Gannett Co., Inc. (Form: 10-Q, Received: 11/05/2021 11:02:17)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 10-Q

_______________________

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

For the quarterly period ended September 30, 2021

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

Commission file number 001-36097

___________________________

GANNETT CO., 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.)

7950 Jones Branch Drive,

McLean,

Virginia

22107-0910

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (703) 854-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

GCI

The New York Stock Exchange

Preferred Stock Purchase Rights

N/A

The New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large Accelerated Filer	☐	Accelerated Filer	☒

Non-Accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 2, 2021, 142,327,552 shares of the registrant's Common Stock were outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views regarding, among other things, our future growth, results of operations, performance, and business prospects and opportunities, and are not statements of historical fact. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "target(s)," "project(s)," "believe(s)," "forecast," "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 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;

•The competitive environment in which we operate;

•Risks and uncertainties associated with the ongoing COVID-19 pandemic;

•Economic conditions in the various regions of the United States, the United Kingdom, and other regions in which we operate our business;

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

•Risks and uncertainties associated with our Digital Marketing Solutions segment, including its significant reliance on Google for media purchases, its international operations, and its ability to develop and gain market acceptance for new products or services;

•Declining print advertising revenue and circulation subscribers;

•Our ability to grow our digital marketing services initiatives, digital audience, and advertiser base;

•Our ability to grow our business organically;

•Variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate;

•The risk that we may not realize the anticipated benefits of our 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 payments associated with our debt;

•Our current intention not to pay dividends and our ability to pay dividends consistent with prior practice or at all;

•Our ability to reduce costs and expenses;

•Our ability to remediate a material weakness in our internal control over financial reporting; and

•Our ability to recruit and retain key personnel, as well as any shortage of skilled or experienced employees, including journalists.

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 this Quarterly Report on Form 10-Q, under the heading "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (the "SEC") on February 26, 2021, and the statements made in subsequent filings. Such forward-looking statements speak only as of the date 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.

INDEX TO GANNETT CO., INC.

Q3 2021 FORM 10-Q


Item No.		Page
	Part I. Financial Information
1	Financial Statements	2
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
3	Quantitative and Qualitative Disclosures About Market Risk	48
4	Controls and Procedures	48

	Part II. Other Information
1	Legal Proceedings	49
1A	Risk Factors	49
2	Unregistered Sales of Equity Securities and Use of Proceeds	52
3	Defaults Upon Senior Securities	52
4	Mine Safety Disclosures	52
5	Other Information	52
6	Exhibits	52
	Signatures	54

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GANNETT CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


In thousands, except share data	September 30, 2021		December 31, 2020
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	141,302	$	170,725
Accounts receivable, net of allowance for doubtful accounts of $16,411 and $20,843 as of September 30, 2021 and December 31, 2020, respectively	301,016		314,305
Inventories	33,492		35,075
Prepaid expenses and other current assets	111,689		116,581
Total current assets	587,499		636,686
Property, plant and equipment, net of accumulated depreciation of $363,200 and $362,029 as of September 30, 2021 and December 31, 2020, respectively	461,923		590,272
Operating lease assets	279,353		289,504
Goodwill	533,797		534,088
Intangible assets, net	741,591		824,650
Deferred tax assets	63,136		90,240
Other assets	242,704		143,474
Total assets	$	2,910,003	$	3,108,914

Liabilities and equity
Current liabilities:
Accounts payable and accrued liabilities	$	357,324	$	378,246
Deferred revenue	196,259		186,007
Current portion of long-term debt	104,948		128,445
Other current liabilities	54,753		48,602
Total current liabilities	713,284		741,300
Long-term debt	741,636		890,323
Convertible debt	399,875		581,405
Deferred tax liabilities	21,419		6,855
Pension and other postretirement benefit obligations	88,149		99,765
Long-term operating lease liabilities	261,429		274,460
Other long-term liabilities	141,577		151,847
Total noncurrent liabilities	1,654,085		2,004,655
Total liabilities	2,367,369		2,745,955
Redeemable noncontrolling interests	(2,209)		(1,150)
Commitments and contingent liabilities (See Note 12)

