvania. The Pocono Mountains Media Group publishes one paid daily, one free weekly newspaper, and one shopper. The flagship publication of the Pocono Mountains Media Group is the Pocono Record. The Pocono Record, with a daily circulation of 13,640, is the premier daily and Sunday local paper in the Pocono Mountains area. The Hudson Valley Media group’s commercial print division publishes 120 weekly, bi- weekly and monthly publications. They are endorsed by both NY and NJ Newspaper Publisher Association groups. Hudson Valley Media also produces Orange and Ulster Magazine. Both are perfect bound glossy magazines.

South Atlantic Publishing Group. This cluster includes publications in North Carolina, South Carolina, and Tennessee.

The North Carolina cluster publishes ten daily newspapers and two weekly newspapers. In western North Carolina, we publish the Times-News in Hendersonville (daily circulation of 9,763). Our Piedmont newspapers include The Star in Shelby (daily circulation of 8,268) and The Gaston Gazette in Gastonia (daily circulation of 20,298). Central North Carolina newspapers include The Dispatch in Lexington (publishing six days per week

 

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with daily circulation of 6,246), Times-News in Burlington (daily circulation of 15,200), and The Courier Tribune in Asheboro (publishing six day per week with daily circulation of 7,709). Coastal publications in North Carolina include The Free Press in Kinston (daily circulation of 6,153), Sun Journal in New Bern (daily circulation of 9,963), The Daily News in Jacksonville (daily circulation of 11,419), and Star News in Wilmington (daily circulation of 29,494). Combined, these newspapers won 151 editorial and advertising awards in the 2015 North Carolina Press Association contest of which 51 were first place awards including for Investigative Reporting, City/County Government Reporting, Deadline Reporting, Business Writing, Photography, and Overall Appearance and Design.

In South Carolina we operate one daily publication, Spartanburg Herald-Journal, with a daily circulation of 24,663. Spartanburg is the largest city, and the county seat of, Spartanburg county. The Herald-Journal’s primary distribution area is Spartanburg and Union counties. In 2015, the Herald-Journal won 43 awards issued by the South Carolina Press Association, including 12 first-place awards and the President’s Cup for overall excellence.

In Columbia, Tennessee our daily publication is the Columbia Daily Herald, with daily circulation of 7,476. The Columbia Daily Herald publishes six days a week (Sunday through Friday) and serves Maury county, Tennessee and the surrounding Middle Tennessee region. The Columbia Daily Herald also publishes one weekly newspaper and one shopper. In 2015, the Daily Herald won Tennessee Press Association awards for Best Education reporting, Sports Writing, Editorial and Breaking News.

Coastal Publishing Group. This cluster includes publications in Florida and Alabama.

The Florida cluster publishes nine daily newspapers, ten weekly newspapers, and four shoppers. On Florida’s east coast in Daytona Beach is our daily publication The Daytona Beach News-Journal, which serves Volusia and Flagler counties with a daily circulation of 57,008. The Daytona Beach News-Journal also publishes four shoppers with a total combined circulation of 185,163 and operates a successful website news-journalonline.com that receives monthly page views of over 3.5 million. To the north is our two-time Pulitzer Prize winning daily publication, The Gainesville Sun, with daily circulation of 24,042 and monthly page views of 4.6 million. The Gainesville Sun also produces GatorSports.com, our University of Florida athletics free website which has approximately 3.5 million monthly page views. To the south of Gainesville in the middle of Marion county is our daily publication, Ocala Star Banner, with daily circulation of 25,091. The Ocala Star Banner also publishes a successful website ocala.com which receives monthly page views of over 5.1 million and monthly unique visitors over 510,000. In Central Florida, The Ledger in Lakeland has daily circulation of 39,278 and operates a robust commercial print operation generating millions of dollars a year. Also in Central Florida, our Leesburg publication the Daily Commercial, with its daily circulation of 15,027, covers a region known for seaplanes, upscale retirement living and rural small towns. Located in an area contiguous to Orlando, the Daily Commercial also publishes a weekly newspaper, South Lake Press and two websites that are enjoying significant audience growth. On the West Coast of Florida serving Sarasota and Manatee counties is the Pulitzer Prize winning Herald-Tribune with daily circulation of 61,494 which operates a family of digital products anchored by the successful heraldtribune.com website that receives monthly page views of over 4.2 million. The Herald-Tribune was named a “2015 10 Newspapers That Do It Right” by Editor & Publisher.

In the northwest Florida panhandle, we publish two dailies and eight weeklies across a ten-county area stretching from Franklin in the east to Santa Rosa in the west, and north to the state line. Our daily in the East, the Panama City News Herald, with daily circulation of 15,851, was awarded a Pulitzer Prize in 1962 for investigative journalism and in 2015 won 20 awards in two statewide contests. It also operates a growing website, newsherald.com, which receives a monthly average of 2.0 million page views and over 312,000 monthly unique visitors.

To the west in Fort Walton Beach, the Northwest Florida Daily News, with a circulation of 18,904 also has a dominant website, nwfdailynews.com that receives monthly page views of over 4.0 million and 430,000 monthly unique visitors. Their staff also garnered statewide awards in 2015, including in categories like sports writing, column writing and headline writing.

 

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In Alabama we publish two daily publications; The Tuscaloosa News and The Gadsden Times. Our Pulitzer Prize winning, daily publication, The Tuscaloosa News, has daily circulation of 21,668 and a successful website Tuscaloosanews.com with more than 1.9 million page views per month. The Tuscaloosa News also publishes TideSports.com, a paid subscription-based website that focuses on University of Alabama athletics. With daily circulation of 11,666, The Gadsden Times is the oldest continually operating business in Etowah county.

The following table sets forth information regarding the number of publications and production facilities in the Eastern US Publishing:

 

     Publications      Production
Facilities
 

State of Operations

   Dailies      Weeklies      Shoppers         

Massachusetts

     9         109         5         2   

Florida

     9         10         4         6   

North Carolina

     10         2         1         3   

New Hampshire

     2         5         0         2   

New York

     1         2         1         1   

Pennsylvania

     1         3         1         0   

Maine

     0         3         0         0   

Tennessee

     1         1         1         1   

Alabama

     2         0         0         1   

Connecticut

     1         0         1         0   

Rhode Island

     1         0         1         1   

South Carolina

     1         0         0         1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     38         135         15         18   

Central US Publishing. Our Central US Publishing operates in the states of Illinois, Ohio, New York, Michigan, Delaware, Pennsylvania, West Virginia, and Virginia.

From the western shore of Lake Michigan to the eastern shore of the Mississippi River and running over 400 miles north to south, Illinois is a picture of manufacturing, agricultural and recreational diversity. Coupled with major daily newspapers from our publications in Rockford, Peoria, and the state capital of Springfield, we are the largest publishing company in Illinois. Nineteen paid daily newspapers, 22 paid weekly newspapers, and sixteen shoppers provide coverage across the state which, is supported by four print production facilities.

Approximately 85 miles to the west of Chicago, Illinois is the Rockford Register Star supported by its 54,652 daily paid circulation base and its TMC product The Weekly, with six zoned editions. The Rockford Register Star operates successful websites that receives a monthly average of over 2.1 million page views.

The Journal (Freeport, IL) Standard is published Tuesday through Sunday. The newspaper’s coverage area includes Caroll, Jo Daviess, Ogle and Stephenson counties. The newspaper has a daily circulation of 5,565. The Journal Standard also publishes a website journalstandard.com and receives monthly page views of over 975,000 and average monthly unique visitors over 135,000.

The Peoria Journal Star with its daily paid circulation of 52,234 is the dominant newspaper in Peoria, Tazewell and Woodford counties and is also distributed in an additional 17 surrounding counties. There are two shoppers—The Marketplace and Pekin Extra—which have a combined weekly circulation of 94,981. The Peoria facility provides print services to our neighboring New Media publications and commercial printing for Lee Enterprises’ The Pantagraph. The market includes manufacturing facilities for Caterpillar and Komatsu, and higher education at Bradley University, Illinois Central College and Midstate College. Peoria has a large medical community including OSF Healthcare, Methodist Medical Center, Proctor Hospital, University Of Illinois College Of Medicine and St. Jude Children’s Hospital Midwest Affiliate. It has agricultural facilities Archer Daniels Midland, LG Seeds and the USDA Ag Lab. The Journal Star has pjstar.com and pjstar.mobi with combined monthly page views of over 6.0 million per month. The combined monthly unique visitors are over 935,000.

 

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The Springfield State Journal-Register with a daily paid circulation of 28,578 covers the state capital of Illinois. The daily paid circulation includes a branded edition of 2,351 of the Lincoln Courier. The State Journal-Register also has successful web sites with monthly page views of more than 5.0 million.

The Columbus Dispatch is a metropolitan daily newspaper and is the trusted source for comprehensive news, politics, sports and entertainment coverage across Central Ohio. One of the country’s strongest papers and the single daily in a top 40 media market, The Columbus Dispatch is located in Columbus, Ohio which is the largest city in Ohio and the fastest growing in the Midwest. The newspaper is distributed to homes and single copy outlets across Franklin county with a daily and Sunday circulation of 116,442 and 208,315, respectively. The Columbus Dispatch’s websites, which represent the primary online source for Columbus-area news, receives over 9.0 million monthly page views.

The Ohio cluster is anchored in Canton, Ohio and covers Stark and Tuscarawas counties. It is comprised of three daily newspapers, one weekly publication and two shoppers. The Repository is a 40,864 daily newspaper that covers the entire area of Stark county. The Dover New Philadelphia Times Reporter is a 13,914 daily publication located 40 miles south of Canton in Tuscarawas county. The Massillon Independent is a 7,225 circulation daily that circulates in western Stark county. The Suburbanite is a 32,600 weekly publication that circulates in the affluent northern Stark county area. The Ohio facility also provides commercial print services to the Akron Beacon Journal. The Ohio cluster has very successful web sites with more than 6.4 million combined monthly page views and more than 960,000 combined monthly unique visitors. Together the newspapers and web sites dominate their local markets.

Central New York is anchored by the Observer-Dispatch in Utica, New York which has circulation of 22,560 daily and 29,519 Sunday subscribers. The Utica operations include one daily and two weekly newspapers in Hamilton. Utica also has web sites with combined monthly unique visitors of more than 395,000. In addition to the Observer—Dispatch, Times-Telegram, which has a daily circulation of 2,922 covering both the towns of Herkimer and Little Falls, rounds out our coverage in the Mohawk Valley.

Also in New York we operate and own a combination of sixteen publications in Suburban Rochester that span four counties and have a combined circulation of 111,605. This market has a tourism industry and is known for boutique wineries and recreational activities. The flagship of Messenger Post Media is the 7,938 circulation Daily Messenger in Canandaigua.

In southwestern New York, our operations are centered around five publications based in Steuben county. In Corning, The Leader, a 5,791 circulation daily newspaper, dominates the eastern half of the county and shares its hometown namesake with Corning Incorporated. The Evening Tribune in Hornell circulates daily throughout the western half of the county. Situated directly between these two dailies in the county seat of Bath is the 10,850 circulation Steuben Courier, a free-distribution weekly. The Pennysaver Plus, a standalone shopper, solidifies this flagship group.

We also have a strong presence in the print advertising markets in three other New York counties that surround Steuben. In Allegany county to the west, the Wellsville Daily Reporter and its shopper, the Pennysaver Plus, cover most households. In Livingston county to the north, the Pennysaver Plus and the Genesee Country Express complement one another with combined circulation of 24,115. In Yates county to the north and east, The Chronicle-Express and Chronicle Ad-Visor shopper distribute weekly to nearly 13,421 households centered around the county seat of Penn Yan.

In nearby Chemung county, the 15,000 circulation Horseheads Shopper anchors our presence in this area. The majority of the southwestern New York cluster parallels Interstate 86 across the central southern tier of New York State, which is benefiting from continued improvement and expansion under an omnibus federal highway appropriations bill. Moreover, the cluster has several colleges and universities nearby, including Cornell University, Ithaca College, Elmira College and Houghton College.

 

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We have a strong presence in southern Michigan where six of our dailies, Adrian, Monroe, Coldwater, Holland, Hillsdale and Sturgis, along with two weekly and eight shoppers blanket the southern tier of the state and into Indiana. The 15,178 Sunday circulation Holland Sentinel is the flagship publication of the group. This area has several large employers, including Delphi, ConAgra, Tecumseh Products, Kellogg, JCI, Herman Miller, Hayworth, Gentex, Jackson State Prison, and a number of colleges and universities.

In Delaware, we publish seven weekly newspapers and various specialty papers that cover most of the state of Delaware and range from suburban Wilmington in the north to Georgetown, Delaware at the southern end of the state. Circulation for the cluster is primarily free and totals approximately 72,377 weekly.

Our Honesdale cluster, approximately 30 miles from Scranton, Pennsylvania, consists of four publications in the cities of Honesdale and Hawley, Pennsylvania. The cluster was created from our daily and shopper operations in Honesdale and later supplemented by our acquisition of one weekly and one shopper in Hawley. Local employers include General Dynamics, Blue Cross/Blue Shield, Commonwealth Telephone and various colleges and universities, medical centers and governmental agencies.

Our Pennsylvania/West Virginia cluster includes dailies in Waynesboro, Pennsylvania, Keyser and Ripley, West Virginia. We also have two weeklies in Ripley and a commercial printing operation in Ravenswood, West Virginia.

The communities we serve in Central US Publishing are largely rural but also support educational institutions, government agencies (including prisons and military bases), tourism, veterinary medicine and ethanol and agricultural chemical manufacturing. The area also includes automotive (including recreational vehicles), boat, home construction products and furniture manufacturing businesses.

The following table sets forth information regarding the number of publications and production facilities in Central US Publishing:

 

     Publications      Production
Facilities
 

State of Operations

   Dailies      Weeklies      Shoppers         

Illinois

     19         29         16         4   

Ohio

     4         28         2         3   

New York

     6         16         9         2   

Michigan

     9         2         11         3   

Delaware

     0         7         0         1   

Pennsylvania

     2         2         2         2   

West Virginia

     1         2         2         2   

Virginia

     1         0         0         1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     42         86         42         18   

Western US Publishing. Western US Publishing operates in the states of Missouri, Arkansas, Texas, California, Kansas, Iowa, Louisiana, Minnesota, Oklahoma, Colorado, Nebraska, Oregon, North Dakota, and Tennessee.

The greatest concentration of circulation and market presence in Missouri is in the northern part of the state where we operate five daily newspapers, four weekly newspapers and five shoppers. We serve the 22,000 square mile area from Hannibal, on the state’s eastern border, to the western border and from Columbia in the south to the Iowa border in the north. Local employers include the University of Missouri and other colleges, local and federal governments, State Farm Insurance and 3M.

Our southern Missouri operations are clustered around Lake of the Ozarks. Located midway between Kansas City and St. Louis and approximately 90 miles from Springfield, Missouri, our three daily newspapers, seven weekly newspapers and three shoppers that serve the Lake of the Ozarks area reach approximately 165,000 people.

 

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Located in southwest Missouri and southeast Kansas is our Joplin cluster with three daily and seven weekly newspapers and four shoppers, serving a population of approximately 170,000. There are several colleges and universities in the area, a National Guard Fort, several large medical centers and a diverse mix of retail businesses, including the 120-store Northpark Mall.

This group also includes our Kansas City cluster with nine publications (two daily and five weekly newspapers and two shoppers) located in the eastern Kansas cities of Leavenworth and Lansing and in Independence, Missouri. The Leavenworth Times was one of our original daily newspapers and the balance of the cluster was acquired afterward. In addition, we secured the military publication, The Fort Leavenworth Lamp, in Fort Leavenworth. The Kansas City cluster is home to several prominent companies, including Hallmark, H&R Block, Sprint, Cerner, Garmin, and the University of Kansas.

The Wichita cluster consists of two dailies, five weeklies and three shoppers in the towns of El Dorado, Pratt, Wellington, Newton and McPherson near Wichita, Kansas. The clustering of the small dailies in this area allows the group to sell advertising packages providing access to multiple communities. Major aircraft manufacturers Boeing, Bombardier, Cessna and Raytheon have facilities nearby and McConnell Air Force Base is a major component of the local economy.

Also located in the southwest is our operation in the state of Texas, with 24 publications (four daily, nine weekly newspapers, and eleven shoppers). The group based in Texas consists of two distinct operations. The first is a collection of small-market dailies and companion publications in central Texas in the towns of Stephenville, Brownwood and Waxahachie. The second is a well-established shopper group serving the growing cities of the Rio Grande Valley in south Texas. These shoppers serve Brownville, Harlingen, Laredo, McAllen, Alice and Corpus Christi, Texas.

The Herald Democrat principally serves Grayson county, Texas, with the largest metropolitan area served located in Sherman, Texas with a daily circulation of 13,646. The Herald Democrat has a growing digital platform with their website heralddemocrat.com and extends the newspapers reach to consumer’s nationwide with monthly page views of over 568,000. The Herald Democrat also publishes three weekly newspapers and five shoppers.

In Louisiana, we have an operating cluster in the southwestern part of the state, located between Lake Charles and Alexandria. This cluster consists of five publications located in the cities of Leesville, Sulphur, DeRidder and Vinton. Local employers include major manufacturers such as Alcoa, Firestone, International Paper and Proctor & Gamble.

Our Baton Rouge cluster consists of three dailies, four weeklies and three shoppers in the southeastern Louisiana cities of Houma, Thibadaux, Donaldsville, Gonzales, and Plaquemine. Numerous petrochemical companies such as BASF, Exxon Mobil and Dow Chemical, plus universities including Louisiana State, support the local economies.

In Fort Smith, Arkansas is the Southwest Times-Record, which has been a primary news source in Northwest Arkansas for over a century with a daily circulation of 23,880. The Southwest Times Record digital platform extends the newspaper’s reach to consumers nationwide through its website swtimes.com with monthly page views of over 755,000. The Southwest Times Record also publishes five weekly newspapers and a shopper and principally serves Sebastian and Crawford counties in Arkansas and Le Flore and Sequoyah counties in Oklahoma with the largest metropolitan area served being Fort Smith, Arkansas. In Southeast Arkansas is our award-winning newspaper The Pine Bluff Commercial, which serves as the primary source of news in Central and Southeast Arkansas with daily circulation of 8,104. The Pine Bluff Commercial also reaches its readers through their successful website pbcommercial.com with monthly page views of over 400,000.