Equity
Preferred stock, $0.01 par value, 300,000 shares authorized, of which 150,000 shares are designated as Series A Junior Participating Preferred Stock, none of which were issued and outstanding at September 30, 2021 and December 31, 2020	—		—
Common stock of $0.01 par value per share, 2,000,000,000 shares authorized, 144,653,850 shares issued and 142,519,768 shares outstanding at September 30, 2021; 139,494,741 shares issued and 138,102,993 shares outstanding at December 31, 2020	1,446		1,395
Treasury stock at cost, 2,134,082 shares and 1,391,748 shares at September 30, 2021 and December 31, 2020, respectively	(6,940)		(4,903)
Additional paid-in capital	1,399,693		1,103,881
Accumulated deficit	(898,951)		(786,437)
Accumulated other comprehensive income	49,595		50,173
Total equity	544,843		364,109
Total liabilities and equity	$	2,910,003	$	3,108,914

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
In thousands, except per share amounts	2021		2020		2021		2020
Advertising and marketing services	$	412,020	$	405,227	$	1,220,487	$	1,249,156
Circulation	306,702		336,158		942,398		1,053,528
Other	81,463		73,154		218,659		227,539
Total operating revenues	800,185		814,539		2,381,544		2,530,223
Operating costs	480,289		492,342		1,431,259		1,535,539
Selling, general and administrative expenses	225,596		241,652		652,184		767,275
Depreciation and amortization	48,107		61,355		154,452		205,706
Integration and reorganization costs	13,619		13,417		35,467		73,978
Asset impairments	2,301		1,585		3,134		8,444
Goodwill and intangible impairments	—		—		—		393,446
(Gain) loss on sale or disposal of assets, net	(833)		795		9,206		1,540
Other operating expenses	4		1,913		11,354		10,261
Total operating expenses	769,083		813,059		2,297,056		2,996,189
Operating income (loss)	31,102		1,480		84,488		(465,966)
Interest expense	34,603		58,063		109,370		173,890
Loss on early extinguishment of debt	3,761		476		25,996		1,650
Non-operating pension income	(23,860)		(18,334)		(71,644)		(54,433)
Loss on convertible notes derivative	—		—		126,600		—
Other income, net	(931)		(10,375)		(3,954)		(14,988)
Non-operating expense	13,573		29,830		186,368		106,119
Income (loss) before income taxes	17,529		(28,350)		(101,880)		(572,085)
Provision (benefit) for income taxes	2,984		3,098		11,567		(22,200)
Net income (loss)	14,545		(31,448)		(113,447)		(549,885)
Net loss attributable to redeemable noncontrolling interests	(142)		(188)		(933)		(1,580)
Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)

Income (loss) per share attributable to Gannett - basic	$	0.11	$	(0.24)	$	(0.84)	$	(4.17)
Income (loss) per share attributable to Gannett - diluted	$	0.09	$	(0.24)	$	(0.84)	$	(4.17)

Other comprehensive income (loss):
Foreign currency translation adjustments	$	(5,487)	$	7,677	$	(700)	$	(8,908)
Pension and other postretirement benefit items:
Net actuarial loss	—		—		(300)		(8,078)
Amortization of net actuarial loss (gain)	25		(11)		40		(36)

Other	1,051		(714)		205		347
Total pension and other postretirement benefit items	1,076		(725)		(55)		(7,767)
Other comprehensive income (loss) before tax	(4,411)		6,952		(755)		(16,675)
Income tax expense (benefit) related to components of other comprehensive income (loss)	7		1		(177)		(2,062)
Other comprehensive income (loss), net of tax	(4,418)		6,951		(578)		(14,613)
Comprehensive income (loss)	10,127		(24,497)		(114,025)		(564,498)
Comprehensive loss attributable to redeemable noncontrolling interests	(142)		(188)		(933)		(1,580)
Comprehensive income (loss) attributable to Gannett	$	10,269	$	(24,309)	$	(113,092)	$	(562,918)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended September 30,
In thousands	2021		2020
Operating activities
Net loss	$	(113,447)	$	(549,885)
Adjustments to reconcile net loss to operating cash flows:
Depreciation and amortization	154,452		205,706
Share-based compensation expense	13,804		22,812
Non-cash interest expense	18,719		17,813
Loss on sale or disposal of assets, net	9,206		1,540
Loss on convertible notes derivative	126,600		—
Loss on early extinguishment of debt	25,996		1,650
Goodwill and intangible impairments	—		393,446
Asset impairments	3,134		8,444
Pension and other postretirement benefit obligations	(114,663)		(77,274)
Change in other assets and liabilities, net	9,546		50,028







Net cash provided by operating activities	133,347		74,280
Investing activities

Purchase of property, plant and equipment	(27,265)		(28,944)
Proceeds from sale of real estate and other assets	67,434		26,186

Change in other investing activities	(933)		779
Net cash provided by (used for) investing activities	39,236		(1,979)
Financing activities
Payments of debt issuance costs	(33,921)		—
Borrowings under term loans	1,045,000		—
Repayments under term loans	(1,220,751)		(27,619)


Deferred payments for acquisitions	—		(7,544)
Payments for employee taxes withheld from stock awards	(2,034)		(1,960)



Changes in other financing activities	(578)		(348)
Net cash used for financing activities	(212,284)		(37,471)
Effect of currency exchange rate change on cash	389		439
(Decrease) increase in cash, cash equivalents and restricted cash	(39,312)		35,269
Balance of cash, cash equivalents and restricted cash at beginning of period	206,726		188,664
Balance of cash, cash equivalents and restricted cash at end of period	$	167,414	$	223,933

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three months ended September 30, 2021
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock
In thousands, except share data	Shares	Amount								Shares	Amount		Total
Balance at June 30, 2021	144,638,938	$	1,446	$	1,395,191	$	54,013	$	(913,638)	2,014,664	$	(6,935)	$	530,077
Net income attributable to Gannett	—	—		—		—		14,687		—	—		14,687
Restricted stock awards settled, net of withholdings	2,857	—		(6)		—		—		—	—		(6)
Restricted share grants	5,226	—		—		—		—		—	—		—

Other comprehensive loss, net of income tax expense of $7	—	—		—		(4,418)				—	—		(4,418)
Share-based compensation expense	—	—		4,602		—		—		—	—		4,602
Issuance of common stock	6,829	—		38		—		—		—	—		38
Treasury stock	—	—		—		—		—		118,675	(4)		(4)
Restricted share forfeiture	—	—		—		—		—		743	(1)		(1)
Other activity	—	—		(132)		—		—		—	—		(132)
Balance at September 30, 2021	144,653,850	$	1,446	$	1,399,693	$	49,595	$	(898,951)	2,134,082	$	(6,940)	$	544,843


	Three months ended September 30, 2020
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock
In thousands, except share data	Shares	Amount								Shares	Amount		Total
Balance at June 30, 2020	136,885,320	$	1,369	$	1,101,899	$	(13,362)	$	(633,003)	770,973	$	(4,818)	$	452,085
Net loss attributable to Gannett	—	—		—		—		(31,260)		—	—		(31,260)
Restricted stock awards settled, net of withholdings	564,406	6		(866)		—		—		—	—		(860)

Other comprehensive income, net of income tax expense of $1	—	—		—		6,951		—		—	—		6,951
Share-based compensation expense	—	—		3,844		—		—		—	—		3,844
Issuance of common stock	28,970	—		(961)		—		—		—	—		(961)
Remeasurement of redeemable noncontrolling interests	—	—		(3,878)		—		—		—	—		(3,878)
Treasury stock	—	—		—		—		—		4,837	(19)		(19)
Restricted share forfeiture	—	—		—		—		—		397,166	(4)		(4)
Other activity	—	—		231		—		—		—	—		231
Balance at September 30, 2020	137,478,696	$	1,375	$	1,100,269	$	(6,411)	$	(664,263)	1,172,976	$	(4,841)	$	426,129

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GANNETT CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY [CONTINUED]

(Unaudited)


	Nine months ended September 30, 2021
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock
In thousands, except share data	Shares	Amount								Shares	Amount		Total
Balance as of December 31, 2020	139,494,741	$	1,395	$	1,103,881	$	50,173	$	(786,437)	1,391,748	$	(4,903)	$	364,109
Net loss attributable to Gannett	—	—		—		—		(112,514)		—	—		(112,514)
Restricted stock awards settled, net of withholdings	1,064,697	10		(1,912)		—		—		—	—		(1,902)
Restricted share grants	3,883,062	39		(39)		—		—		—	—		—
Equity component of the 2027 Notes	—	—		283,718		—		—		—	—		283,718
Other comprehensive loss, net of income tax benefit of $177	—	—		—		(578)		—		—	—		(578)
Share-based compensation expense	—	—		13,804		—		—		—	—		13,804
Issuance of common stock	211,350	2		99		—		—		—	—		101
Remeasurement of redeemable noncontrolling interests	—	—		126		—		—		—	—		126
Treasury stock	—	—		—		—		—		511,828	(2,034)		(2,034)
Restricted share forfeiture	—	—		—		—		—		230,506	(3)		(3)
Other activity	—	—		16		—		—		—	—		16
Balance at September 30, 2021	144,653,850	$	1,446	$	1,399,693	$	49,595	$	(898,951)	2,134,082	$	(6,940)	$	544,843