To the West in Oklahoma is the Examiner-Enterprise in Bartlesville, which is one of the state’s largest daily newspaper with circulation of 6,043. The Examiner-Enterprise is an award-winning publication with awards including Oklahoma Press Association recognition for website, editorials, photography, and news coverage. The Examiner-Enterprise also publishes one weekly newspaper and one shopper.

 

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We are represented in California by two daily newspapers in Ridgecrest and Yreka, five paid weekly papers in Dunsmuir, Mt. Shasta, Weed, Gridley and Taft, and three shoppers in Gridley, Mt. Shasta and Ridgecrest. These publications reach from northern California through the southern desert and China Lake naval base in Ridgecrest. In the Stockton, California area we publish one paid daily, one free weekly paper, and two shoppers. The flagship publication of the area is the Record. The Record, with a daily circulation of 27,841, is the premier daily and Sunday local paper in the Stockton, California area.

In Oregon we publish two paid daily papers and one shopper with the flagship publication being the Medford Mail Tribune. The Medford Mail Tribune, with a daily circulation of 18,839, is the premier daily and Sunday local paper in southern Oregon. The other paid daily paper, the Ashland Daily Tidings, has a daily circulation of 1,405.

La Junta, in the southeastern part of the state, represents the Colorado properties. Along with La Junta we also serve Bent county and Fowler and produce the weekly agricultural newspaper, The Ag Journal.

We also have clusters in and around Grand Forks, North Dakota (home to the Grand Forks Air Force Base and the University of North Dakota), and Iowa, where Cargill, ConAgra, Kraft, Winnebago and Fort Dodge Animal Health, a division of Wyeth, each maintain significant operations.

We are represented in southwestern Minnesota through seven paid weekly newspapers and four shoppers. St. James, Redwood Falls, Sleepy Eye, Granite Falls, Cottonwood, Wabasso, and Montevideo are all communities with populations of 10,000 and under. These papers represent the primary local news and information source for these communities.

The Ames Tribune is Central Iowa’s Pulitzer Prize-winning newspaper, with a daily circulation of 6,817. The Ames Tribune’s digital platform allows customers, both local and nationwide, to access content through its market-leading website, amestrib.com with over 560,000 monthly page views. Ames Tribune also publishes six weekly newspapers and five shoppers.

The following table sets forth information regarding the number of publications and production facilities in the Western Publishing Group:

 

     Publications      Production
Facilities
 

State of Operations

   Dailies      Weeklies      Shoppers         

Missouri

     10         15         10         4   

Arkansas

     5         27         1         3   

Texas

     4         11         15         4   

California

     5         9         8         2   

Kansas

     5         9         7         0   

Iowa

     2         7         5         0   

Louisiana

     3         8         4         2   

Minnesota

     1         7         5         0   

Oklahoma

     4         3         3         3   

Colorado

     1         3         0         1   

Nebraska

     0         2         1         0   

Oregon

     2         0         1         1   

North Dakota

     1         0         1         1   

Tennessee

     1         0         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     44         101         61         21   

 

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Directories

The core of our directory portfolio is comprised of the three yellow page directories, which are located in and around the Sacramento, California area, primarily in Roseville, California. The three directories have an aggregate circulation of approximately 348,000 and service Roseville, Auburn/Grass Valley/Nevada City and Folsom/El Dorado/Placerville, reaching four counties within the Sacramento region.

Our SureWest Directories portfolio is highlighted by the Roseville directory. The Roseville directory is the incumbent (with a circulation of approximately 210,000) and has served the local Roseville community for over 100 years and has achieved more than 50% market share.

We also own three additional directories including two Michigan and Indiana phone guides servicing St. Joseph county, Michigan and LaGrange county, Indiana, and Branch county, Michigan and Steuben county, Indiana, respectively, and one yellow page directory based in Mt. Shasta, California.

Propel Marketing

Propel is our digital marketing product line with digital products designed for SMBs. We believe the digital services industry represents a large and expanding opportunity. Propel is a product offering we created to attack that opportunity.

There are approximately 27.9 million SMBs in the United States today and about 26.7 million have less than 20 employees according to the 2011 U.S. Census data. Although these businesses are increasingly beginning to recognize the need to establish and maintain a strategy for the digital space, most do not have the time, expertise or resources to handle this themselves.

Propel is a product line that can become the outsourced digital marketing services department for those SMBs. Propel’s products help an SMB build a presence across digital platforms, help them get found by consumers, help them engage with and grow their customer base. We pull these products together for the SMB with a proprietary customer dashboard which integrates activity and results for all Propel products.

We also believe Propel gives us an opportunity to expand beyond our current geographic boundaries, as its product set could be of value to SMBs around the country.

Revenue

Our operations generate three primary types of revenue: (i) advertising, (ii) circulation (including home delivery subscriptions, single copy sales and digital subscriptions) and (iii) other (primarily commercial printing and digital marketing services). In 2015, these revenue streams accounted for approximately 58%, 32% and 10%, respectively, of our total revenue. The contribution of advertising, circulation and other revenue to our total revenue for New Media, known as the Successor Company for the years ended December 27, 2015 and December 28, 2014, two months ended December 29, 2013 and the Predecessor Company for the ten months ended November 6, 2013 was as follows:

 

     Successor Company         Predecessor Company  
     Year Ended
December 27, 2015
     Year Ended
December 28, 2014
     Two Months Ended
December 29, 2013
         Ten Months Ended
November 6, 2013
 
(in thousands)                                

Revenue:

              

Advertising

   $ 696,696       $ 385,399       $ 63,340          $ 265,078   

Circulation

     378,263         195,661         29,525            118,810   

Commercial printing and other

     120,856         71,263         10,366            29,402   
  

 

 

    

 

 

    

 

 

       

 

 

 

Total revenue

   $ 1,195,815       $ 652,323       $ 103,231          $ 413,290   
  

 

 

    

 

 

    

 

 

       

 

 

 

 

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Advertising

Advertising revenue, which includes revenue generated from online and mobile products, is the largest component of our revenue, accounting for approximately 58%, 59% and 63% of our total revenue in 2015, 2014 and 2013, respectively. We categorize advertising as follows:

 

   

Local Retail—local retailers, local stores for national retailers, grocers, drug stores, department and furniture stores, local financial institutions, niche shops, restaurants and other consumer related businesses.

 

   

Local Classified—local legal, obituaries, employment, automotive, real estate and other advertising.

 

   

Online—banner, display, classified, behavioral targeting, audience extension, search and other advertising on websites or mobile devices.

 

   

National—national and major accounts such as wireless communications companies, airlines and hotels, generally placed with us through agencies.

We believe that our advertising revenue tends to be less volatile than the advertising revenue of large metropolitan and national print media because we rely primarily on local, rather than national advertising and our classified revenue, tends to be more local market oriented (job listing for example). We generally derive 95% or more of our advertising revenue from local advertising (local retail, local classified and online) and less than 5% from national advertising. We believe that local advertising tends to be less sensitive to economic cycles than national advertising because local businesses generally have fewer effective advertising channels through which they may reach their customers.

Our advertising rate structures vary among our publications and are a function of various factors, including local market conditions, competition, circulation, readership and demographics. Management works with local newspaper management to set advertising rates and a portion of our publishers’ incentive compensation is based upon growing advertising revenue. Our sales compensation program emphasizes digital and new business growth. We share advertising concepts throughout our network of publishers and advertising directors including periodic special section programs, enabling them to utilize advertising products and sales strategies that are successful in other markets we serve.

Substantially all of our advertising revenue is derived from a diverse group of local retailers and local classified advertisers, resulting in very limited customer concentration. No single advertiser accounted for more than 1% of our total revenue in 2015, 2014 or 2013 and our 20 largest advertisers account for less than 10% of total revenue.

Our advertising revenue tends to follow a seasonal pattern, with higher advertising revenue in months containing significant events or holidays. Accordingly, our first quarter, followed by our third quarter, historically are our weakest quarters of the year in terms of revenue. Correspondingly, our second and fourth fiscal quarters, historically are our strongest quarters. We expect that this seasonality will continue to affect our advertising revenue in future periods.

We have experienced declines in advertising revenue over the past few years, due primarily to the secular pressures on the business as consumers and advertisers shift time and spend from traditional media to the internet. We continue to search for organic growth opportunities, specifically with digital advertising and ways to stabilize print revenue declines through strengthening local news product, value based pricing and training of sales staff.

Circulation

Our circulation revenue is derived from home delivery sales to subscribers, single copy sales at retail stores and vending racks and boxes, and digital subscriptions. We own 124 paid daily publications that range in

 

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circulation from approximately 300 to 116,000 and 213 paid weekly publications that range in circulation from approximately 100 to 12,000. Circulation revenue accounted for approximately 32%, 30% and 29% of our total revenue in 2015, 2014 and 2013, respectively.

Subscriptions are typically sold for three to twelve-month terms and often include promotions to extend the average subscription period or convert someone to become a subscriber. We also provide bundled print and digital subscriptions and employ pay meters for our website content at most of our daily publications. We implement marketing programs to increase readership through subscription and single copy sales, including company-wide and local circulation contests, direct mail programs, door-to-door sales and strategic alliances with local schools in the form of “Newspapers in Education” programs. In addition, since the adoption of the Telemarketing Sales Rule by the Federal Trade Commission in 2003, which created a national “do not call” registry, we have increased our use of “EZ Pay” programs, kiosks, sampling programs, in-paper promotions and online promotions to increase our circulation.

We encourage subscriber use of EZ Pay, a monthly credit card charge or direct bank debit payment program, which has led to higher retention rates for subscribers. We also use an active stop-loss program for all expiring subscribers. Additionally, in order to improve our circulation revenue and circulation trends, we periodically review the need for quality enhancements, such as:

 

   

Consumer research to better understand local content of interest;

 

   

Increasing the amount of unique hyper-local content;

 

   

Increasing the use of color and color photographs;

 

   

Improving graphic design, including complete redesigns;

 

   

Developing creative and interactive promotional campaigns;

 

   

Improving customer service and company wide customer retention efforts; and

 

   

Better use of demographic data to specifically target pricing and customer acquisition opportunities.

We believe that our unique and valuable hyper-local content allows us to continue to produce products of great relevance to our local market audiences. This allows us to be able to periodically raise prices, both for home delivery and on a single copy basis, resulting in increased circulation revenues. We also believe this unique hyper-local content will allow us to find ways to grow circulation revenues from our wide array of digital products.

Other

We provide commercial printing services to third parties on a competitive bid basis as a means to generate incremental revenue and utilize excess printing capacity. These customers consist primarily of other publishers that do not have their own printing presses and do not compete with our publications. We also print other commercial materials, including flyers, business cards and invitations. Additionally, this category includes Propel which provides internet marketing solutions for SMBs and GateHouse Live, our events business. Other sources of revenue, including commercial printing and Propel, accounted for approximately 10%, 11% and 8% of our total revenue in 2015, 2014 and 2013, respectively.

Printing and Distribution

We own and operate 57 print facilities. Our print facilities produce eight publications on average and are generally located within 60 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 midsize market publications that would typically not otherwise have access to high

 

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quality production facilities. We also believe that 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. As other print media businesses look to reduce costs, we believe we have the opportunity to leverage our unutilized press time to grow our commercial print customer base and revenue.

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.

Availability of Raw Materials for Our Business—Newsprint

The basic raw material for our publications is newsprint. We generally maintain only a 45 to 55-day inventory of newsprint.

Historically, the market price of newsprint has been volatile, reaching a high of approximately $823 per metric ton in 2008 and a low of $410 per metric ton in 2002. However, from 2010 to 2015, there was much less volatility in newsprint pricing and we have benefited from negotiating a fixed annual price for a majority of our newsprint. The average market price of newsprint during 2015 was approximately $585 per metric ton.

In 2014, we consumed approximately 57,300 metric tons of newsprint (inclusive of commercial printing) and the cost of our newsprint consumption totaled approximately $36.2 million. In contrast, in 2015, we consumed approximately 119,900 metric tons of newsprint (inclusive of commercial printing), and the cost of our newsprint consumption totaled approximately $66.9 million. Our newsprint expense typically averages less than 10% of total revenue, which we believe generally compares favorably to larger, metropolitan newspapers.

For our 2014 and 2015 purchases of newsprint, we negotiated a fixed price for approximately 95% and 93%, respectively, of our newsprint tons which allowed us to eliminate some of the volatility of the market price. We expect to purchase 93% of our newsprint with a fixed price again in 2016.

Competition

Each of our publications competes for advertising revenue 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 new digital and social media companies for advertising revenue. However, we believe that barriers to entry remain high in many of the markets we serve in terms of being the preeminent source for local news and information therein, because our markets are generally not large enough to support a second newspaper and because our local news gathering infrastructures, sales networks and relationships would be time consuming and costly to replicate. We also have highly recognized local brand names and long histories in the towns we serve.

We also provide our readers with community-specific content, which is generally not available from other media sources. We believe that our direct and focused coverage of the market and our cost effective advertising rates relative to more broadly circulated metropolitan newspapers allow us to tailor an approach for our advertisers. As a result, our publications generally capture a large share of local advertising in the markets they serve.

The level of competition and the primary competitors we face vary from market to market. Competition tends to be based on market penetration, demographic and quality factors, as opposed to price factors. The competitive environment in each of our operating regions is discussed in greater detail below.

 

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Eastern US Publishing. In Eastern US Publishing, the Boston Globe and boston.com, a metropolitan daily and website, respectively, owned by John Henry, compete with us throughout eastern Massachusetts. In addition, we compete in Massachusetts with companies that publish a combined total of approximately 16 dailies and 50 weeklies, three major radio station operators, five local network television broadcasters, one cable company and numerous niche publications for advertising revenues. We believe that our publications generally deliver the highest household coverage in their respective markets.

We believe our publications in these markets are generally the dominant media and that each has an audience far larger than the competitors. Daily newspapers owned by Gannett Company, Inc. (Poughkeepsie Journal in Poughkeepsie, New York) and 21st Century Media, Inc. (Daily Freeman in Kingston, New York), compete within the New York market. Our Cape Cod and New Bedford, Massachusetts newspapers experience competition from weekly newspapers, local radio stations, shopping guides, directories and niche publications.

Our publication, the Providence Journal, is the dominant daily newspaper in its market. Other daily newspaper operators in the state include the Edward Sherman Company, which owns the Newport Daily News and numerous non-dailies serving the Newport Rhode Island area and Sun Publishing Company, owner of the Westerly Sun and three non-dailies in the state. RISN Operations, Inc. publish four daily papers and five weekly publications serving communities in Providence county and Rhode Island. Three other companies publish more than 16 weeklies in Rhode Island. The Providence market has seven local network television stations and three major radio station operators, one cable company and numerous print and online niche publications.

Our publication The Gainesville Sun and Ocala Star Banner are the dominant media in their respective markets, primarily Alachua and Marion counties. We compete with four television stations, which is unusual for markets this size. Gainesville has its own DMA and Ocala falls into the Orlando DMA. There are no other dailies in the market other than a slow movement by the Villages Daily Sun into Marion county (Ocala), a concern due to their offering the lowest home delivery and single copy rates of any Florida daily. They operate as part of one of the fastest growing developments in the county, The Villages. We publish a weekly newspaper, Gainesville Guardian, in east Gainesville and also a very successful city magazine, Gainesville Magazine.

In the Daytona Beach market, our publication The Daytona Beach News-Journal is the dominant media. Primary print competition for the west side of our coverage area is the Orlando Sentinel, owned by Tribune Publishing. Smaller weekly competitive publications, including The Observer Group and Hometown News are also in the market. Major radio and network television stations are out of the Orlando market.

In the Sarasota market, we believe our publications are generally the dominant media and have an audience far larger than the competitors for the main areas we serve. Daily newspapers owned by McClatchy (Bradenton Herald) and Sun Coast Media Group (Charlotte Sun) border us on the north and south ends of our market respectively and distribute in our circulation area on the fringes. The Sarasota market has one local network television station and several local radio station operators and cable companies as well as numerous non-daily print and online niche publications.

Located in central Florida, our publication, The Ledger, in Lakeland is bordered by the Orlando Sentinel to the east and the Tampa Tribune to the west. In addition, our competitors also include multiple weekly newspapers and two radio stations. The Ledger is the dominant media in the central Florida area it serves.

In Tuscaloosa, the digital space is highly competitive with the competing site AL.com, owned by Advance Local.

Central US Publishing. Central US Publishing operates in 126 markets and we believe our publications are the dominant print advertising media in the vast majority of these markets. There are radio stations in or within 20 miles of every market in which we operate, but we do not believe that any of these radio station operators pose a significant competitive threat to our publications. Yellow page advertising is prevalent in all of our

 

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markets with either a local phone book or a regional phone book. We believe that, in most cases, yellow page advertising is geared more towards the professional services advertisers, such as attorneys and doctors, and not the local retail advertisers, as is the focus with our non-directory publications.

Lee Enterprises publishes the Southern Illinoisan in Carbondale, which is a regional newspaper that competes with our dailies in Marion, Benton, West Frankfort and DuQuoin. In all four of these cases, we believe our publications are the dominant local daily, but do compete on a regional basis with the larger dailies. We also compete with shoppers or weekly newspapers. This competition comes from small independent operators and is not significant. We have very little television competition in this group because of our geographic location in relation to major markets. There are no local television affiliates in our markets.

In the Northeast market of this group we believe our publications are generally the dominant media. The competition we face in this region is from major newspaper companies: daily newspapers owned by Gannett Company, Inc. (The Star-Gazette in Elmira, NY and the Chambersburg (PA) Public-Opinion); Times-Shamrock Company’s Scranton (PA) The Times-Tribune and Towanda Daily/Sunday Review; Community Newspaper Holdings, Inc.’s Sunbury Daily Item; and Ogden-Nutting’s Williamsport Sun-Gazette. We believe our publications tend to be the dominant local publication in those markets. In the Columbus market, the advertising competition in print is minimal with just a weekly business journal and a few small monthly magazines. On the electronic and digital side, the competition is intense comprised of six network TV stations, three cable companies, ten radio stations, and twelve digital agencies, with SMART 1 being the most aligned with our Propel product set.

In our Great Lakes markets we believe our publications are generally the dominant media in those markets. Our only significant competition comes from regional television stations in Adrian, Michigan. We also face competition from dozens of other competitors such as other local daily and weekly papers and niche publications, as well as radio and television stations, directories, direct mail and non-local internet websites, but none of these have proven to be significant.