	Nine months ended September 30, 2020
	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Treasury stock
In thousands, except share data	Shares	Amount								Shares	Amount		Total
Balance as of December 31, 2019	129,386,258	$	1,294	$	1,090,694	$	8,202	$	(115,958)	394,714	$	(2,876)	$	981,356
Net loss attributable to Gannett	—	—		—		—		(548,305)		—	—		(548,305)
Restricted stock awards settled, net of withholdings	3,072,991	31		(10,819)		—		—		—	—		(10,788)
Restricted share grants	4,346,313	44		(44)		—		—		—	—		—
Other comprehensive loss, net of income tax benefit of $2,062	—	—		—		(14,613)		—		—	—		(14,613)
Share-based compensation expense	—	—		22,812		—		—		—	—		22,812
Issuance of common stock	673,134	6		1,609		—		—		—	—		1,615
Remeasurement of redeemable noncontrolling interests	—	—		(3,878)		—		—		—	—		(3,878)
Treasury stock	—	—		—		—		—		322,524	(1,960)		(1,960)
Restricted share forfeiture	—	—		—		—		—		455,738	(5)		(5)
Other activity	—	—		(105)		—		—		—	—		(105)
Balance at September 30, 2020	137,478,696	$	1,375	$	1,100,269	$	(6,411)	$	(664,263)	1,172,976	$	(4,841)	$	426,129

The accompanying notes are an integral part of these condensed consolidated financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Description of Business and basis of presentation

Description of Business

Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") is a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. We aim to be the premier source for clarity, connections and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. The execution of this strategy is expected to allow the Company to continue its evolution from a more traditional print media business to a digitally-focused content platform.

Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom (the "U.K.") with more than 120 local media brands. Gannett also owns the digital marketing services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream"), which are marketed under the LOCALiQ brand, and runs the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

Through USA TODAY, our local property network, and Newsquest, Gannett delivers high-quality, trusted content where and when consumers want to engage on virtually any device or platform. Additionally, the Company has strong relationships with thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and marketing solutions product suite. The Company reports in two segments: Publishing and Digital Marketing Solutions ("DMS"). A full description of our segments is included in Note 13 — Segment reporting in the notes to the condensed consolidated financial statements.

Impacts of the COVID-19 pandemic

As a result of the COVID-19 pandemic, we experienced a significant decline in Advertising and marketing services revenues, which accelerated the secular declines that we continue to experience. In addition, we continue to experience constraints on the sales of single copy newspapers, largely tied to business travel and in-person events. While we have seen operating trends improve since the second quarter of 2020, which represents the quarter that was most significantly impacted by the pandemic, we expect that the COVID-19 pandemic will continue to have a negative impact on our business and results of operations in the near-term, including lower revenues associated with events and lower sales of single copy newspapers, largely as a result of reduced business travel. If the COVID-19 pandemic were to revert to conditions that existed during 2020, including measures to help mitigate and control the spread of the virus, we would expect to experience further negative impacts in Advertising and marketing services and Circulation revenues.

We have implemented, and continue to implement, measures to reduce costs and preserve cash flow. These measures include, evaluating and applying for all governmental relief programs for which we are eligible, including the Paycheck Protection Program ("PPP"), suspending our quarterly dividend, and debt refinancing, as well as reducing discretionary spending. In addition, we are continuing with our previously-disclosed plan to monetize non-core assets.

In connection with the CARES Act, the Company received PPP funding in support of certain of our locations that were meaningfully affected by the COVID-19 pandemic totaling $16.4 million, which was included in Operating activities in the condensed consolidated statements of cash flows for the nine months ended September 30, 2021. As permitted under the CARES Act, during the third quarter of 2021, the Company received forgiveness of such loans totaling $15.1 million, which was recognized in earnings in the condensed consolidated statements of operations and comprehensive income (loss) as an offset to Operating costs of $11.1 million and Selling, general, and administrative expenses of $4.0 million. As of September 30, 2021, the remaining PPP loans of $1.3 million were included in Other long-term liabilities in the condensed consolidated balance sheets. Management has applied for forgiveness of the remaining PPP loans in accordance with applicable guidelines. Interest expense related to PPP funding was immaterial for the three and nine months ended September 30, 2021.