Western US Publishing. In the southern regions of this group we believe our publications are generally the dominant media. Our major competition comes from regional daily newspapers, specifically: The Advocate in Baton Rouge, Louisiana; The American Press in Lake Charles, Louisiana; The Joplin Globe; and the Wichita Eagle. The community newspapers operate generally in isolated markets where the American Consolidated Media newspapers are by far the leading sources of local news and print advertising. We also face competition from numerous other daily and weekly papers, local radio stations, shopping guides, directories and niche publications. In the Sherman, Texas market, we believe our publications are generally the dominant media in those markets with minor competition with The Dallas Morning News, which has minimal circulation, and it does not focus on coverage of local content. All weeklies in the Sherman, Texas market are controlled by us, though there is some weekly competition in outlying Texas and Oklahoma communities. Our publication, the Herald Democrat also competes with local TV stations and several locally-owned radio stations in the market.

In Arkansas, there is some minor competition from the Northwest Arkansas Democrat-Gazette in northern Crawford county, AR, but they have limited circulation in the Fort Smith market, with some local news coverage. The Northwest Arkansas Democrat-Gazette circulates in the market with our publication The Pine Bluff Commercial, but does not deliver the community coverage that is most relevant to Pine Bluff and the surrounding counties making our publication the most relevant news source in the area. There are several locally-owned radio stations in the market that compete with The Pine Bluff Commercial.

In the northern regions of this group, we control every local weekly and daily paper in Story county, Iowa and have weeklies in other neighboring counties, which is why we believe our publications are the dominant news source in the area. The principal print competition is the Des Moines Register, but it does not deliver meaningful local community content.

 

26


Table of Contents

We face competition from other newspaper companies that include daily and weekly newspapers, local websites, local radio stations, local television stations, shopping guides, directories and niche publications. None of our competitors have proven to be significant. Our publications and websites have a rich history in our markets which we believe uniquely positions them for unmatched reach and relevancy in their local audiences.

Employees

As of December 27, 2015, we employed 9,509 employees. We employ union personnel at a number of our core publications representing 1,236 employees. As of December 27, 2015, there were 35 collective bargaining agreements covering union personnel. Most of our unionized employees work under collective bargaining agreements that expire in 2017. We believe that relations with our employees are generally good and we have had no work stoppages at any of our publications.

Environmental Matters

We believe that 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 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, since the incorporation of our Predecessor in 1997, been accomplished without having a material adverse effect on its 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 you that we will not incur material costs or liabilities in the future which could adversely affect us.

Corporate Governance and Public Information

The address of New Media’s website is http://www.newmediainv.com/. Stockholders can access a wide variety of information on New Media’s website, under the “Investor Relations” tab, including news releases, SEC filings, information New Media is required to post online pursuant to applicable SEC rules, newspaper profiles and online links. New Media 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, and 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 New Media’s corporate website nor any other website referred to in this report are incorporated by reference into this report unless expressly noted. The public may read and copy any information New Media files with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov) where New Media’s filings filed with the SEC are available free of charge.

 

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Table of Contents

List of New Media’s Dailies, Weeklies, Shoppers, Websites and Directories

As of December 27, 2015, New Media’s dailies, weeklies, shoppers, websites and directories were as listed below. New Media maintains registered trademarks in many of the masthead names listed below. Maintaining such trademarks allows us to exclusively use the masthead name to the exclusion of third parties.

 

 

Eastern US Publishing

 

State

 

City

 

Masthead

 

Circulation Type

Massachusetts

  Brockton  

The Enterprise

www.enterprisenews.com

  Daily
  Fall River  

The Herald News

www.heraldnews.com

  Daily
  Framingham  

The Metrowest Daily News

www.metrowestdailynews.com

  Daily
  Hyannis  

Cape Cod Times

www.capecodtimes.com

  Daily
  Milford  

The Milford Daily News

www.milforddailynews.com

  Daily
  New Bedford  

The Standard-Times

www.southcoasttoday.com

  Daily
  Quincy  

Patriot Ledger

www.patriotledger.com

  Daily
  Taunton  

Taunton Daily Gazette

www.tauntongazette.com

  Daily
  Worcester  

Telegram & Gazette

www.telegram.com

  Daily
  Abington  

Abington Mariner

www.wickedlocal.com/abington

  Paid Weekly
  Acton/Roxborough  

The Beacon

www.wickedlocal.com/acton

  Paid Weekly
  Allston  

Allston/Brighton Tab

www.wickedlocal.com/allston

  Paid Weekly
  Arlington  

The Arlington Advocate

www.wickedlocal.com/arlington

  Paid Weekly
  Bedford  

Bedford Minuteman

www.wickedlocal.com/bedford

  Paid Weekly
  Belmont  

Belmont Citizen-Herald

www.wickedlocal.com/belmont

  Paid Weekly
  Beverly  

Beverly Citizen

www.wickedlocal.com/beverly

  Paid Weekly
  Billerica  

Billerica Minuteman

www.wickedlocal.com/billerica

  Paid Weekly
  Boxford  

Tri-Town Transcript

www.wickedlocal.com/boxford

  Paid Weekly
  Braintree  

Braintree Forum

www.wickedlocal.com/braintree

  Paid Weekly
  Brewster  

The Cape Codder

www.wickedlocal.com/capecod

  Paid Weekly
  Burlington  

Burlington Union

www.wickedlocal.com/burlington

  Paid Weekly

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Cambridge  

Cambridge Chronicle & Tab

www.wickedlocal.com/cambridge

  Paid Weekly
  Carver  

Carver Reporter

www.wickedlocal.com/carver

  Paid Weekly
  Chelmsford  

Chelmsford Independent

www.wickedlocal.com/chelmsford

  Paid Weekly
  Clinton   The Item   Paid Weekly
  Clinton   The Banner   Paid Weekly
  Cohasset  

Cohasset Mariner

www.wickedlocal.com/cohasset

  Paid Weekly
  Concord  

The Concord Journal

www.wickedlocal.com/concord

  Paid Weekly
  Danvers  

Danvers Herald

www.wickedlocal.com/danvers

  Paid Weekly
  Dedham  

Dedham Transcript

www.wickedlocal.com/dedham

  Paid Weekly
  Dover  

Dover/Sherborn Press

www.wickedlocal.com/dover

  Paid Weekly
  Easton  

Easton Journal

www.wickedlocal.com/easton

  Paid Weekly
  Framingham  

Westwood Press

www.wickedlocal.com/westwood

  Paid Weekly
  Georgetown  

Georgetown Record

www.wickedlocal.com/georgetown

  Paid Weekly
  Hamilton  

Hamilton-Wenham Chronicle

www.wickedlocal.com/hamilton

  Paid Weekly
  Hanover  

Hanover Mariner

www.wickedlocal.com/hanover

  Paid Weekly
  Hingham  

The Hingham Journal

www.wickedlocal.com/hingham

  Paid Weekly
  Holbrook  

Holbrook Sun

www.wickedlocal.com/holbrook

  Paid Weekly
  Hopkinton  

Hopkinton Crier

www.wickedlocal.com/hopkinton

  Paid Weekly
  Hudson  

Hudson Sun

www.wickedlocal.com/hudson

  Paid Weekly
  Hyannis  

The Register

www.wickedlocal.com/barnstable

  Paid Weekly
  Hyannis  

Barnstable Patriot

www.barnstablepatriot.com

  Paid Weekly
  Ipswich  

Ipswich Chronicle

www.wickedlocal.com/ipswich

  Paid Weekly
  Kingston  

Kingston Reporter

www.wickedlocal.com/kingston

  Paid Weekly
  Lexington  

Lexington Minuteman

www.wickedlocal.com/lexington

  Paid Weekly
  Lincoln  

Lincoln Journal

www.wickedlocal.com/lincoln

  Paid Weekly
  Littleton  

Littleton Independent

www.wickedlocal.com/littleton

  Paid Weekly

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Malden  

Malden Observer

www.wickedlocal.com/malden

  Paid Weekly
  Mansfield  

Mansfield News

www.wickedlocal.com/mansfield

  Paid Weekly
  Marblehead  

Marblehead Reporter

www.wickedlocal.com/marblehead

  Paid Weekly
  Marion  

The Sentinel

www.wickedlocal.com/marion

  Paid Weekly
  Marlborough  

Marlborough Enterprise

www.wickedlocal.com/marlborough

  Paid Weekly
  Marshfield  

Marshfield Mariner

www.wickedlocal.com/marshfield

  Paid Weekly
  Maynard/Stow  

The Beacon-Villager

www.wickedlocal.com/maynard

  Paid Weekly
  Medfield  

Medfield Press

www.wickedlocal.com/medfield

  Paid Weekly
  Medford  

Medford Transcript

www.wickedlocal.com/medford

  Paid Weekly
  Melrose  

Melrose Free Press

www.wickedlocal.com/melrose

  Paid Weekly
  Middleboro  

Middleboro Gazette

www.southcoasttoday.com

  Paid Weekly
  Nantucket  

Nantucket Inquirer & Mirror

www.ack.net

www.discovernantucket.com

  Paid Weekly
  Natick  

Natick Bulletin & Tab

www.wickedlocal.com/natick

  Paid Weekly
  New Bedford   Advocate   Paid Weekly
  New Bedford   Chronicle   Paid Weekly
  New Bedford   Spectator   Paid Weekly
  North Andover  

North Andover Citizen

www.wickedlocal.com/northandover

  Paid Weekly
  Northborough/Southborough  

The Northborough/Southborough Villager

www.wickedlocal.com/northborough

  Paid Weekly
  Norwell  

Norwell Mariner

www.wickedlocal.com/norwell

  Paid Weekly
  Norwood  

Norwood Transcript & Bulletin

www.wickedlocal.com/norwood

  Paid Weekly
  Pembroke  

Pembroke Mariner & Express

www.wickedlocal.com/pembroke

  Paid Weekly
  Plymouth  

Old Colony Memorial

www.wickedlocal.com/plymouth

  Paid Weekly
  Provincetown  

The Provincetown Banner

www.wikedlocal.com/provincetown

  Paid Weekly
  Reading  

The Reading Advocate

www.wickedlocal.com/reading

  Paid Weekly
  Rockland  

Rockland Standard

www.wickedlocal.com/rockland

  Paid Weekly
  Roslindale  

Roslindale Transcript

www.wickedlocal.com/roslindale

  Paid Weekly

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Saugus  

Saugus Advertiser

www.wickedlocal.com/saugus

  Paid Weekly
  Scituate  

Scituate Mariner

www.wickedlocal.com/scituate

  Paid Weekly
  Sharon  

Sharon Advocate

www.wickedlocal.com/sharon

  Paid Weekly
  Shrewsbury  

Shrewsbury Chronicle

www.wickedlocal.com/shrewsbury

  Paid Weekly
  Somerville  

Somerville Journal

www.wickedlocal.com/somerville

  Paid Weekly
  Stoughton  

Stoughton Journal

www.wickedlocal.com/stoughton

  Paid Weekly
  Sudbury  

The Sudbury Town Crier

www.wickedlocal.com/sudbury

  Paid Weekly
  Swampscott  

Swampscott Reporter

www.wickedlocal.com/swampscott

  Paid Weekly
  Tewksbury  

Tewksbury Reporter

www.wickedlocal.com/tewksbury

  Paid Weekly
  Wakefield  

Wakefield Observer

www.wickedlocal.com/wakefield

  Paid Weekly
  Walpole  

The Walpole Times

www.wickedlocal.com/walpole

  Paid Weekly
  Waltham  

Waltham News Tribune

www.wickedlocal.com/waltham

  Paid Weekly
  Wareham  

Wareham Courier

www.wickedlocal.com/wareham

  Paid Weekly
  Watertown  

Watertown Tab & Press

www.wickedlocal.com/watertown

  Paid Weekly
  Wayland  

The Wayland Town Crier

www.wickedlocal.com/wayland

  Paid Weekly
  Wellesley  

The Wellesley Townsman

www.wickedlocal.com/wellesley

  Paid Weekly
  West Roxbury  

West Roxbury Transcript

www.wickedlocal.com/west-roxbury

  Paid Weekly
  Westborough  

Westborough News

www.wickedlocal.com/westborough

  Paid Weekly
  Westford  

Westford Eagle

www.wickedlocal.com/westford

  Paid Weekly
  Weston  

The Weston Town Crier

www.wickedlocal.com/weston

  Paid Weekly
  Weymouth  

Weymouth News

www.wickedlocal.com/weymouth

  Paid Weekly
  Winchester  

The Winchester Star

www.wickedlocal.com/winchester

  Paid Weekly
  Bellingham  

County Gazette

www.wickedlocal.com/franklin

  Free Weekly
  Boston  

Boston Homes

www.linkbostonhomes.com

  Free Weekly
  Bourne  

Bourne Courier

www.wickedlocal.com/bourne

  Free Weekly

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Bridgewater  

Bridgewater Independent

www.wickedlocal.com/bridgewater

  Free Weekly
  Brookline  

Brookline Tab

www.wickedlocal.com/brookline

  Free Weekly
  Canton  

Canton Journal

www.wickedlocal.com/canton

  Free Weekly
  Danvers   North Shore Sunday   Free Weekly
  Fall River  

Fall River Spirit

www.southcoasttoday.com

  Free Weekly
  Fall River  

OJornal

www.ojournal.com

  Free Weekly
  Falmouth  

The Bulletin

www.wickedlocal.com/falmouth

  Free Weekly
  Framingham  

Framingham Tab

www.wickedlocal.com/framingham

  Free Weekly
  Gloucester   Cape Ann Beacon   Free Weekly
  Needham  

Needham Times

www.wickedlocal.com/needham

  Free Weekly
  Newburyport  

The Newburyport Current

www.wickedlocal.com/newburyport

  Free Weekly
  Newton  

Newton Tab

www.wickedlocal.com/newton

  Free Weekly
  North Attleborough  

The North Attleborough Free Press

www.wickedlocal.com/northattleborough

  Free Weekly
  Randolph  

Randolph Herald

www.wickedlocal.com/randolph

  Free Weekly
  Raynham  

Raynham Call

www.wickedlocal.com/raynham

  Free Weekly
  Salem  

Salem Gazette

www.wickedlocal.com/salem

  Free Weekly
  Sandwich   Sandwich Broadsider   Free Weekly
  Stoneham  

Stoneham Sun

www.wickedlocal.com/stoneham

  Free Weekly
  Wilmington  

Wilmington Advocate

www.wickedlocal.com/wilmington

  Free Weekly
  Woburn  

Woburn Advocate

www.wickedlocal.com/woburn

  Free Weekly
  Fall River   South Coast Life   Shopper
  Hyannis   DollarSaver/TMC   Shopper
  Middleboro  

Middleboro Gazette Extra/TMC

www.southcoasttoday.com

  Shopper
  New Bedford   SouthCoast MarketPlace/TMC   Shopper
  Taunton   Yellow Jacket   Shopper
  Amesbury   www.wickedlocal.com/amesbury   On-line Only
  Ashland   www.wickedlocal.com/ashland   On-line Only
  Avon   www.wickedlocal.com/avon   On-line Only
  Bellingham   www.wickedlocal.com/bellingham   On-line Only
  Berkley   www.wickedlocal.com/berkley   On-line Only
  Bolton   www.wickedlocal.com/bolton   On-line Only
  Boston   www.wickedlocal.com/goodlife   On-line Only
  Boxborough   www.wickedlocal.com/boxborough   On-line Only

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Brewster   www.wickedlocal.com/brewster   On-line Only
  Brockton   www.wickedlocal.com/brockton   On-line Only
  Chatham   www.wickedlocal.com/chatham   On-line Only
  Clinton   www.wickedlocal.com/clinton   On-line Only
  Dennis   www.wickedlocal.com/dennis   On-line Only
  Dighton   www.wickedlocal.com/dighton   On-line Only
  Duxbury   www.wickedlocal.com/duxbury   On-line Only
  East Bridgewater   www.wickedlocal.com/bridgewatereast   On-line Only
  Eastham   www.wickedlocal.com/eastham   On-line Only
  Essex   www.wickedlocal.com/essex   On-line Only
  Fall River   www.wickedlocal.com/fall-river   On-line Only
  Foxborough   www.wickedlocal.com/foxborough   On-line Only
  Gloucester   www.wickedlocal.com/gloucester   On-line Only
  Halifax   www.wickedlocal.com/halifax   On-line Only
  Hanson   www.wickedlocal.com/hanson   On-line Only
  Harvard   www.wickedlocal.com/harvard   On-line Only
  Harwich   www.wickedlocal.com/harwich   On-line Only
  Holliston   www.wickedlocal.com/holliston   On-line Only
  Hopedale   www.wickedlocal.com/hopedale   On-line Only
  Hull   www.wickedlocal.com/hull   On-line Only
  Lakeville   www.wickedlocal.com/lakeville   On-line Only
  Lancaster   www.wickedlocal.com/lancaster   On-line Only
  Manchester   www.wickedlocal.com/manchester   On-line Only
  Mashpee   www.wickedlocal.com/mashpee   On-line Only
  Mattapoisett   www.wickedlocal.com/mattapoisett   On-line Only
  Medway   www.wickedlocal.com/medway   On-line Only
  Mendon   www.wickedlocal.com/mendon   On-line Only
  Middleborough   www.wickedlocal.com/middleborough   On-line Only
  Middleton   www.wickedlocal.com/middleton   On-line Only
  Milford   www.wickedlocal.com/milford   On-line Only
  Millis   www.wickedlocal.com/millis   On-line Only
  Milton   www.wickedlocal.com/milton   On-line Only
  Nantucket   www.wickedlocal.com/nantucket   On-line Only
  Norfolk   www.wickedlocal.com/norfolk   On-line Only
  North Boston   www.wickedlocal.com/northofboston   On-line Only
  Norton   www.wickedlocal.com/norton   On-line Only
  Orleans   www.wickedlocal.com/orleans   On-line Only
  Plainville   www.wickedlocal.com/plainville   On-line Only
  Plymouth   www.plymouthguide.com   On-line Only
  Plympton   www.wickedlocal.com/plympton   On-line Only
  Quincy   www.wickedlocal.com/quincy   On-line Only
  Rehoboth   www.wickedlocal.com/rehoboth   On-line Only
  Rochester   www.wickedlocal.com/rochester   On-line Only
  Rockport   www.wickedlocal.com/rockport   On-line Only
  Sandwich   www.wickedlocal.com/sandwich   On-line Only
  Sherborn   www.wickedlocal.com/sherborn   On-line Only
  Somerset   www.wickedlocal.com/somerset   On-line Only
  Southborough   www.wickedlocal.com/southborough   On-line Only
  Stow   www.wickedlocal.com/stow   On-line Only
  Swansea   www.wickedlocal.com/swansea   On-line Only
  Taunton   www.wickedlocal.com/taunton   On-line Only