Basis of presentation

Our condensed consolidated financial statements are unaudited; however, in the opinion of management, they contain all of the adjustments (consisting of those of a normal, recurring nature) considered necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles

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("U.S. GAAP") applicable to interim periods. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates entities that it controls due to ownership of a majority voting interest. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ materially from those estimates.

Significant estimates inherent in the preparation of the condensed consolidated financial statements include pension and postretirement benefit obligation assumptions, income taxes, goodwill and intangible asset impairment analysis, valuation of property, plant and equipment and intangible assets and the mark to market of the conversion feature associated with the convertible debt.

Recent accounting pronouncements adopted

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (the "FASB") issued new guidance that simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. This guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Adopting this guidance allowed the Company to record a tax benefit for the first quarter of 2021 because year-to-date losses on interim periods are no longer limited to losses annually forecasted, but did not have a material impact on the Company's condensed consolidated financial statements in subsequent quarters.

Recent accounting pronouncements not yet adopted

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued new guidance ("ASU 2020-06") that simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. In addition to eliminating certain accounting models, the guidance amends the disclosures for convertible instruments and earnings-per-share guidance. It also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on the condensed consolidated financial statements.

NOTE 2 — Revenues

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company’s condensed consolidated statements of operations and comprehensive income (loss) present revenues disaggregated by revenue type. Sales taxes and other usage-based taxes are excluded from revenues. The following table presents our revenues disaggregated by source:

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	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Print advertising	$	190,044	$	208,047	$	584,165	$	664,047
Digital advertising and marketing services	221,976		197,180		636,322		585,109
Total advertising and marketing services	412,020		405,227		1,220,487		1,249,156
Circulation	306,702		336,158		942,398		1,053,528
Other	81,463		73,154		218,659		227,539
Total revenues	$	800,185	$	814,539	$	2,381,544	$	2,530,223

Revenues generated from international locations were approximately 8% for both the three and nine months ended September 30, 2021 and approximately 7% for both the three and nine months ended September 30, 2020.

Deferred revenues

The Company records deferred revenues when cash payments are received in advance of the Company’s performance obligation. The Company's primary source of deferred revenues is from circulation subscriptions paid in advance of the service provided, which represents future delivery of publications (the performance obligation) to subscription customers. The Company expects to recognize the revenue related to unsatisfied performance obligations over the next one to twelve months in accordance with the terms of the subscriptions.

The Company's payment terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. The majority of our subscription customers are billed and pay on monthly terms.

The following table presents changes in the deferred revenues balance by type of revenues:


	Nine months ended September 30, 2021						Nine months ended September 30, 2020
In thousands	Advertising, Marketing Services, and Other		Circulation		Total		Advertising, Marketing Services, and Other		Circulation		Total
Beginning balance	$	51,686	$	134,321	$	186,007	$	67,543	$	151,280	$	218,823
Cash receipts	226,214		738,366		964,580		215,050		878,856		1,093,906
Revenue recognized	(206,203)		(748,125)		(954,328)		(221,052)		(884,080)		(1,105,132)
Ending balance	$	71,697	$	124,562	$	196,259	$	61,541	$	146,056	$	207,597

NOTE 3 — Leases

We lease certain real estate, vehicles, and equipment. Our leases have remaining lease terms of one to fifteen years, some of which may include options to extend the leases, and some of which may include options to terminate the leases. The exercise of lease renewal options is at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.

As of September 30, 2021, our condensed consolidated balance sheets included $279.4 million of operating lease right-to-use assets, $48.3 million of short-term operating lease liabilities included in Other current liabilities, and $261.4 million of long-term operating lease liabilities.

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The components of lease expense are as follows:


	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Operating lease cost (a)	$	19,977	$	20,924	$	60,626	$	62,429
Short-term lease cost (b)	133		828		698		5,315
Variable lease cost	2,963		2,897		8,685		9,713
Net lease cost	$	23,073	$	24,649	$	70,009	$	77,457

(a)Includes sublease income of $1.7 million and $0.9 million for the three months ended September 30, 2021 and 2020, respectively, and $4.7 million and $2.9 million for the nine months ended September 30, 2021 and 2020, respectively.

(b)Excluding expenses relating to leases with a lease term of 12 months or less.

Future minimum lease payments under non-cancellable leases are as follows:


In thousands	Year ended December 31, (a)
2021 (excluding the nine months ended September 30, 2021)	$	18,625
2022	81,364
2023	68,607
2024	60,380
2025	51,315
Thereafter	213,647
Total future minimum lease payments	493,938
Less: Imputed interest	(184,245)
Total	$	309,693

(a)Operating lease payments exclude $0.9 million of legally binding minimum lease payments for leases signed but not yet commenced.

Supplemental information related to leases is as follows:


	Nine months ended September 30,
In thousands, except lease term and discount rate	2021			2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	59,989		$	61,508
Right-of-use assets obtained in exchange for operating lease obligations	31,014			25,562
Gain on sale and leaseback transactions, net	(1,568)			—

	As of September 30,
	2021			2020
Weighted-average remaining lease term (in years)	7.3			7.7
Weighted-average discount rate	12.81		%	12.66		%

NOTE 4 — Accounts receivable, net

The Company performs its evaluation of the collectability of trade receivables based on customer category. For example, trade receivables from individual subscribers to our publications are evaluated separately from trade receivables related to advertising customers. For advertising trade receivables, the Company applies a "black motor formula" methodology as the baseline to calculate the allowance for doubtful accounts. The reserve percentage is calculated as a ratio of total net bad debts (less write-offs and recoveries) for the prior three-year period to total outstanding trade accounts receivable for the same three-year period. The calculated reserve percentage by customer category is applied to the consolidated gross advertising receivable balance, irrespective of aging. In addition, each category has specific reserves for at risk accounts that vary based on the nature of the underlying trade receivables. Due to the short-term nature of our circulation receivables, the Company reserves all receivables aged over 90 days.

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The following table presents changes in the allowance for doubtful accounts for the nine months ended September 30, 2021 and 2020:


	Nine months ended September 30,
In thousands	2021		2020
Beginning balance	$	20,843	$	19,923
Current period provision	3,478		23,075
Write-offs charged against the allowance	(10,998)		(21,139)
Recoveries of amounts previously written-off	3,076		2,230
Disposition	—		(351)
Foreign currency	12		11
Ending balance	$	16,411	$	23,749

The calculation of the allowance considers current economic, industry and customer-specific conditions relative to their respective operating environments in the incremental allowances recorded related to high-risk accounts, bankruptcies, receivables in repayment plan and other aging specific reserves. As a result of this analysis, the Company adjusts specific reserves and the amount of allowable credit as appropriate. The collectability of trade receivables related to advertising, marketing services and other customers depends on a variety of factors, including trends in local, regional or national economic conditions that affect our customers' ability to pay. 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 that may impact our ability to collect on the related receivables. Similarly, while circulation revenues related to individual subscribers are primarily prepaid, changes in economic conditions may also affect our ability to collect on amounts owed from single copy circulation customers.

For the three and nine months ended September 30, 2021, the Company recorded $2.8 million and $3.5 million in bad debt expense, respectively. For the three and nine months ended September 30, 2020, the Company recorded $5.7 million and $23.1 million in bad debt expense, respectively. Bad debt expense is included in Selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss). For the three months ended September 30, 2021, the decrease compared to the prior year period was driven by lower write-offs, as the prior year reflected the impact of the COVID-19 pandemic which resulted in higher bad debt expense and allowance for doubtful accounts. For the nine months ended September 30, 2021, the decrease compared to the prior year period was due to lower write-offs compared to the same period in the prior year, as the prior year reflected the impact of the COVID-19 pandemic.