 

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Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Topsfield   www.wickedlocal.com/topsfield   On-line Only
  Truro   www.wickedlocal.com/truro   On-line Only
  Upton   www.wickedlocal.com/upton   On-line Only
  Wellfleet   www.wickedlocal.com/wellfleet   On-line Only
  Wenham   www.wickedlocal.com/wenham   On-line Only
  West Bridgewater   www.wickedlocal.com/bridgewaterwest   On-line Only
  West Port   www.wickedlocal.com/westport   On-line Only
  Whitman   www.wickedlocal.com/whitman   On-line Only
  Wrentham   www.wickedlocal.com/wrentham   On-line Only
  Yarmouth   www.wickedlocal.com/yarmouth   On-line Only
Florida   Daytona Beach  

Daytona Beach News-Journal

www.news-journalonline.com

  Daily
  Fort Walton Beach  

Northwest Florida Daily News

www.nwfdailynes.com

www.destin.com

www.emeraldcoast.com

www.nwfvarsity.com

  Daily
  Gainesville  

The Gainesville Sun

www.gainesville.com

www.gatorsports.com

  Daily
  Lakeland  

The Ledger

www.theledger.com

  Daily
  Leesburg  

Daily Commercial

www.dailycommercial.com

  Daily
  Ocala  

Ocala Star Banner

www.ocala.com

  Daily
  Panama City  

Panama City News Herald

www.newsherald.com

www.panamacity.com

www.panhandlevarsity.com

  Daily
  Sarasota  

Herald-Tribune

www.heraldtribune.com

  Daily
  Winter Haven  

News Chief

www.newschief.com

  Daily
  Apalachicola  

The Times

www.apalachitimes.com

  Paid Weekly
  Bonifay   Holmes County Times Advertiser   Paid Weekly
  Chipley  

Washington County News

www.chipleypaper.com

  Paid Weekly
  Crestview  

Crestview News Bulletin

www.crestviewbulletin.com

  Paid Weekly
  Destin  

The Destin Log

www.thedestinlog.com

  Paid Weekly
  Milton  

Santa Rosa Press Gazette

www.srpressgazette.com

  Paid Weekly
  Port St. Joe  

The Star

www.starfl.com

  Paid Weekly
  Clermont  

South Lake Press

www.southlakepress.com

  Free Weekly
  Gainesville   Gainesville Sun   Free Weekly

 

34


Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Santa Rosa Beach  

The Walton Sun

www.waltonsun.com

  Free Weekly
  Daytona Beach   Daytona Pennysaver   Shopper
  Daytona Beach   Flagler Pennysaver   Shopper
  Daytona Beach   New Smyrna Pennysaver   Shopper
  Daytona Beach   West Voluisa Pennysaver   Shopper
North Carolina   Asheboro  

The Courier-Tribune

www.courier-tribune.com

  Daily
  Burlington  

Times-News

www.thetimesnews.com

  Daily
  Gastonia  

The Gaston Gazette

www.gastongazette.com

  Daily
  Hendersonville  

Times-News

www.blueridgenow.com

  Daily
  Jacksonville  

The Daily News

www.jdnews.com

  Daily
  Kinston  

The Free Press

www.kinston.com

  Daily
  Lexington  

The Dispatch

www.the-dispatch.com

  Daily
  New Bern  

Sun Journal

www.newbernsj.com

  Daily
  Shelby  

The Star

www.shelbystar.com

  Daily
  Wilmington  

Star News

www.starnewsonline.com

  Daily
  Havelock  

Havelock News

www.havenews.com

  Paid Weekly
  Surf City   Topsail Advertiser   Free Weekly
  Asheboro   CT Marketplace   Shopper
New Hampshire   Dover   Foster’s Daily Democrat   Daily
  Portsmouth  

Portsmouth Herald

www.seacoastonline.com

  Daily
  Exeter   Exeter News-Letter   Paid Weekly
  Hampton   Hampton Union   Paid Weekly
  Portsmouth   Seacoast Sunday   Paid Weekly
  Rochester   Rochester Times   Paid Weekly
  Hampton   Beachcomber   Free Weekly
New York   Middletown  

Times Herald-Record

www.recordonline.com

  Daily
  Middletown  

The Gazette

www.hudsonvalley.com

  Free Weekly
  Middletown  

Pointer View

www.pointerview.com

  Free Weekly
  Middletown   Extra/TMC   Shopper
Pennsylvania   Stroudsburg  

Pocono Record

www.poconorecord.com

  Daily
  Carbondale  

The Villager

www.moscowvillager.com

  Paid Weekly
  Carbondale  

Carbondale News

www.thecarbondalenews.com

  Paid Weekly

 

35


Table of Contents

State

 

City

 

Masthead

 

Circulation Type

  Stroudsburg   Pike & Monroe Life   Free Weekly
  Stroudsburg   Plus/TMC   Shopper
Maine   Kennebunk  

York County Coast Star

www.seacoastonline.com

  Paid Weekly
  Sanford   Sanford News   Paid Weekly
  York  

York Weekly

www.seacoastonline.com

  Paid Weekly
Tennessee   Columbia  

Columbia Daily Herald

www.columbiadailyherald.com

  Daily
  Columbia  

Spring Hill Advertiser News

www.advertisernews.biz

www.brentwoodlife.net

www.franklinlife.net

  Paid Weekly
  Columbia   Value Guide   Shopper
Alabama   Gadsden  

The Gadsden Times

www.gadsdentimes.com

  Daily
  Tuscaloosa  

The Tuscaloosa News

www.tuscaloosanews.com

www.tidesports.com

  Daily
Connecticut   Norwich  

The Bulletin

www.norwichbulletin.com

  Daily
  Norwich   Bulletin Deals   Shopper
Rhode Island   Providence  

The Providence Journal

www.providencejournal.com

  Daily
  Providence   Providence Journal Express   Shopper
South Carolina   Spartanburg  

Herald-Journal

www.goupstate.com

  Daily

 

36


Table of Contents

 

Central US Publishing

 

State

 

City

  

Masthead

  

Circulation Type

Illinois

  Benton   

Benton Evening News

www.bentoneveningnews.com

   Daily
  Canton   

Daily Ledger

www.cantondailyledger.com

   Daily
  Carmi   

The Carmi Times

www.carmitimes.com

   Daily
  Du Quoin   

Du Quoin Evening Call

www.duquoin.com

   Daily
  El Dorado    El Dorado Daily Journal    Daily
  Freeport   

The Journal Standard

www.journalstandard.com

   Daily
  Galesburg   

The Register-Mail

www.galesburg.com

   Daily
  Harrisburg   

The Daily Register

www.dailyregister.com

   Daily
  Kewanee   

Star-Courier

www.starcourier.com

   Daily
  Lincoln   

The Courier

www.lincolncourier.com

   Daily
  Macomb   

McDonough County Voice

www.mcdonoughvoice.com

   Daily
  Marion   

The Daily Republican

www.dailyrepublicannews.com

   Daily
  Monmouth   

Daily Review Atlas

www.reviewatlas.com

   Daily
  Olney   

The Olney Daily Mail

www.olneydailymail.com

   Daily
  Pekin   

Pekin Daily Times

www.pekintimes.com

   Daily
  Peoria   

Journal Star

www.pjstar.com

   Daily
  Pontiac   

Daily Leader

www.pontiacdailyleader.com

   Daily
  Rockford   

Rockford Register Star

www.rrstar.com

www.rockfordwoman.com

www.rockfordparent.com

   Daily
  Springfield   

The State Journal-Register

www.sj-r.com

   Daily
  Abingdon   

Abingdon Argus-Sentinel

www.eaglepublications.com

   Paid Weekly
  Aledo   

The Times Record

www.aledotimesrecord.com

   Paid Weekly
  Augusta   

Augusta Eagle-Scribe

www.eaglepublicatons.com

   Paid Weekly
  Cambridge   

Cambridge Chronicle

www.cambridgechron.com

   Paid Weekly
  Carmi    The Weekly Times    Paid Weekly

 

37


Table of Contents

State

 

City

  

Masthead

  

Circulation Type

  Chester   

Randolph County Herald Tribune

www.randolphcountyheraldtribune.com

   Paid Weekly
  Christopher    The Progress    Paid Weekly
  Du Quoin    Du Quoin News    Paid Weekly
  Du Quoin    Ashley News    Paid Weekly
  Fairbury    The Blade    Paid Weekly
  Flora   

Advocate Press

www.advocatepress.com

   Paid Weekly
  Galva   

Galva News

www.galvanews.com

   Paid Weekly
  Geneseo   

The Geneseo Republic

www.geneseorepublic.com

   Paid Weekly
  Newton   

Newton Press Mentor

www.pressmentor.com

   Paid Weekly
  Oquawka    Oquawka Current    Paid Weekly
  Orion   

Orion Gazette

www.oriongazette.com

   Paid Weekly
  Roseville   

Roseville Independent

www.eaglepublications.com

   Paid Weekly
  Shawneetown    Ridgway News    Paid Weekly
  Shawneetown    Gallatin Democrat    Paid Weekly
  Steelville    The Steelville Ledger    Paid Weekly
  Teutopolis   

Teutopolis Press

www.teutopolispress.com

   Paid Weekly
  West Frankfort   

SI Trader

www.sitraders.com

   Paid Weekly
  Chillicothe   

Chillicothe Times Bulletin

www.chillicothetimesbulletin.com

   Free Weekly
  East Peoria   

East Peoria Times-Courier

www.eastpeoriatimescourier.com

   Free Weekly
  Galesburg   

Knox County Neighbors

www.galesburg.com

   Free Weekly
  Macomb    Daily Brief    Free Weekly
  Metamora   

Woodford Times

www.woodfordtimes.com

   Free Weekly
  Morton   

Morton Times News

www.mortontimesnews.com

   Free Weekly
  Washington   

Washington Times Reporter

www.washingtontimesreporter.com

   Free Weekly
  Aledo    Town Crier Advertiser    Shopper
  Canton    Fulton County Shopper    Shopper
  Flora    CCAP Special    Shopper
  Freeport    The Scene    Shopper
  Geneseo    Henry County Advertizer/Shopper    Shopper
  Lincoln    Logan County Shopper    Shopper
  Macomb    McDonough County Choice    Shopper
  Monmouth    Pennysaver    Shopper
  Olney    Richland County Shopper    Shopper
  Olney    Jasper County News Eagle    Shopper
  Peoria    The Marketplace    Shopper
  Peoria    Pekin Extra    Shopper

 

38


Table of Contents

State

 

City

  

Masthead

  

Circulation Type

  Pontiac    Livingston Shopping News    Shopper
  Rockford    The Weekly    Shopper
  Springfield    Springfield Advertiser    Shopper
  Springfield    Springfield Shopper    Shopper
Ohio   Canton   

The Repository

www.cantonrep.com

   Daily
  Columbus   

The Columbus Dispatch

www.dispatch.com

   Daily
  Dover/New Philadelphia   

The Times-Reporter

www.timesreporter.com

   Daily
  Massillon   

The Independent

www.indeonline.com

   Daily
  Bexley   

This Week Bexley

www.thisweeknews.com/bexley

   Free Weekly
  Clintonville   

This Week Clintonville (Booster)

www.thisweeknews.com/clintonville

   Free Weekly
  Columbus    The Bag    Free Weekly
  Columbus    Alive    Free Weekly
  Columbus    This Week Southside Shopper    Free Weekly
  Columbus   

This Week Westside

www.thisweeknews.com/west-side

   Free Weekly
  Delaware   

This Week Delaware

www.thisweeknews.com/delaware

   Free Weekly
  Dublin   

This Week Dublin

www.thisweeknews.com/dublin

   Free Weekly
  German Village   

This Week German Village

www.thisweeknews.com/german-village

   Free Weekly
  Grandview   

This Week Grandview

www.thisweeknews.com/grandview

   Free Weekly
  Green   

The Suburbanite

www.thesuburbanite.com

   Free Weekly
  Grove City   

This Week Grove City

www.thisweeknews.com/grove-city

   Free Weekly
  Hilliard   

This Week Hilliard

www.thisweeknews.com/hilliard

   Free Weekly
  Johnstown   

This Week Johnstown

www.thisweeknews.com/johnstown

   Free Weekly
  Marysville   

This Week Marysville

www.thisweeknews.com/marysville

   Free Weekly
  New Albany   

This Week New Albany

www.thisweeknews.com/new-albany

   Free Weekly
  Northland   

This Week Northland

www.thisweeknews.com/northland

   Free Weekly
  Northwest   

This Week Northwest

www.thisweeknews.com/northwest

   Free Weekly
  Olentangy   

This Week Olentangy

www.thisweeknews.com/olentangy

   Free Weekly
  Pickerington   

This Week Pickerington

www.thisweeknews.com/pickerington

   Free Weekly
  Reynoldsburg   

This Week Reynoldsburg

www.thisweeknews.com/reynoldsburg

   Free Weekly

 

39


Table of Contents

State

 

City

  

Masthead

  

Circulation Type

  Rocky Fork   

This Week Rocky Fork

www.thisweeknews.com/gahanna

   Free Weekly
  Upper Arlington   

This Week Upper Arlington

www.thisweeknews.com/upper-arlington

   Free Weekly
  West Licking   

This Week Licking County

www.thisweeknews.com/licking-county

   Free Weekly
  Westerville   

This Week Westerville

www.thisweeknews.com/westerville

   Free Weekly
  Whitehall   

This Week Whitehall

www.thisweeknews.com/whitehall

   Free Weekly
  Winchester   

This Week Canal Winchester

www.thisweeknews.com/canal-winchester

   Free Weekly
  Worthington   

This Week Worthington

www.thisweeknews.com/worthington

   Free Weekly
  Canton    The Wrap    Shopper
  Dover/New Philadelphia    TMC-ExTra    Shopper
New York   Canandaigua   

Daily Messenger

www.mpnnow.com

www.mpnnow.com/commercialprinting

   Daily
  Corning   

The Leader

www.the-leader.com

   Daily
  Herkimer   

The Evening Telegram

www.timestelegram.com

   Daily
  Hornell   

Evening Tribune

www.eveningtribune.com

   Daily
  Utica   

Utica Observer-Dispatch

www.uticaod.com

   Daily
  Wellsville   

Wellsville Daily Reporter

www.wellsvilledaily.com

   Daily
  Dansville   

Genesee Country Express

www.dansvilleonline.com

   Paid Weekly
  Newark/Palmyra   

Wayne Post

www.waynepost.com

   Paid Weekly
  Penn Yan   

The Chronicle-Express

www.chronicle-express.com

   Paid Weekly
  Bath   

Steuben Courier-Advocate

www.steubencourier.com

   Free Weekly
  Brighton/Pittsford   

Brighton-Pittsford Post

www.brightonpittsfordpost.com

   Free Weekly
  Canandaigua    Canandaigua Community Post    Free Weekly
  Fairport   

Fairport-ER Post

www.fairport-erpost.com

   Free Weekly
  Gates/Chili   

Gates-Chili Post

www.gateschilipost.com

   Free Weekly
  Greece   

Greece Post

www.greecepost.com

   Free Weekly
  Hamilton    Mid-York Weekly    Free Weekly
  Henrietta   

Henrietta Post

www.henriettapost.com

   Free Weekly
  Irondequoit   

Irondequoit Post

www.irondequoitpost.com

   Free Weekly

 

40


Table of Contents

State

 

City

  

Masthead

  

Circulation Type

  Penfield   

Penfield Post

www.penfieldpost.com

   Free Weekly
  Utica    The Pennysaver    Free Weekly
  Victor   

Victor Post

www.victorpost.com

   Free Weekly
  Webster   

Webster Post

www.websterpost.com

   Free Weekly
  Corning    Corning Pennysaver    Shopper
  Herkimer    Your Valley    Shopper
  Hornell    Pennysaver Plus    Shopper
  Horseheads    The Shopper    Shopper
  Lyons    Lyons Shopping Guide    Shopper
  Newark    Newark Pennysaver    Shopper
  Penn Yan    Chronicle Ad-Visor    Shopper
  Sodus    Sodus Pennysaver    Shopper
  Wayne County    Timesaver    Shopper
Michigan   Adrian   

The Daily Telegram

www.lenconnect.com

   Daily
  Cheboygan   

Cheboygan Daily Tribune

www.cheboygannews.com

www.mackinacjournal.com

   Daily
  Coldwater   

The Daily Reporter

www.thedailyreporter.com

   Daily
  Hillsdale   

Hillsdale Daily News

www.hillsdale.net

   Daily
  Holland   

The Holland Sentinel

www.hollandsentinel.com

www.myzeeland.com

   Daily
  Ionia   

Sentinel-Standard

www.sentinel-standard.com

   Daily
  Monroe   

The Monroe News

www.monroenews.com

   Daily
  Sault Ste Marie   

The Evening News

www.sooeveningnews.com

   Daily
  Sturgis   

Sturgis Journal

www.sturgisjournal.com

   Daily
  Coldwater   

Bronson Journal

www.thebronsonjournal.com

   Paid Weekly
  Monroe   

Bedford News

www.bedfordnow.com

   Free Weekly
  Adrian   

Adrian Access Shopper

www.accessshoppersguide.com

   Shopper
  Allegan   

Flashes Shopping Guide (Allegan/Lakeshore)

www.flashespublishers.com

   Shopper
  Cheboygan    Shopper Fair    Shopper
  Coldwater    The Reporter Extra    Shopper
  Coldwater    Coldwater Shoppers Guide    Shopper
  Hillsdale   

Tip Off Shopping Guide

www.tipoffonline.com

   Shopper
  Holland   

Flashes Shopping Guide (Holland/Zeeland)

www.flashespublishers.com

   Shopper

 

41


Table of Contents

State

 

City

  

Masthead

  

Circulation Type

  Ionia    Sentinel-Standard TMC    Shopper
  Monroe    Cover Story    Shopper
  Sault Ste Marie    Tri County Buyers Guide    Shopper
  Sturgis    Sturgis Gateway Shopper    Shopper
Delaware   Dover   

Community Publication

www.communitypub.com

   Free Weekly
  Dover   

Dover Post

www.doverpost.com

www.delmarvaexpress.com

   Free Weekly
  Dover   

Milford Beacon

www.milfordbeacon.com

   Free Weekly
  Dover   

Smyrna/Clayton Sun Times

www.scsuntimes.com

   Paid Weekly
  Dover   

The Middletown Transcript

www.middletowntranscript.com

   Paid Weekly
  Dover   

The Sussex Countian

www.sussexcountian.com

   Paid Weekly
  Dover    Kent County Sunday    Free Weekly
Pennsylvania   Honesdale   

The Wayne Independent

www.wayneindependent.com

   Daily
  Waynesboro   

The Record Herald

www.therecordherald.com

   Daily
  Greencastle   

The Echo Pilot

www.echo-pilot.com

   Paid Weekly
  Hawley   

News Eagle

www.neagle.com

   Paid Weekly
  Hawley    The Pike Pennysaver    Shopper
  Honesdale    The Independent Extra    Shopper
West Virginia   Keyser   

Mineral Daily News Tribune

www.newstribune.info

   Daily
  Ripley   

The Jackson Herald

www.jacksonnewspapers.com

   Paid Weekly
  Ripley   

The Jackson Star News

www.jacksonnewspapers.com

   Paid Weekly
  Keyser    Today’s Shopper    Shopper
  Ravenswood   

Star Herald Weekender

www.jacksonnewspapers.com

   Shopper
Virginia   Petersburg   

The Progress-Index

www.progress-index.com

   Daily

 

42


Table of Contents

 

Western US Publishing

 

State

  

City

  

Masthead

  

Circulation Type

Missouri    Camdenton   

Lake Sun Leader

www.lakenewsonline.com

   Daily
   Chillicothe   

Constitution Tribune

www.chillicothenews.com

   Daily
   Hannibal   

Hannibal Courier Post

www.hannibal.net

   Daily
   Independence   

The Examiner

www.examiner.net

   Daily
   Kirksville   

Kirksville Daily Express & News

www.kirksvilledailyexpress.com

   Daily
   Mexico   

The Mexico Ledger

www.mexicoledger.com

   Daily
   Moberly   

Moberly Monitor Index

www.moberlymonitor.com

   Daily
   Neosho   

Neosho Daily News

www.neoshodailynews.com

   Daily
   Rolla   

Rolla Daily News

www.therolladailynews.com

   Daily
   Waynesville   

The Daily Guide

www.waynesvilledailyguide.com

   Daily
   Aurora   

Aurora Advertiser

www.auroraadvertiser.net

   Paid Weekly
   Boonville   

Boonville Daily News

www.boonvilledailynews.com

   Paid Weekly
   Brookfield   

The Linn County Leader

www.linncountyleader.com

   Paid Weekly
   Carthage   

The Carthage Press

www.carthagepress.com

   Paid Weekly
   St James   

St James Leader Journal

www.leaderjournal.com

   Paid Weekly
   Boonville    Weekly    Free Weekly
   Camdenton   

West Side Star

www.lakenewsonline.com

   Free Weekly
   Carthage    The Carthage Press Wednesday TMC    Free Weekly
   Hannibal    Salt River Journal    Free Weekly
   Neosho    The Neighborhood Showcase    Free Weekly
   Osage Beach    Lake Area News Focus    Free Weekly
   Osage Beach    Lake of the Ozarks Real Estate    Free Weekly
   Osage Beach    Tube Tab    Free Weekly
   Osage Beach    Vacation News    Free Weekly
   Rolla    Rolla Daily News Extra    Free Weekly
   Aurora    Big AA Shopper    Shopper
   Brookfield    Sho-Me Shopper    Shopper
   Camdenton    Lake Sun Extra    Shopper
   Chillicothe    Chillicothe C-T Shopper    Shopper
   Joplin    Big Nickel    Shopper
   Kirksville    Nemo Trader    Shopper
   Kirksville    Kirksville Crier    Shopper

 

43


Table of Contents

State

  

City

  

Masthead

  

Circulation Type

   Moberly    The Shopper    Shopper
   Osage Beach    Lake of the Ozarks Boats    Shopper
   Waynesville    Daily Guide Extra    Shopper
Arkansas    Arkadelphia   

Daily Siftings Herald

www.siftingsherald.com

   Daily
   Fort Smith   

Ft. Smith Southwest Times Record

www.swtimes.com

   Daily
   Hope   

Hope Star

www.hopestar.com

   Daily
   Pine Bluff   

Pine Bluff Commercial

www.pbcommercial.com

   Daily
   Stuttgart   

Stuttgart Daily Leader

www.stuttgartdailyleader.com

   Daily
   Booneville   

Booneville Democrat

www.boonevilledemocrat.com

   Paid Weekly
   Cabot   

Cabot Star-Herald

www.lonokenews.net/cabot-star-herald

   Paid Weekly
   Charleston   

Charleston Express

www.charlestonexpress.com

   Paid Weekly
   Greenwood   

Greenwood Democrat

www.greenwooddemocrat.com

   Paid Weekly
   Gurdon   

Gurdon Times

www.thegurdontimes.com

   Paid Weekly
   Heber Springs   

The Sun Times

www.thesuntimes.com

   Paid Weekly
   Helena   

The Daily World

www.helena-arkansas.com

   Paid Weekly
   Hope   

Nevada County Picayune

www.picayune-times.com

   Paid Weekly
   Jacksonville   

Jacksonville Patriot

www.pulaskinews.net/jacksonville-patriot

   Paid Weekly
   Lonoke   

Lonoke Democrat

www.lonokenews.net/lonoke-democrat

   Paid Weekly
   Maurnelle   

Maurnelle Monitor

www.pulaskinews.net/maurnelle-monitor

   Paid Weekly
   Newport   

Newport Independent

www.newportindependent.com

   Paid Weekly
   North Little Rock   

North Little Rock Times

www.pulaskinews.net/north-little-rock-times

   Paid Weekly
   Paris   

Paris Express

www.paris-express.com

   Paid Weekly
   Van Buren   

Press Argus Courier

www.pressargus.com

   Paid Weekly
   Van Buren    Alma Journal    Paid Weekly
   White Hall   

The White Hall Journal

www.whitehalljournal.com

   Paid Weekly
   Arkadelphia   

Arkadelphia Extra

www.siftingsherald.com

   Free Weekly
   Carlisle   

Carlisle Independent

www.lonokenews.net/carlisle-independent

   Free Weekly

 

44


Table of Contents

State

  

City

  

Masthead

  

Circulation Type

   Van Buren   

Van Buren County Democrat

www.vanburencountydem.com

   Free Weekly
   Helena   

Daily World TMC

www.helena-arkansas.com

   Free Weekly
   Hope   

Star Extra

www.hopestar.com

   Free Weekly
   Hot Springs   

Hot Springs Village Voice

www.hsvoice.com

   Free Weekly
   Pine Bluff    Pine Bluff Commercial Today    Free Weekly
   Sherwood   

Sherwood Voice

www.pulaskinews.net/sherwood-voice

   Free Weekly
   Stuttgart   

The Xtra

www.stuttgartdailyleader.com

   Free Weekly
   White Hall    The Arsenel Sentinel    Free Weekly
   Fort Smith    River Valley Advertiser    Shopper
Texas    Brownwood   

Brownwood Bulletin

www.brownwoodtx.com

   Daily
   Sherman   

Herald Democrat

www.heralddemocrat.com

   Daily
   Stephenville   

Stephenville Empire-Tribune

www.yourstephenvilletx.com

   Daily
   Waxahachie   

Waxahachie Daily Light

www.waxahachietx.com

   Daily
   Alice   

Alice Echo-News Journal

www.alicetx.com

   Paid Weekly
   Ballinger    Ballinger Ledger    Paid Weekly
   Freer    Freer Press    Paid Weekly
   Freer    Duval Press    Paid Weekly
   Glen Rose   

Glen Rose Reporter

www.yourglenrosetx.com

   Paid Weekly
   Midlothian   

Midlothian Mirror

www.midlothianmirror.com

   Paid Weekly
   Robstown   

Neuces County Record Star

www.recordstar.com

   Paid Weekly
   Van Alstyne   

Van Alstyne Leader

www.vanalsyneleader.com

   Paid Weekly
   Winters    Winters Enterprise    Paid Weekly
   Anna   

Anna-Melissa Tribune

www.amtrib.com

   Free Weekly
   Prosper   

Prosper Press

www.prosperpressnews.com

   Free Weekly
   Alice    Alice Review    Shopper
   Brownsville   

Valley Bargain Book-South

www.valleybargainbook.com

   Shopper
   Brownwood    Heartland Trading Post    Shopper
   Bryan    Bryan County Shopper    Shopper
   Cooke County    Cooke County Shopper    Shopper
   Corpus Christi   

Ad Sack

www.adsack.com

   Shopper
   Harlingen   

Valley Bargain Book-North

www.valleybargainbook.com

   Shopper

 

45


Table of Contents

State

  

City

  

Masthead

  

Circulation Type

   Laredo   

Laredo Bargain Book

www.laredobargainbook.com

   Shopper
   Marshall/Johnston    Marshall/Johnston County Shopper    Shopper
   McAllen   

Valley Town Crier

www.yourvalleyvoice.com

   Shopper
   McAllen    Edinburg Review    Shopper
   North Colin    North Colin/Denton County Shopper    Shopper
   Sherman   

Grayson County Shopper

www.heralddemocrat.com/herald-democrat-shopper

   Shopper
   Stephenville    Cross Timbers Trading Post    Shopper
   Waxahachie    Ellis County Trading Post    Shopper
California    Barstow   

Desert Dispatch

www.desertdispatch.com

   Daily
   Ridgecrest   

The Daily Independent

www.ridgecrestca.com

www.rocketeer2.com

   Daily
   Stockton   

The Stockton Record

www.recordnet.com

   Daily
   Victorville   

Victorville Daily Press

www.vvdailypress.com

   Daily
   Yreka   

Siskiyou Daily News

www.siskiyoudaily.com

   Daily
   Gridley   

Gridley Herald

www.gridleyherald.com

   Paid Weekly
   Lucerne Valley   

Lucerne Valley Leader

www.lucernevalleyleader.com

   Paid Weekly
   Mt Shasta   

Weed Press

www.mtshastanews.com

   Paid Weekly
   Mt Shasta   

Dunsmuir News

www.mtshastanews.com

   Paid Weekly
   Mt Shasta   

Mt Shasta Herald

www.mtshastanews.com

   Paid Weekly
   Taft   

Midway Driller

www.taftmidwaydriller.com

   Paid Weekly
   Hesperia   

Hesperia Star

www.hesperiastar.com

   Free Weekly
   Stockton    VIDA    Free Weekly
   Victorville   

El Mojave

www.elmojave.com

   Free Weekly
   Apple Valley   

Apple Valley Review

www.applevalley-review.com

   Shopper
   Barstow    Barstow Plus    Shopper
   Gridley   

Gidley Shopping News

www.gridleyherald.com

   Shopper
   Mt Shasta    Super Saver Advertiser    Shopper
   Ridgecrest    Super Tuesday    Shopper
   Stockton    Sunday Select    Shopper
   Stockton   

The Valley Marketplace/TMC

www.esanjoaquin.com

   Shopper
   Victorville    Review    Shopper

 

46


Table of Contents

State

  

City

  

Masthead

  

Circulation Type

Kansas    Dodge City   

Dodge City Daily Globe

www.dodgeglobe.com

   Daily
   Leavenworth   

The Leavenworth Times

www.leavenworthtimes.com

   Daily
   McPherson   

McPherson Sentinel

www.mcphersonsentinel.com

   Daily
   Newton   

The Newton Kansan

www.thekansan.com

   Daily
   Pittsburg   

The Morning Sun

www.morningsun.net

   Daily
   Baxter Springs   

Cherokee County News-Advocate

www.sekvoice.com

   Paid Weekly
   El Dorado   

The Butler County Times-Gazette

www.butlercountytimesgazette.com

   Paid Weekly
   Greensburg   

Kiowa County Signal

www.kiowacountysignal.com

   Paid Weekly
   Pratt   

The Pratt Tribune

www.pratttribune.com

   Paid Weekly
   St John   

St John News

www.sjnewsonline.com

   Paid Weekly
   Wellington   

Wellington Daily News

www.wellingtondailynews.com

   Paid Weekly
   Dodge City    La Estrella    Free Weekly
   Leavenworth    Lansing This Week    Free Weekly
   Leavenworth   

The Fort Leavenworth Lamp

www.ftleavenworthlamp.com

   Free Weekly
   Dodge City    Shoppers Weekly    Shopper
   El Dorado    Shoppers Guide    Shopper
   Hiawatha    Penny Press 4    Shopper
   Leavenworth    Chronicle Shopper    Shopper
   McPherson/Newton    South Central Kansas Shoppers Guide    Shopper
   Pittsburg    The Sunland Shopper    Shopper
   Pratt    Sunflower Shopper    Shopper
Iowa    Ames   

Ames Tribune

www.amestrib.com

   Daily
   Boone   

Boone News Republican

www.newsrepublican.com

   Daily
   Adel   

Dallas County News

www.adelnews.com

   Paid Weekly
   Adel    Northeast Dallas County Record    Paid Weekly
   Hamburg   

Hamburg Reporter

www.hamburgreporter.com

   Paid Weekly
   Nevada    Nevada Journal    Paid Weekly
   Nevada   

Tri-County Times

www.tricountytimes.com

   Paid Weekly
   Perry   

The Perry Chief

www.theperrychief.com

   Paid Weekly
   Story City   

Story City Herald

www.storycityherald.com

   Paid Weekly
   Adel    Dallas County Today    Shopper
   Ames    Ames Sun/Story County Advertiser    Shopper

 

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State

  

City

  

Masthead

  

Circulation Type

   Boone    Boone Shopping News    Shopper
   Nevada    North Polk Sun    Shopper
   Perry    Chiefland Shopper    Shopper
Louisiana    Bastrop   

The Bastrop Daily Enterprise

www.bastropenterprise.com

   Daily
   Houma   

The Courier

www.houmatoday.com

   Daily
   Thibodaux   

Daily Comet

www.dailycomet.com

   Daily
   DeRidder   

Beauregard Daily News

www.beauregarddailynews.net

   Paid Weekly
   Donaldsonville   

The Donaldsonville Chief

www.donaldsonvillechief.com

   Paid Weekly
   Gonzales   

Gonzales Weekly Citizen

www.weeklycitizen.com

   Paid Weekly
   Leesville   

Leesville Daily Leader

www.leesvilledailyleader.com

   Paid Weekly
   Plaquemine   

Post South

www.postsouth.com

   Paid Weekly
   Sulphur   

Southwest Daily News

www.sulphurdailynews.com

   Paid Weekly
   Sulphur    Vinton News    Paid Weekly
   Sterlington    North Quachita Weekly    Free Weekly
   Gonzales   

The Marketeer

www.weeklycitizen.com

   Shopper
   Gonzales   

Nickel Ads

www.weeklycitizen.com

   Shopper
   Plaquemine   

West Bank Shopper

www.postsouth.com

   Shopper
   Sulphur    Calcasieu Shopper    Shopper
Minnesota    Crookston   

Crookston Daily Times

www.crookstontimes.com

   Daily
   Cottonwood    Tri-County News    Paid Weekly
   Granite Falls   

Granite Falls Advocate-Tribune

www.granitefallsnews.com

   Paid Weekly
   Montevideo   

Montevideo American News

www.montenews.com

   Paid Weekly
   Redwood Falls   

Redwood Gazette

www.redwoodfallsgazette.com

   Paid Weekly
   Sleepy Eye   

Sleepy Eye Herald Dispatch

www.sleepyeyenews.com

   Paid Weekly
   St James   

St James Plaindealer

www.stjamesnews.com

   Paid Weekly
   Wabasso    The Wabasso Standard    Paid Weekly
   Crookston    Crookston Valley Shopper    Shopper
   Montevideo   

The Star Advisor

www.montenews.com

   Shopper
   Redwood Falls    Redwood Falls Livewire    Shopper
   Sleepy Eye    Brown County Reminder    Shopper
   St James    Town and Country Shopper    Shopper

 

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State

  

City

  

Masthead

  

Circulation Type

Oklahoma    Ardmore   

The Daily Ardmoreite

www.ardmoreite.com

   Daily
   Bartlesville   

Examiner Enterprise

www.examiner-enterprise.com

   Daily
   Miami   

Miami News-Record

www.miamiok.com

   Daily
   Shawnee   

The Shawnee News-Star

www.news-star.com

   Daily
   Grove   

Grove Sun

www.grandlakenews.com

   Paid Weekly
   Jay   

Delaware County Journal

www.grandlakenews.com

   Paid Weekly
   Pawhuska   

Pawhuska Journal-Capital

www.pawhuskajournalcapital.com

   Paid Weekly
   Ardmore    Entertainment Spotlight    Shopper
   Bartlesville    Hometown Shopper    Shopper
   Miami    Northeast Oklahoma Trading Post    Shopper
Colorado    LaJunta   

LaJunta Tribune Democrat

www.lajuntatribunedemocrat.com

   Daily
   LaJunta   

Ag Journal

www.agjournalonline.com

   Paid Weekly
   LaJunta   

Fowler Tribune

www.fowlertribune.com

   Paid Weekly
   Las Animas   

Bent County Democrat

www.bcdemocratonline.com

   Paid Weekly
Nebraska    Nebraska City   

Nebraska City News Press

www.ncnewspress.com

   Paid Weekly
   Syracuse   

Syracuse Journal Democrat

www.journaldemocrat.com

   Paid Weekly
   Nebraska City    Penny Press 1    Shopper
Oregon    Medford   

Ashland Daily Tidings

www.dailytidings.com

   Daily
   Medford   

Mail Tribune

www.mailtribune.com

   Daily
   Medford   

Nickel

www.medfordnickel.com

   Shopper
North Dakota    Devils Lake   

Devils Lake Daily Journal

www.devilslakejournal.com

   Daily
   Devils Lake    The Country Peddler    Shopper

Tennessee

   Oak Ridge   

The Oak Ridger

www.oakridger.com

   Daily

 

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Item 1A. Risk Factors

You should carefully consider the following risks and other information in this Annual Report in evaluating us and our common stock. Any of the following risks could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into the following groups: Risks Related to Our Business, Risks Related to Our Manager, and Risks Related to Our Common Stock.