NOTE 5 — Goodwill and intangible assets

Goodwill and intangible assets consisted of the following:


	September 30, 2021						December 31, 2020
In thousands	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Finite-lived intangible assets:
Advertiser relationships	$	456,141	$	144,326	$	311,815	$	460,331	$	112,468	$	347,863
Other customer relationships	102,685		32,439		70,246		102,925		23,682		79,243
Subscriber relationships	254,972		92,953		162,019		255,702		71,271		184,431
Other intangible assets	68,590		41,021		27,569		68,687		26,982		41,705
Sub-total	$	882,388	$	310,739	$	571,649	$	887,645	$	234,403	$	653,242
Indefinite-lived intangible assets:
Mastheads					169,942						171,408
Total intangible assets					$	741,591					$	824,650

Goodwill					$	533,797					$	534,088

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Consistent with the Company’s past practice, the Company performed its annual goodwill and indefinite-lived intangible impairment assessment in the second quarter of 2021 with the assistance of third-party valuation specialists. Within the impairment analyses performed, the Company considered the current and expected future economic and market conditions and the impact on the fair value of each of the reporting units. The most significant assumptions utilized in the determination of the estimated fair values include revenue and cash flow projections, discount rates and long-term growth rates. The long-term growth rates are dependent on overall market growth rates, the competitive environment, inflation and relative currency exchange rates, and could be adversely impacted by a sustained decrease in any of these measures, all of which the Company considered in determining the long-term growth rates used in the analysis, which ranged from negative 0.5% to positive 3.0%. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. The discount rate may be impacted by adverse changes in the macroeconomic environment and volatility in the equity and debt markets. The Company considered these factors in determining the discount rates used in the analysis, which ranged from 11.0% to 15.0%.

For goodwill, the Company determined the fair value of each reporting unit using a combination of a discounted cash flow analysis and a market-based approach. During the second quarter of 2021, the Company compared the fair value of each reporting unit to its carrying amount, which resulted in the fair value of all the reporting groups being in excess of their carrying values.

For mastheads, the Company applied a "relief from royalty" approach, a discounted cash flow model, reflecting current assumptions, to fair value of the indefinite-lived intangible assets. During the second quarter of 2021, the Company compared the fair value of each indefinite-lived intangible asset to its carrying amount, which resulted in the fair value of each indefinite-lived intangible asset being in excess of its carrying value.

In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred under ASC 360, which would require interim impairment testing. As of September 30, 2021, the Company performed a review of potential impairment indicators and it was determined that no indicators of impairment were present.

During the second quarter of 2020, the Company recorded goodwill impairment charges of $256.5 million, $65.4 million and $40.5 million in our Domestic Publishing, Newsquest and Marketing Solutions reporting units, respectively, and recorded indefinite-lived asset impairments of $4.0 million in both our Domestic Publishing and Newsquest reporting units, as a result of the annual impairment assessment. During the second quarter of 2020, the Company considered the impact of the COVID-19 pandemic on the Company’s operations to be an indicator of impairment under ASC 360, and as such, the Company recorded an intangible asset impairment of $23.0 million related to advertiser and other customer relationships.

NOTE 6 — Integration and reorganization costs and asset impairments

Over the past several years, the Company has engaged in a series of individual restructuring programs, designed primarily to right-size the Company’s employee base, consolidate facilities and improve operations, including those of recently acquired entities. These initiatives impact all the Company’s operations and can be influenced by the terms of union contracts. Costs related to these programs, which primarily include severance expense, are accrued when probable and reasonably estimable or at the time of program announcement.

Severance-related expenses

We recorded severance-related expenses by segment as follows:


	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Publishing	$	1,941	$	3,983	$	10,125	$	35,401
Digital Marketing Solutions	402		1,196		321		5,333
Corporate and other	317		2,103		440		14,069
Total	$	2,660	$	7,282	$	10,886	$	54,803

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A rollforward of the accrued severance and related costs included in Accounts payable and accrued expenses on the condensed consolidated balance sheets for the nine months ended September 30, 2021 is as follows:


In thousands	Severance and Related Costs
Beginning balance	$	30,943
Restructuring provision included in integration and reorganization costs	10,886
Cash payments	(31,869)
Ending balance	$	9,960

The restructuring reserve balance is expected to be paid out over the next twelve months.