Risks Related to Our Business

We depend to a great extent on the economies and the demographics of the local communities that we serve, and we are also susceptible to general economic downturns, which have had, and could continue to have, a material and adverse impact on our advertising and circulation revenues and on our profitability.

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. 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 consumer 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. Declines in the U.S. economy could also significantly affect key advertising revenue categories, such as help wanted, real estate and automotive.

Uncertainty and adverse changes in the general economic conditions of markets in which we participate may negatively affect our business.

Current and future conditions in the economy have an inherent degree of uncertainty. 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. Adverse changes may occur as a result of weak global economic conditions, declining oil prices, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, 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.

Our ability to generate revenues is correlated with the economic conditions of three geographic regions of the United States.

Our Company primarily generates revenue in three geographic regions: the Northeast, the Southeast, and the Midwest. During the year ended December 27, 2015, approximately 28% of our total revenues were generated in three states in the Northeast: Massachusetts, Rhode Island, and New York. During the same period, approximately 21% of our total revenues were generated in two states in the Southeast: Florida and North Carolina. Also during the same period, approximately 19% of our total revenues were generated in two states in the Midwest: Illinois and Ohio. As a result of this geographic concentration, our financial results, including advertising and circulation revenue, depend largely upon economic conditions in these principal market areas. Accordingly, adverse economic developments within these three regions in particular could significantly affect our consolidated operations and financial results.

 

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Our indebtedness and any future indebtedness may limit our financial and operating activities and our ability to incur additional debt to fund future needs or dividends.

As of December 27, 2015, New Media’s outstanding indebtedness consists primarily of the New Media Credit Agreement. The New Media Credit Agreement provides for (i) a $200 million senior secured term facility and (ii) a $25 million senior secured revolving credit facility, with a $5 million sub-facility for letters of credit and a $5 million sub-facility for swing loans. In addition, we may request one or more new commitments for term loans or revolving loans from time to time up to an aggregate total of $75 million, subject to certain conditions. On September 3, 2014, the New Media Credit Agreement was amended to provide for additional term loans under the Incremental Facility in an aggregate principal amount of $25 million. On November 20, 2014, the New Media Credit Agreement was further amended to increase the amount available thereunder for incremental term loans from $75 million to $225 million in order to facilitate the financing of the acquisition of substantially all of the assets from Halifax Media Group LLC. On January 9, 2015, the New Media Credit Agreement was amended to provide for additional term loans and revolving commitments under the Incremental Facility in a combined aggregate principal amount of $152 million and to make certain amendments to the Revolving Credit Facility (as defined below). On February 13, 2015, the New Media Credit Agreement was amended to, amongst other things, replace the existing term loans with a new class of replacement term loans with extended call protection. On March 6, 2015, the New Media Credit Agreement was amended to provide for $15 million in additional revolving commitments under the Incremental Facility. On May 29, 2015, the New Media Credit Agreement was amended to provide for $25 million in additional term loans under the Incremental Facility. As of December 27, 2015, $0 was drawn under the Revolving Credit Facility.

The Advantage Credit Agreements, which arose from debt obligations assumed by us in connection with our acquisition of substantially all of the assets from Halifax Media Group LLC on January 9, 2015, are comprised of; (i) debt in the principal amount of $10 million that bears interest at the rate of 5.25% per annum, payable quarterly in arrears, maturing on December 31, 2016 and (ii) debt in the principal amount of $8 million that bears interest at the rate of LIBOR plus 6.25% per annum (with a minimum of 1% LIBOR) payable quarterly in arrears, maturing on March 31, 2019. As of December 27, 2015, $18 million was outstanding under the Advantage Credit Agreements.

All the above indebtedness and any future indebtedness we incur could:

 

   

require us to dedicate a portion of cash flow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes, including dividends or other distributions;

 

   

subject us to increased sensitivity to increases in prevailing interest rates;

 

   

place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or

 

   

reduce our flexibility in planning for or responding to changing business, industry and economic conditions.

In addition, our indebtedness could limit our ability to obtain additional financing on acceptable terms or at all to fund future acquisitions, working capital, capital expenditures, debt service requirements, general corporate and other purposes, which would have a material effect on our business and financial condition. Our liquidity needs could vary significantly and may be affected by general economic conditions, industry trends, performance and many other factors not within our control.

 

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Each of the New Media Credit Agreement and Advantage Credit Agreements contains covenants that restrict our operations and may inhibit our ability to grow our business, increase revenues and pay dividends to our stockholders.

The New Media Credit Agreement contains various restrictions, covenants and representations and warranties. If we fail to comply with any of these covenants or breach these representations or warranties in any material respect, such noncompliance would constitute a default under the New Media Credit Agreement (subject to applicable cure periods), and the lenders could elect to declare all amounts outstanding under the agreements related thereto to be immediately due and payable and enforce their respective interests against collateral pledged under such agreements.

The covenants and restrictions in the New Media Credit Agreement generally restrict our ability to, among other things:

 

   

incur or guarantee additional debt;

 

   

make certain investments, loans or acquisitions;

 

   

transfer or sell assets;

 

   

make distributions on capital stock or redeem or repurchase capital stock;

 

   

create or incur liens;

 

   

enter into transactions with affiliates;

 

   

consolidate, merge or sell all or substantially all of our assets; and

 

   

create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries.

The Advantage Credit Agreements contain covenants substantially consistent with those contained in the New Media Credit Facilities in addition to those required for compliance with the New Markets Tax Credit program.

The restrictions described above may interfere with our ability to obtain new or additional financing or may affect the manner in which we structure such new or additional financing or engage in other business activities, which may significantly limit or harm our results of operations, financial condition and liquidity. A default and any resulting acceleration of obligations under any of the New Media Credit Agreement or the Advantage Credit Agreements could also result in an event of default and declaration of acceleration under our other existing debt agreements. Such an acceleration of our debt would have a material adverse effect on our liquidity and our ability to continue as a going concern. A default under any of the New Media Credit Agreement or the Advantage Credit Agreements could also significantly limit our alternatives to refinance both the debt under which the default occurred and other indebtedness. This limitation may significantly restrict our financing options during times of either market distress or our financial distress, which are precisely the times when having financing options is most important.

We may not generate a sufficient amount of cash or generate sufficient funds from operations to fund our operations or repay our indebtedness.

Our ability to make payments on our indebtedness as required depends on our ability to generate cash flow from operations in the future. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise

 

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additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Furthermore, our ability to refinance would depend upon the condition of the finance and credit markets. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, financial condition and results of operations.

We may not be able to pay dividends in accordance with our announced intent or at all.

We have announced our intent to distribute a substantial portion of our free cash flow as a dividend to our stockholders, through a quarterly dividend, subject to satisfactory financial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit Agreement. The Board of Directors’ determinations 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. Although we recently paid a third quarter 2015 cash dividend of $0.33 per share of Common Stock and have paid regularly quarterly dividends since the third quarter of 2014, there can be no guarantee that we will continue to pay dividends in the future or that this recent dividend is representative of the amount of any future dividends. Our ability to declare future dividends 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.

Our Predecessor suspended the payments of dividends commencing with the second quarter of 2008. We own substantially all of our Predecessor’s assets, and our Predecessor experienced revenue and cash flow declines in the past. In addition, we may acquire additional companies with declining cash flow as part of a strategy aimed at stabilizing cash flow through expense reduction and digital expansion. If our strategy is not successful, we may not be able to pay dividends.

As a holding company, we are also dependent on our subsidiaries being able to pay dividends to us. Our subsidiaries are subject to restrictions on the ability to pay dividends under the various instruments governing their indebtedness. If our subsidiaries incur additional debt or losses, such additional indebtedness or loss may further impair their ability to pay dividends or make other distributions to us. In addition, the ability of our subsidiaries to declare and pay dividends to us will also be dependent on their cash income and cash available and may be restricted under applicable law or regulation. Under Delaware law, approval of the board of directors is required to approve any dividend, which may only be paid out of surplus or net profit for the applicable fiscal year. As a result, we may not be able to pay dividends in accordance with our announced intent or at all.

We have invested in growing our digital business, including Propel, but such investments may not be successful, which could adversely affect our results of operations.

We continue to evaluate our business and how we intend to grow our digital business. Internal resources and effort are put towards this business and key partnerships have been entered into to assist with our digital business, including Propel. We continue to believe that our digital businesses, including Propel, offer opportunities for revenue growth to support and, in some cases, offset the revenue trends we have seen in our print business. There can be no assurances that the partnerships we have entered into or the internal strategy being employed will result in generating or increasing digital revenues in amounts necessary to stabilize or offset trends in print revenues. In addition, we have a limited history of operations in this area, and there can be no

 

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assurances that past performance will be indicative of future performance or future trends. If our digital strategy, including with regard to Propel, is not as successful as we anticipate, our financial condition, results of operations and ability to pay dividends could be adversely affected.

Acquisitions have formed a significant part of our growth strategy in the past and are expected to continue to do so. If we are unable to identify suitable acquisition candidates or successfully integrate the businesses we acquire, our growth strategy may not succeed. Acquisitions involve numerous risks, including risks related to integration, and these risks could adversely affect our business, financial condition and results of operations.

Our business strategy relies on acquisitions. We expect to derive a significant portion of our growth by acquiring businesses and integrating those businesses into our existing operations. We continue to seek acquisition opportunities, however we may not be successful in identifying acquisition opportunities, assessing the value, strengths and weaknesses of these opportunities or consummating acquisitions on acceptable terms. Furthermore, suitable acquisition opportunities may not even be made available or known to us. In addition, valuations of potential acquisitions may rise materially, making it economically unfeasible to complete identified acquisitions.

Additionally, our ability to realize the anticipated benefits of the synergies between New Media and our recent or potential future acquisitions of assets or companies will depend, in part, on our ability to appropriately integrate the business of New Media and the businesses of other such acquired companies. The process of acquiring assets or companies may disrupt our business and may not result in the full benefits expected. The risks associated with integrating the operations of New Media and recent and potential future acquisitions include, among others:

 

   

uncoordinated market functions;

 

   

unanticipated issues in integrating the operations and personnel of the acquired businesses;

 

   

the incurrence of indebtedness and the assumption of liabilities;

 

   

the incurrence of significant additional capital expenditures, transaction and operating expenses and non-recurring acquisition-related charges;

 

   

unanticipated adverse impact on our earnings from the amortization or write-off of acquired goodwill and other intangible assets;

 

   

not retaining key employees, vendors, service providers, readers and customers of the acquired businesses; and

 

   

the diversion of management’s attention from ongoing business concerns.

If we are unable to successfully implement our acquisition strategy or address the risks associated with integrating the operations of New Media and past acquisitions or potential future acquisitions, or if we encounter unforeseen expenses, difficulties, complications or delays frequently encountered in connection with the integration of acquired entities and the expansion of operations, our growth and ability to compete may be impaired, we may fail to achieve acquisition synergies and we may be required to focus resources on integration of operations rather than other profitable areas. Moreover, the success of any acquisition will depend upon our ability to effectively integrate the acquired assets or businesses. The acquired assets or businesses may not contribute to our revenues or earnings to any material extent, and cost savings and synergies we expect at the time of an acquisition may not be realized once the acquisition has been completed. Furthermore, if we incur indebtedness to finance an acquisition, the acquired business may not be able to generate sufficient cash flow to service that indebtedness. Unsuitable or unsuccessful acquisitions could adversely affect our business, financial condition, results of operations, cash flow and ability to pay dividends.

 

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If we are unable to retain and grow our digital audience and advertiser base, our digital businesses will be adversely affected.

Given the ever-growing and rapidly changing number of digital media options available on the internet, we may not be able to increase our online traffic sufficiently and retain or grow a base of frequent visitors to our websites and applications on mobile devices.

Our Predecessor experienced declines in advertising revenue due in part to advertisers’ shift from print to digital media, and we may not be able to create sufficient advertiser interest in our digital businesses to maintain or increase the advertising rates of the inventory on our websites.

In addition, the ever-growing and rapidly changing number of digital media options available on the internet may lead to technologies and alternatives that we are not able to offer or about which we are not able to advise. Such circumstances could directly and adversely affect the availability, applicability, marketability and profitability of the suite of SMB services and the private ad exchange we offer as a significant part of our digital business. Specifically, news aggregation websites and customized news feeds (often free to users) may reduce our traffic levels by driving interaction away from our websites or our digital applications. If traffic levels stagnate or decline, we may not be able to create sufficient advertiser interest in our digital businesses or to maintain or increase the advertising rates of the inventory on our digital platforms. We may also be adversely affected if the use of technology developed to block the display of advertising on websites proliferates.

Technological developments and any changes we make to our business strategy may require significant capital investments. Such investments may be restricted by our current or future credit facilities.

If there is a significant increase in the price of newsprint or a reduction in the availability of newsprint, our results of operations and financial condition may suffer.

The basic raw material for our publications is newsprint. We generally maintain only a 45 to 55-day inventory of newsprint, although our participation in a newsprint-buying consortium has helped ensure adequate supply. An inability to obtain an adequate supply of newsprint at a favorable price or at all in the future could have a material adverse effect on our ability to produce our publications. Historically, the price of newsprint has been volatile, reaching a high of approximately $823 per metric ton in 2008 and experiencing a low of almost $410 per metric ton in 2002. The average price of newsprint during 2015 was approximately $585 per metric ton. Recent and future consolidation of major newsprint suppliers may adversely affect price competition among suppliers. Significant increases in newsprint costs for properties and periods not covered by our newsprint vendor agreement could have a material adverse effect on our financial condition and results of operations.

Our Predecessor experienced declines in advertising revenue, and further declines, which could adversely affect our results of operations and financial condition, may occur.

Our Predecessor previously experienced declines in advertising revenue, due primarily to the economic recession and advertisers’ shift from print to digital media. Advertising revenue decreased by $29.6 million, or 9.0%, in the year ended December 29, 2013, as compared to the year ended December 30, 2012 for total company excluding Local Media. Advertising revenue increased by $57.0 million, or 17.4%, in the year ended December 28, 2014, as compared to the year ended December 29, 2013, however, excluding acquisitions, there was a decrease in advertising revenue. Advertising revenue increased by $311.3 million, or 80.8%, in the year ended December 27, 2015, as compared to the year ended December 28, 2014, however, excluding acquisitions, there was a decrease in advertising revenue. We continue to search for organic growth opportunities, including in our digital advertising business, and for ways to stabilize print revenue declines through new product launches and pricing. However, there can be no assurance that our advertising revenue will not continue to decline. In addition, the range of advertising choices across digital products and platforms and the large inventory of available digital advertising space have historically resulted in significantly lower rates for digital advertising

 

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than for print advertising. Consequently, our digital advertising revenue may not be able to replace print advertising revenue lost as a result of the shift to digital consumption. Further declines in advertising revenue could adversely affect our results of operations and financial condition.

Our Predecessor had a history of losses and filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code in 2013.

Our Predecessor experienced losses from continuing operations of approximately $27.5 million and $21.0 million in 2012 and 2011, respectively. On September 27, 2013, GateHouse filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code and emerged from Chapter 11 protection on November 26, 2013. We may not be able to maintain profitable operations in the future and our failure to achieve profitability in the future could adversely affect the trading price of our Common Stock and our ability to pay dividends and raise additional capital for growth.

We compete with a large number of companies in the local media industry; if we are unable to compete effectively, our advertising and circulation revenues may decline.

Our business is concentrated in newspapers and other print publications located primarily in small and midsize markets in the United States. Our revenues primarily consist of advertising and paid circulation. Competition for advertising revenues and paid circulation comes from direct mail, directories, radio, television, outdoor advertising, other newspaper publications, the internet and other media. For example, as the use of the internet and mobile devices has increased, we have lost some classified advertising and subscribers to online advertising businesses and our free internet sites that contain abbreviated versions of our publications. Competition for advertising revenues is based largely upon advertiser results, advertising rates, readership, demographics and circulation levels. Competition for circulation is based largely upon the content of the publication and its price and editorial quality. Our local and regional competitors vary from market to market, and many of our competitors for advertising revenues are larger and have greater financial and distribution resources than us. We may incur increased costs competing for advertising expenditures and paid circulation. We may also experience further declines of circulation or print advertising revenue due to alternative media, such as the internet. If we are not able to compete effectively for advertising expenditures and paid circulation, our revenues may decline.

We are undertaking strategic process upgrades that could have a material adverse financial impact if unsuccessful.

We are implementing strategic process upgrades of our business. Among other things we are implementing the standardization and centralization of systems and processes, the outsourcing of certain financial processes and the use of new software for our circulation, advertising and editorial systems. As a result of ongoing strategic evaluation and analysis, we have made and will continue to make changes that, if unsuccessful, could have a material adverse financial impact.

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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We could be adversely affected by declining circulation.

Overall daily newspaper circulation, including national and urban newspapers, has declined in recent years. For the year ended December 27, 2015, our circulation revenue increased by $182.6 million, or 93.3%, as compared to the year ended December 28, 2014, of which $180.1 million relates to acquisitions. There can be no assurance that our circulation revenue will not decline again in the future. Our Predecessor and us were able to maintain annual circulation revenue from existing operations in recent years through, among other things, increases in per copy prices. However, there can be no assurance that we will be able to continue to increase prices to offset any declines in circulation. Further declines in circulation could impair our ability to maintain or increase our advertising prices, cause purchasers of advertising in our publications to reduce or discontinue those purchases and discourage potential new advertising customers, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.

The increasing popularity of digital media could also adversely affect circulation of our newspapers, which may decrease circulation revenue and cause more marked declines in print advertising. Further, readership demographics and habits may change over time. If we are not successful in offsetting such declines in revenues from our print products, our business, financial condition and prospects will be adversely affected.

The value of our intangible assets may become impaired, depending upon future operating results.

As a result of the Restructuring, which was considered a triggering event for the non-amortizable intangibles, our Predecessor performed a valuation analysis to determine if an impairment existed as of September 29, 2013. The fair values of our Predecessor’s reporting units for goodwill and newspaper mastheads were estimated using the expected present value of future cash flows, recent industry transaction multiples and using estimates, judgments and assumptions that management believed were appropriate in the circumstances and were consistent with the terms of the Plan. The estimates and judgments used in the assessment included multiples for revenue and EBITDA, the weighted average cost of capital and the terminal growth rate. Given the Restructuring, our Predecessor determined that discounted cash flows provided the best estimate of the fair value of its reporting units. The estimated fair value of the Large Daily reporting unit exceeded its carrying value and Step 2 of the analysis was not necessary. The Small Community reporting unit failed the Step 1 goodwill impairment analysis. Our Predecessor performed Step 2 of the analysis using consistent assumptions, as discussed above, and determined an impairment was not present for this reporting unit. The estimated fair value of each reporting unit’s mastheads exceeded their carrying values, using consistent assumptions as discussed above. The masthead fair value was estimated using the relief from royalty valuation method. For further information on goodwill and intangible assets, see Note 7 to the condensed consolidated financial statements, “Goodwill and Intangible Assets”.

Due to reductions in our Predecessor’s operating projections during the third quarter of 2013 in conjunction with the Restructuring, an impairment charge of $68.6 million was recognized for advertiser relationships within the Predecessor’s Metro and Small Community reporting units, an impairment charge of $19.1 million was recognized for subscriber relationships within the Company’s Metro and Small Community reporting units, an impairment charge of $2.1 million was recognized for customer relationships within the Company’s Metro reporting unit and an impairment charge of $1.8 million was recognized for trade names and publication rights within the Directories business unit.

During the fourth quarter of 2015, we reorganized our management structure to align with the geography of the market served. As a result, an additional impairment analysis was performed. The analysis of masthead values suggested impairment, and a charge of $4.8 million was recorded in December.

At December 27, 2015 the carrying value of our goodwill is $171.1 million, mastheads is $86.0 million, and amortizable intangible assets is $217.6 million.

 

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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 Predecessor’s acquisitions, as well as 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.

Sustained increases in costs of employee health and welfare benefits may reduce our profitability. Moreover, our pension plan obligations are currently underfunded, and we may have to make significant cash contributions to our plans, which could reduce the cash available for our business.

In recent years, we and our Predecessor experienced significant increases in the cost of employee medical benefits because of economic factors beyond our control, including increases in health care costs. At least 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.

Our pension and postretirement plans were underfunded by $11.2 million at December 27, 2015. Our pension plan invests in a variety of equity and debt securities, many of which were affected by the disruptions in the credit and capital markets in 2009 and 2010. Future volatility and disruption in the stock markets could cause further declines in the asset values of our pension plans. In addition, a decrease in the discount rate used to determine minimum funding requirements could result in increased future contributions. If either occurs, 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 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 services, which we 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 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 our Predecessor 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 man 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 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. 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 27, 2015, we employed 9,509 employees, of whom 1,236 (or approximately 13%) were represented by 35 unions. 93% of the unionized employees are in four states: Ohio, Rhode Island, Illinois and Massachusetts and represent 36%, 23%, 17% and 17% of all our union employees, respectively. Most of our unionized employees work under collective bargaining agreements that expire in 2017.

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.

 

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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 United States have increased our exposure to losses resulting from financial distress, insolvency and the potential bankruptcy of our advertising customers. Our accounts receivable are 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.

Our potential inability to successfully execute cost control measures could result in greater than expected total operating costs.

We and our Predecessor have implemented general cost control measures, and we expect to continue such cost control efforts in the future. If we do not achieve expected savings as a result of such measures or if our operating costs increase as a result of our growth strategy, our total operating costs may be greater than expected. In addition, reductions in staff and employee benefits could affect our ability to attract and retain key employees.

We rely on revenue from the printing of publications for third parties that may be subject to many of the same business and industry risks that we are.

In 2015, we generated approximately 4.8% of our revenue from printing third-party publications, and our relationships with these third parties are generally pursuant to short-term contracts. As a result, if the macroeconomic and industry trends described herein such as the sensitivity to perceived economic weakness of discretionary spending available to advertisers and subscribers, circulation declines, shifts in consumer habits and the increasing popularity of digital media affect those third parties, we may lose, in whole or in part, a substantial source of revenue.

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 materially impact our profitability.

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 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.

 

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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 consumer 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.

Our financial results were affected by the adoption of fresh start reporting and may not reflect historical trends.

Pursuant to the Plan, we acquired substantially all of the assets of our Predecessor. The Restructuring resulted in us becoming a new reporting entity and adopting fresh start accounting. As required by fresh start accounting, our Predecessor’s assets and liabilities were adjusted to estimated fair value, and we recognized certain assets and liabilities not previously recognized in our Predecessor’s financial statements. Accordingly, our financial condition and results of operations from and after the Effective Date are not comparable to the financial condition and results of operations reflected in our Predecessor’s historical consolidated financial statements, including those presented herein.

Risks Related to Our Manager

We are dependent on our Manager and may not find a suitable replacement if our Manager terminates the Management Agreement and the inability of our Manager to retain or obtain key personnel could delay or hinder implementation of our investment strategies, which could impair our ability to make distributions and could reduce the value of your investment.

Some of our officers and other individuals who perform services for us are employees of our Manager. We are reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business. We are subject to the risk that our Manager will terminate the Management Agreement and that we will not be able to find a suitable replacement for our Manager in a timely manner, at a reasonable cost or at all. Furthermore, we are dependent on the services of certain key employees of our Manager whose compensation may be partially or entirely dependent upon the amount of incentive or management compensation earned by our Manager and whose continued service is not guaranteed, and the loss of such services could adversely affect our operations. If any of these people were to cease their affiliation with us or our Manager, either we or our Manager may be unable to find suitable replacements, and our operating results could suffer. We believe that our future success depends, in large part, upon our Manager’s ability to hire and retain highly skilled personnel. Competition for highly skilled personnel is intense, and our Manager may be unsuccessful in attracting and retaining such skilled personnel. If we lose or are unable to obtain the services of highly skilled personnel, our ability to implement our investment strategies could be delayed or hindered and this could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

 

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There are conflicts of interest in our relationship with our Manager.

Our Management Agreement with our Manager was not negotiated between unaffiliated parties, and its terms, including fees payable, although approved by the independent directors of both Newcastle (our parent prior to the spin-off) and New Media as fair, may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates—including investment funds, private investment funds, or businesses managed by our Manager—invest in media assets and whose investment objectives overlap with our investment objectives. Certain investments appropriate for us may also be appropriate for one or more of these other investment vehicles. Certain members of our Board of Directors and employees of our Manager who may be officers also serve as officers and/or directors of these other entities. Although we have the same Manager, we may compete with entities affiliated with our Manager or Fortress for certain target assets. From time to time, affiliates of Fortress focus on investments in assets with a similar profile as our target assets that we may seek to acquire. These affiliates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt financing, market conditions and cash on hand. Fortress had approximately $70.5 billion of assets under management as of December 31, 2015. In addition, with respect to Fortress funds in the process of selling investments, our Manager may be incentivized to regard the sale of such assets to us positively, particularly if a sale to an unrelated third party would result in a loss of fees to our Manager.

Our Management Agreement with our Manager generally does not limit or restrict our Manager or its affiliates from engaging in any business or managing other pooled investment vehicles that invest in investments that meet our investment objectives. Our Manager may engage in additional investment opportunities related to media assets in the future, which may cause our Manager to compete with us for investments or result in a change in our current investment strategy. In addition, our certificate of incorporation provides that if Fortress or an affiliate or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our affiliates. In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of ours and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.

The ability of our Manager and its officers and employees to engage in other business activities, subject to the terms of our Management Agreement with our Manager, may reduce the amount of time our Manager, its officers or other employees spend managing us. In addition, we may engage in material transactions with our Manager or another entity managed by our Manager or one of its affiliates, which may present an actual, potential or perceived conflict of interest. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could materially adversely affect our business in a number of ways, including causing an inability to raise additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting increased risk of litigation and regulatory enforcement actions.

The management compensation structure that we have agreed to with our Manager, as well as compensation arrangements that we may enter into with our Manager in the future (in connection with new lines of business or other activities), may incentivize our Manager to invest in high risk investments. In addition to its management

 

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fee, our Manager is currently entitled to receive incentive compensation. In evaluating investments and other management strategies, the opportunity to earn incentive compensation may lead our Manager to place undue emphasis on the maximization of such measures at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative than lower-yielding investments. Moreover, because our Manager receives compensation in the form of options in connection with the completion of our equity offerings, our Manager may be incentivized to cause us to issue additional stock, which could be dilutive to existing stockholders.

It would be difficult and costly to terminate our Management Agreement with our Manager.

It would be difficult and costly for us to terminate our Management Agreement with our Manager. After its initial three-year term, the Management Agreement will be automatically renewed for one-year terms unless terminated (i) by a majority vote of at least two-thirds of our independent directors, or by a vote of the holders of a simple majority of the outstanding shares of our common stock, that there has been unsatisfactory performance by our Manager that is materially detrimental to us or (ii) a determination by a simple majority of our independent directors that the management fee payable to our Manager is not fair, subject to our Manager’s right to prevent such a termination by continuing to provide the services under the Management Agreement at a fee that a simple majority of our independent directors have reasonably determined to be fair. Our Manager will be provided 60 days’ prior notice of any termination and will be paid a termination fee equal to the amount of the management fee earned by the Manager during the 12-month period preceding such termination. In addition, following any termination of the Management Agreement, our Manager may require us to purchase its right to receive incentive compensation at a price determined as if our assets were sold for their then current fair market value or otherwise we may continue to pay the incentive compensation to our Manager. These provisions may increase the effective cost to us of terminating the Management Agreement, thereby adversely affecting our ability to terminate our Manager without cause.

Our Board of Directors does not approve each investment decision made by our Manager. In addition, we may change our investment strategy without a stockholder vote, which may result in our making investments that are different, riskier or less profitable than our current investments.

Our Manager has great latitude in determining the types and categories of assets it may decide are proper investments for us, including the latitude to invest in types and categories of assets that may differ from those in which we currently invest. Our Board of Directors periodically reviews our investment portfolio. However, our Board of Directors does not review or pre-approve each proposed investment or our related financing arrangements. In addition, in conducting periodic reviews, our Board of Directors relies primarily on information provided to them by our Manager. Furthermore, transactions entered into by our Manager may be difficult or impossible to unwind by the time they are reviewed by our Board of Directors even if the transactions contravene the terms of the Management Agreement. In addition, we may change our investment strategy, including our target asset classes, without a stockholder vote.

Our investment strategy may evolve in light of existing market conditions and investment opportunities, and this evolution may involve additional risks depending upon the nature of the assets in which we invest and our ability to finance such assets on a short-or long-term basis. Investment opportunities that present unattractive risk-return profiles relative to other available investment opportunities under particular market conditions may become relatively attractive under changed market conditions, and changes in market conditions may therefore result in changes in the investments we target. Decisions to make investments in new asset categories present risks that may be difficult for us to adequately assess and could therefore reduce our ability to pay dividends on our common stock or have adverse effects on our liquidity or financial condition. A change in our investment strategy may also increase our exposure to interest rate, real estate market or credit market fluctuations. In addition, a change in our investment strategy may increase the guarantee obligations we agree to incur or increase the number of transactions we enter into with affiliates. Our failure to accurately assess the risks inherent in new asset categories or the financing risks associated with such assets could adversely affect our results of operations and our financial condition.

 

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Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our investments.

Pursuant to our Management Agreement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our Board of Directors in following or declining to follow its advice or recommendations. Our Manager, its members, managers, officers and employees will not be 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 our Manager, its members, managers, sub-advisers, officers or employees, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement. We shall, to the full extent lawful, reimburse, indemnify and hold our Manager, its members, managers, officers and employees, sub-advisers and each other person, if any, controlling our Manager, harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of an indemnified party made in good faith in the performance of our Manager’s duties under our Management Agreement and not constituting such indemnified party’s bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement.

Our Manager’s due diligence of investment opportunities or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations.

Our Manager intends to conduct due diligence with respect to each investment opportunity or other transaction it pursues. It is possible, however, that our Manager’s due diligence processes will not uncover all relevant facts, particularly with respect to any assets we acquire from third parties. In these cases, our Manager may be given limited access to information about the investment and will rely on information provided by the target of the investment. In addition, if investment opportunities are scarce, the process for selecting bidders is competitive, or the timeframe in which we are required to complete diligence is short, our ability to conduct a due diligence investigation may be limited, and we would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case. Accordingly, investments and other transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.

Because we are dependent upon our Manager and its affiliates to conduct our operations, any adverse changes in the financial health of our Manager or its affiliates or our relationship with them could hinder our Manager’s ability to successfully manage our operations.

We are dependent on our Manager and its affiliates to manage our operations and acquire and manage our investments. Under the direction of our Board of Directors, our Manager makes all decisions with respect to the management of our company. To conduct its operations, our Manager depends upon the fees and other compensation that it receives from us in connection with managing our company and from other entities and investors with respect to investment management services it provides. Any adverse changes in the financial condition of our Manager or its affiliates, or our relationship with our Manager, could hinder our Manager’s ability to successfully manage our operations, which would materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders. For example, adverse changes in the financial condition of our Manager could limit its ability to attract key personnel.

Risks Related to our Common Stock

There can be no assurance that the market for our stock will provide you with 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:

 

   

our business profile and market capitalization may not fit the investment objectives of any stockholder;

 

   

a shift in our investor base;

 

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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;

 

   

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;

 

   

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.

Sales or issuances of shares of our common stock could adversely affect the market price of our Common Stock.

Sales of substantial amounts of shares of our Common Stock in the public market, or the perception that such sales 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 Plan (as defined below) or otherwise could also have an adverse effect on the market price of our Common Stock.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

As a public company, we are required to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. The acquisitions of Stephens Media, LLC, Halifax Media Group, The Columbus Dispatch and the Monroe News have resulted in a change to our internal control over financial reporting which has materially affected our internal control over financial reporting. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause us to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a material weakness in our internal control over financial reporting. This could materially adversely affect us by, for example, leading to a decline in our share price and impairing our ability to raise capital, if and when desirable.

 

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The percentage ownership of existing shareholders in New Media may be diluted in the future.

We may issue equity in order to raise capital or in connection with future acquisitions and strategic investments, which would dilute investors’ percentage ownership in New Media. In addition, your percentage ownership may be diluted if we issue equity instruments such as debt and equity financing.

The percentage ownership of existing shareholders in New Media may also be diluted in the future as result of the issuance of ordinary shares in New Media upon the exercise of 10-year warrants (the “New Media Warrants”). The New Media Warrants collectively represent the right to acquire New Media Common Stock, which in the aggregate are equal to 5% of New Media Common Stock as of the Effective Date (calculated prior to dilution from shares of New Media Common Stock issued pursuant to Newcastle’s contribution of Local Media Parent and assignment of related stock purchase agreement to New Media (the “Local Media Contribution”)) at a strike price of $46.35 calculated based on a total equity value of New Media prior to the Local Media Contribution of $1.2 billion as of the Effective Date. As a result, New Media Common Stock may be subject to dilution upon the exercise of such New Media Warrants.

Furthermore, the percentage ownership in New Media may be diluted in the future because of additional equity awards that we expect will be granted to our Manager pursuant to our Management Agreement. Upon the successful completion of an offering of shares of our Common Stock or any shares of preferred stock, we will grant our Manager options equal to 10% of the number of shares being sold in the offering, with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser. The Board of Directors of New Media approved the Incentive Plan, which provides for the grant of equity and equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards, restricted stock units, tandem awards and other equity-based and non-equity based awards, in each case to our Manager, to the directors, officers, employees, service providers, consultants and advisors of our Manager who perform services for us, and to our directors, officers, employees, service providers, consultants and advisors. Any future grant would cause further dilution. We initially reserved 15 million shares of our Common Stock for issuance under the Incentive Plan; on the first day of each fiscal year beginning during the ten-year term of the Incentive Plan and in and after calendar year 2015, that number will be increased by a number of shares of our Common Stock equal to 10% of the number of shares of our Common Stock newly issued by us during the immediately preceding fiscal year. In January 2016 and 2015, the number of shares reserved for issuance under the Incentive Plan was increased by 724,400 and 746,649 representing 10% of the shares of Common Stock newly issued in fiscal year 2015 and 2014, respectively.

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 our 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:

 

   

a classified board of directors with staggered three-year terms;

 

   

amendment of provisions in our amended and restated certificate of incorporation and amended and restated bylaws regarding the election of directors, classes 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 (provided, however, that for so long as Newcastle and certain other affiliates of Fortress and permitted transferees (collectively, the “Fortress Stockholders”) beneficially own at least 20% of our issued and outstanding Common Stock, such provisions may be amended with the affirmative vote of a majority of the voting interest of stockholders entitled to vote or by a majority of the entire Board of Directors);

 

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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 (provided, however, that for so long as the Fortress Stockholders beneficially own at least 20% of our issued and outstanding Common Stock, directors may be removed with or without cause with the affirmative vote of a majority of the voting interest of stockholders entitled to vote);

 

   

our Board to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval;

 

   

provisions in our amended and restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders (provided, however, that for so long as the Fortress Stockholders beneficially own at least 20% of our issued and outstanding Common Stock, Fortress Stockholders may call 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 (provided, however, that for so long as the Fortress Stockholders beneficially own at least 20% of our issued and outstanding Common Stock, our stockholders may act without a meeting by written consent of a majority of the voting interest of stockholders entitled to vote).

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.

 

Item 1B. Unresolved Staff Comments

Not applicable.

 

Item 2. Properties

We own and operate 57 print facilities across the United States. GateHouse’s print facilities range in size from approximately 6,000 to 401,000 square feet (combined printing and office space). GateHouse’s executive offices are located in Pittsford, New York, where we lease approximately 25,870 square feet under a lease terminating in October 2022.

We maintain our properties in good condition and believe that our current facilities are adequate to meet the present needs of our business. We do not believe any individual property is material to our financial condition or results of operations.

 

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Item 3. Legal Proceedings

We are and may become involved from time to time in legal proceedings in the ordinary course of our business, including but not limited to with respect to such matters as libel, invasion of privacy, intellectual property infringement, wrongful termination actions and complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, we are involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental and other claims. Insurance coverage mitigates potential loss for certain of these matters. Historically, such claims and proceedings have not had a material adverse effect on our consolidated results of operations or financial position. Although we are unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, we do not expect our current and any threatened legal proceedings to have a material adverse effect on our business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our financial results.

 

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

New Media Common Stock trades on the NYSE under the trading symbol “NEWM” since the spin-off from Newcastle. A “when-issued” trading market for New Media’s Common Stock on the NYSE began on February 4, 2014 and “regular-way” trading of New Media Common Stock began on February 14, 2014. Prior to February 4, 2014, there was no public market for New Media Common Stock. Set forth in the table below for the periods presented are the high and low sale prices for New Media Common Stock as reported on the NYSE.

 

     HIGH      LOW  

Fiscal Year Ending December 27, 2015:

     

First Quarter

   $ 25.77       $ 20.55   

Second Quarter

   $ 24.32       $ 17.80   

Third Quarter

   $ 18.59       $ 13.96   

Fourth Quarter

   $ 20.06       $ 14.91   

Fiscal Year Ending December 28, 2014:

     

First Quarter (since February 4, 2014)

   $ 15.65       $ 10.35   

Second Quarter

   $ 15.79       $ 12.89   

Third Quarter

   $ 17.95       $ 13.59   

Fourth Quarter

   $ 24.52       $ 15.76   

From the most recent available Company information, on February 18, 2016 there were approximately 44 holders of record.

Dividends

New Media currently intends to distribute a substantial portion of free cash flow as a dividend to stockholders, through a quarterly dividend, subject to satisfactory financial performance, Board approval and dividend restrictions in the New Media Credit Agreement. The Board of Directors’ determinations 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.

On July 31, 2014, the Company announced a second quarter 2014 cash dividend of $0.27 per share of New Media Common Stock. The dividend was paid on August 21, 2014 to shareholders of record as of the close of business on August 12, 2014.

On October 30, 2014, the Company announced a third quarter 2014 cash dividend of $0.27 per share of New Media Common Stock. The dividend was paid on November 20, 2014, to shareholders of record as of the close of business on November 12, 2014.

On February 26, 2015, the Company announced a fourth quarter 2014 cash dividend of $0.30 per share of New Media Common Stock. The dividend was paid on March 19, 2015, to shareholders of record as of the close of business on March 11, 2015.

On April 30, 2015, the Company announced a first quarter 2015 cash dividend of $0.33 per share of New Media Common Stock. The dividend was paid on May 21, 2015, to shareholders of record as of the close of business on May 13, 2015.

 

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On July 30, 2015, the Company announced a second quarter 2015 cash dividend of $0.33 per share of New Media Common Stock. The dividend was paid on August 20, 2015, to shareholders of record as of the close of business on August 12, 2015.

On October 29, 2015, the Company announced a third quarter 2015 cash dividend of $0.33 per share of New Media Common Stock. The dividend was on November 19, 2015, to shareholders of record as of the close of business on November 12, 2015.

On February 25, 2016, the Company announced a fourth quarter 2015 cash dividend of $0.33 per share of New Media Common Stock. The dividend will be paid on March 17, 2016, to shareholders of record as of the close of business on March 9, 2016.

Unregistered Sales of Equity Securities

In connection with the restructuring of GateHouse, on the Effective Date New Media issued 30,000,000 shares of New Media Common Stock pursuant to the Plan in accordance with Section 1145(a)(1) of the U.S. Bankruptcy Code (the “Bankruptcy Code”).

Additionally, on the Effective Date, New Media issued 1,362,479 10-year warrants at a strike price of $46.35 per share to the former equity holders of GateHouse pursuant to the Plan, in accordance with Section 1145(a)(2) of the Bankruptcy Code.

 

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Item 6. Selected Financial Data

The following table presents our selected historical financial data as of and for each of the years in the five year period ended December 27, 2015. The information in this table should be read in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business” and our historical consolidated financial statements and the related notes thereto included elsewhere in this report. The selected consolidated statements of operations and comprehensive income (loss) data and other data for the years ended December 30, 2012 and January 1, 2012 and the selected consolidated balance sheets data at December 29, 2013, December 30, 2012 and January 1, 2012 have been derived from the audited consolidated financial statements of our Predecessor that are not included in this report.

 

    Successor Company          Predecessor Company  
    Year Ended
December 27,
2015
    Year Ended
December 28,
2014
    Two
Months Ended
December 29,
2013
         Ten
Months Ended
November 6,
2013
    Year Ended
December 30,
2012 (2)
    Year Ended
January 1,
2012
 
(in thousands, except per share data)                                         

Statement of Operations Data:

               

Revenues:

               

Advertising

  $ 696,696      $ 385,399      $ 63,340          $ 265,078      $ 330,881      $ 357,134   

Circulation

    378,263        195,661        29,525            118,810        131,576        131,879   

Commercial printing and other

    120,856        71,263        10,366            29,402        26,097        25,657   
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Total revenues

    1,195,815        652,323        103,231            413,290        488,554        514,670   

Operating costs and expenses:

               

Operating costs

    656,555        368,420        56,614            232,066        268,222        281,884   

Selling, general and administrative

    406,282        211,829        28,749            136,832        145,020        146,295   

Depreciation and amortization

    67,752        41,450        6,588            33,409        39,888        42,426   

Integration and reorganization costs

    8,052        2,796        1,758            1,577        4,393        5,884   

Impairment of long-lived assets

    —          —          —              91,599        —          1,733   

(Gain) loss on sale or disposal of assets

    (51,051     1,472        27            1,163        1,238        455   

Goodwill and mastheads impairment

    4,800        —          —              —          —          385   
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Operating income (loss)

    103,425        26,356        9,495            (83,356     29,793        35,608   

Interest expense, amortization of deferred financing costs, loss on early extinguishment of debt, (gain) loss on derivative instruments, reorganization items, net, and other

    32,407        26,848        1,798            (871,399     57,463        58,361   
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

    71,018        (492     7,697            788,043        (27,670     (22,753

Income tax expense (benefit)

    3,404        2,713        491            (197     (207     (1,803
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

    67,614        (3,205     7,206            788,240        (27,463     (20,950

Loss from discontinued operations, net of income taxes

    —          —          —              (1,034     (2,340     (699
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Net income (loss)

    67,614        (3,205     7,206            787,206        (29,803     (21,649

Net loss attributable to noncontrolling interest

    —          —          —              208        —          —     
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to New Media

  $ 67,614      $ (3,205   $ 7,206          $ 787,414      $ (29,803   $ (21,649
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

 

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    Successor Company          Predecessor Company  
    Year Ended
December 27,
2015
    Year Ended
December 28,
2014
    Two
Months Ended
December 29,
2013
         Ten
Months Ended
November 6,
2013
    Year Ended
December 30,
2012 (2)
    Year Ended
January 1,
2012
 
(in thousands, except per share data)                                         

Basic net income (loss) from continuing operations attributable to New Media per share

  $ 1.53      $ (0.10   $ 0.24          $ 13.58      $ (0.47   $ (0.36

Diluted income (loss) from continuing operations attributable to New Media per share

  $ 1.52      $ (0.10   $ 0.24          $ 13.58      $ (0.47   $ (0.36

Basic net income (loss) attributable to New Media common stockholders per share

  $ 1.53      $ (0.10   $ 0.24          $ 13.56      $ (0.51   $ (0.37

Diluted net income (loss) attributable to New Media common stockholders per share

  $ 1.52      $ (0.10   $ 0.24          $ 13.56      $ (0.51   $ (0.37

Dividends declared per share

  $ 1.29      $ 0.54      $ —            $ —        $ —        $ —     

Other Data:

               

Adjusted EBITDA (1)

  $ 175,627      $ 67,741      $ 16,096          $ 988,265      $ 69,766      $ 80,547   

Cash interest paid

  $ 21,726      $ 15,181      $ 925          $ 43,606      $ 55,976      $ 58,225   

 

(1) We define Adjusted EBITDA as net income (loss) from continuing operations before income tax expense (benefit), interest/financing expense, depreciation and amortization and non-cash impairments. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. We believe this non-GAAP measure, as we have defined it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance in our day-to-day operations. This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. Adjusted EBITDA provides an indicator for management to determine if adjustments to current spending decisions are needed.

Adjusted EBITDA provides us with a measure of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with our capital structure. This metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the Company. Adjusted EBITDA is one of the metrics used by senior management and the board of directors to review the financial performance of our business on a monthly basis.

Not all companies calculate Adjusted EBITDA using the same methods; therefore, the Adjusted EBITDA figures set forth herein may not be comparable to Adjusted EBITDA reported by other companies. A substantial portion of our Adjusted EBITDA must be dedicated to the payment of interest on our outstanding indebtedness and to service other commitments, thereby reducing the funds available to us for other purposes. Accordingly, Adjusted EBITDA does not represent an amount of funds that is available for management’s discretionary use. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this report.

 

(2)

The year ended December 30, 2012 included a 53rd week of operations for approximately 60% of the business.

 

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The table below shows the reconciliation of income (loss) from continuing operations to Adjusted EBITDA for the periods presented:

 

    Successor Company          Predecessor Company  
    Year Ended
December 27, 2015
    Year Ended
December 28, 2014
    Two Months Ended
December 29, 2013
         Ten Months Ended
November 6, 2013
    Year Ended
December 30,
2012 (3)
    Year Ended
January 1,
2012
 
(in thousands)                                         

Income (loss) from continuing operations

  $ 67,614      $ (3,205   $ 7,206          $ 788,240      $ (27,463   $ (20,950

Income tax expense (benefit)

    3,404        2,713        491            (197     (207     (1,803

Loss (gain) on derivative instruments (1)

    —          51        —              14        (1,635     (913

Loss on early extinguishment of debt (2)

    —          9,047        —              —          —          —     

Amortization of deferred financing costs

    2,712        1,049        171            842        1,255        1,360   

Interest expense

    29,345        16,636        1,640            74,358        57,928        58,309   

Impairment of long-lived assets

    —          —          —              91,599        —          1,733   

Depreciation and amortization

    67,752        41,450        6,588            33,409        39,888        42,426   

Goodwill and mastheads impairment

    4,800        —          —              —          —          385   
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations

  $ 175,627 (a)    $ 67,741 (b)    $ 16,096 (c)        $ 988,265 (d)    $ 69,766 (e)    $ 80,547 (f)
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

   

 

 

 

 

(a) Adjusted EBITDA for the year ended December 27, 2015 included net expenses of ($13,566), comprised of transaction and project costs, non-cash compensation, and other expenses of $29,433, integration and reorganization costs of $8,052 and a $51,051 gain on the sale or disposal of assets.
(b) Adjusted EBITDA for the year ended December 28, 2014 included net expenses of $21,673, comprised of transaction and project costs, non-cash compensation, and other expenses of $17,405, integration and reorganization costs of $2,796 and a $1,472 loss on the sale or disposal of assets.
(c) Adjusted EBITDA for the two months ended December 29, 2013 included net expenses of $4,828, comprised of transaction and project costs and other expenses of $3,043, integration and reorganization costs of $1,758 and a $27 loss on the sale or disposal of assets.
(d) Adjusted EBITDA for the ten months ended November 6, 2013 included net expenses of $(930,229), comprised of transaction and project costs, non-cash compensation, and other expenses of $(932,969), integration and reorganization costs of $1,577 and a $1,163 loss on the sale or disposal of assets.

Adjusted EBITDA also does not include $123 of EBITDA generated from our discontinued operations.

 

(e) Adjusted EBITDA for the year ended December 30, 2012 included net expenses of $11,009, comprised of transaction and project costs, non-cash compensation, and other expenses of $5,378, integration and reorganization costs of $4,393 and a $1,238 loss on the sale or disposal of assets.

Adjusted EBITDA also does not include $255 of EBITDA generated from our discontinued operations.

 

(f) Adjusted EBITDA for the year ended January 1, 2012 included net expenses of $10,565, comprised of transaction and project costs, non-cash compensation, and other expenses of $4,226, integration and reorganization costs of $5,884 and a $455 loss on the sale or disposal of assets.

Adjusted EBITDA also does not include $432 of EBITDA generated from our discontinued operations.

 

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(1) Non-cash loss (gain) on derivative instruments is related to interest rate swap agreements which are financing related and are excluded from Adjusted EBITDA.
(2) Non-cash write-off of deferred financing costs are similar to interest expense and amortization of financing fees and are excluded from Adjusted EBITDA.
(3)

The year ended December 30, 2012 included a 53rd week of operations for approximately 60% of the business.

 

     As of  
     Successor Company           Predecessor Company  
     December 27,
2015
     December 28,
2014
     December 29,
2013
          December 30,
2012
    January 1,
2012
 
(in thousands)                                       

Balance Sheet Data:

                 

Total assets

   $ 1,200,263       $ 820,826       $ 693,399           $ 469,766      $ 510,802   

Total long-term obligations, including current maturities

     366,788         228,311         187,119             1,177,298        1,185,212   

Stockholders’ equity (deficit)

     647,073         484,127         395,362             (834,159     (805,632

 

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and notes to those statements appearing in this report. The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors under the heading “Risk Factors” and elsewhere in this report that could cause our actual future growth, results of operations, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, such forward-looking statements. See “Cautionary Note Regarding Forward Looking Information” at the beginning of this report.

Comparability of Information

As a result of the restructuring of GateHouse Media, LLC (formerly known as GateHouse Media, Inc.) (“GateHouse” or “Predecessor”) (the “Restructuring”), all GateHouse debt, including derivative liabilities and deferred financing assets, was eliminated on November 6, 2013, the confirmation date of the pre-packaged plan under Chapter 11 of title 11 of the United States Bankruptcy Code (the “Plan”). Fresh start accounting also led to changes in the basis of our assets and liabilities including property, plant and equipment and intangible assets that will impact future depreciation and amortization expense levels. As a result of the adoption of fresh start accounting, New Media’s (“New Media,” “Company,” “us,” or “we”) reorganized company post-emergence financial statements will generally not be comparable with the financial statements of GateHouse prior to emergence, including historical financial information in this Annual Report on Form 10-K.

Overview

New Media is a company that owns, operates and invests in high quality local media assets. We have a particular focus on owning and acquiring strong local media assets in small to mid-size markets. With our collection of assets, we focus on two large business categories; consumers and small to medium size businesses (“SMBs”).

Our portfolio of media assets today spans across 489 markets and 31 states. Our products include 564 community print publications, 489 websites, 476 mobile sites and six yellow page directories. We reach over 19 million people per week and serve over 193,000 business customers.

We are focused on growing our consumer revenues primarily through our penetration into the local consumer market that values comprehensive local news and receives their news primarily from our products. We believe our rich local content, our strong media brands, and multiple platforms for delivering content will impact our reach into the local consumers leading to growth in subscription income. We also believe our focus on smaller markets will allow us to be a dominant provider of valuable, unique local news to consumers in those markets. We believe that one result of our local consumer penetration in these smaller markets will be transaction revenues as we link consumers with local businesses. For our SMB business category, we focus on leveraging our strong local media brands, our in-market sales force and our high consumer penetration rates with a variety of products and services that we believe will help SMBs expand their marketing, advertising and other digital lead generation platforms. We also believe our strong position in our local markets will allow us to develop other products that will be of value to our SMBs in helping them run and grow their businesses.

Our business strategy is to be the preeminent provider of local news, information, advertising and digital services in the markets we operate in today. We aim to grow our business organically through what we believe are both our consumer and SMB strategies. We also plan to pursue strategic acquisitions of high quality local media assets at attractive valuation levels. Finally, we intend to distribute a substantial portion of our free cash flow as a dividend to stockholders through a quarterly dividend, subject to satisfactory financial performance and approval by our board of directors (the “Board of Directors” or “Board”) and dividend restrictions in the New Media Credit Agreement (as defined below). The Board of Directors’ determinations regarding dividends will

 

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depend on a variety of factors, including the Company’s U.S. generally accepted accounting principles (“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.

Our focus on owning and operating dominant local content oriented media properties in small to mid-size markets, we believe, puts us in a position to better execute on our strategy. We believe that being the dominant provider of local news and information in the markets in which we operate, and distributing that content across multiple print and digital platforms, gives us an opportunity to grow our audiences and reach. Further, we believe our strong local media brands and our in-markets presence gives us the opportunity to expand our advertising and lead generation products with local business customers.

Central to our business strategy are our digital marketing services products called Propel Marketing (“Propel”). We launched the products in 2012 and have seen rapid growth since then. Revenues have grown from $1 million in 2012 to $31.3 million in 2015. We believe Propel and our digital marketing service products, combined with our strong local brands and in market sales force, position this business to be a key component to our overall organic growth strategy.

The opportunity Propel looks to seize upon is as follows:

There are approximately 27.9 million SMBs in the U.S. according to the 2011 U.S. Census data. Of these, approximately 26.7 million have 20 employees or less.

Many of the owners and managers of these SMBs do not have the bandwidth, expertise or resource to navigate the fast evolving digital marketing sector, but they increasingly know they have to be present there to stay connected with current and future customers. Propel is designed to offer a complete set of digital marketing services to SMBs that are turn-key with results that are transparent to the business owners. Propel provides four broad categories of services: building businesses a presence, helping businesses to be located by consumers online, engaging with consumers, and growing their customer base.

We believe our local media properties and local sales infrastructure are uniquely positioned to sell these digital marketing services to local business owners and give us distinct advantages, including:

 

   

our strong and trusted local brands, with 85% of our daily newspapers having been publishing local content for more than 100 years;

 

   

our ability to market through our print and online properties, driving branding and traffic; and

 

   

our more than 1,480 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve.

Our core products include:

 

   

124 daily newspapers with total paid circulation of approximately 1.5 million;

 

   

322 weekly newspapers (published up to three times per week) with total paid circulation of approximately 321,000 and total free circulation of approximately 2.0 million;

 

   

118 “shoppers” (generally advertising-only publications) with total circulation of approximately 2.8 million;

 

   

489 locally focused websites and 476 mobile sites, which extend our businesses onto the internet and mobile devices with approximately 226 million page views per month;

 

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six yellow page directories, with a distribution of approximately 348,000, that cover a population of approximately 620,000 people; and

 

   

Propel digital marketing services.

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. Similarly, GateHouse Live, our events business, concentrates on local markets and interests.

Our advertising revenue tends to follow a seasonal pattern, with higher advertising revenue in months containing significant events or holidays. Accordingly, our first quarter, followed by our third quarter, historically are our weakest quarters of the year in terms of revenue. Correspondingly, our second and fourth fiscal quarters, historically, are our strongest quarters. We expect that this seasonality will continue to affect our advertising revenue in future periods.