Facility consolidation and other restructuring-related expenses

Facility consolidation and other restructuring-related expenses represent costs for consolidating operations, systems implementation, and outsourcing of corporate functions. We recorded facility consolidation charges and other restructuring-related costs by segment as follows:


	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Publishing	$	1,571	$	1,137	$	516	$	3,648
Digital Marketing Solutions	529		41		980		254
Corporate and other	8,859		4,957		23,085		15,273
Total	$	10,959	$	6,135	$	24,581	$	19,175

Asset impairments

For the three and nine months ended September 30, 2021, the Company recorded Asset impairment charges of $2.3 million and $3.1 million, respectively, at the Publishing segment primarily due to the impairment of real estate held for sale. For the three months ended September 30, 2020, the Company recorded Asset impairment charges at the Publishing segment of $0.9 million as a result of the Company's fixed asset disposals related to the continued consolidation of operations and recorded $7.7 million for the nine months ended September 30, 2020 as a result of a recoverability test for long-lived assets and fixed asset disposals during the period. For both the three and nine months ended September 30, 2020, the Company recorded $0.7 million of Asset impairment charges at the DMS segment as a result of fixed asset disposals related to the continued consolidation of operations.

Accelerated depreciation

The Company incurred accelerated depreciation of $1.1 million and $9.3 million for the three months ended September 30, 2021 and 2020, respectively, and $11.4 million and $45.0 million for the nine months ended September 30, 2021 and 2020, respectively, related to the shortened useful life of assets due to the sale of property at the Publishing segment and included within Depreciation and amortization expense on the condensed consolidated statements of operations and comprehensive income (loss).

NOTE 7 — Debt

5-Year Term Loan

On February 9, 2021, the Company entered into a five-year, senior-secured term loan facility with the lenders from time to time party thereto and Citibank, N.A., as collateral agent and administrative agent for the lenders, in an aggregate principal amount of $1.045 billion (the "5-Year Term Loan"). The 5-Year Term Loan was to mature on February 9, 2026 and, at the Company's option, bore interest at a rate equal to LIBOR plus a margin equal to 7.00% per annum or an alternate base rate plus a margin equal to 6.00% per annum. Interest on the 5-Year Term Loan was payable at least every three months in arrears, beginning in May 2021.

The proceeds from the 5-Year Term Loan were used to repay the remaining principal balance and accrued interest of $1.043 billion and $13.3 million, respectively, (the "Payoff") on the Company's five-year, senior-secured 11.5% term loan

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facility with Apollo Capital Management, L.P. (the "Acquisition Term Loan") and to pay fees and expenses incurred to obtain the 5-Year Term Loan.

There were certain lenders that participated in both the Acquisition Term Loan and the 5-Year Term Loan and their balances in the Acquisition Term Loan were deemed to be modified. The Company continued to defer, over the term, the deferred financing fees and original issue discount from the Acquisition Term Loan of $1.5 million and $34.7 million, respectively, related to those lenders. Further, certain lenders in the Acquisition Term Loan did not participate in the 5-Year Term Loan and their balances in the Acquisition Term Loan were deemed to be extinguished. The Company recognized a Loss on early extinguishment of debt of $17.2 million in the first quarter of 2021 as a result of the write-off of the remaining original issue discount and deferred financing fees related to those lenders. Third-party fees of approximately $13.0 million were allocated to the new lenders in the 5-Year Term Loan on a pro-rata basis, and $20.9 million of original issue discount were capitalized and amortized over the term of the 5-Year Term Loan using the effective interest method. For the nine months ended September 30, 2021, third-party fees of $10.9 million, which were allocated to the lenders whose balances were deemed to be modified, were expensed and recorded in Other operating expenses in the condensed consolidated statements of operations and comprehensive income (loss). No third-party fees were incurred during the three months ended September 30, 2021.

The 5-Year Term Loan amortized in equal quarterly installments at a rate of 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) was equal to or less than a specified ratio, 5% per annum) (the "Quarterly Amortization Installment"), beginning September 30, 2021. In addition, we were required to repay the 5-Year Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness that was not otherwise permitted under the 5-Year Term Loan and (iii) the aggregate amount of cash and cash equivalents on hand in excess of $100 million at the end of each fiscal year. The 5-Year Term Loan was subject to a requirement to have minimum unrestricted cash of $30 million as of the last day of each fiscal quarter. As of September 30, 2021, the Company was in compliance with all of the covenants and obligations under the 5-Year Term Loan.

As of September 30, 2021, the Company had $899.4 million in aggregate principal outstanding under the 5-Year Term Loan, $11.5 million of unamortized deferred financing costs, and $41.4 million of unamortized original issue discount and an effective interest rate of 9.5%. During the three months ended September 30, 2021, the Company recorded interest expense of $19.2 million and paid $30.3 million for interest expense related to the 5-Year Term Loan. During the nine months ended September 30, 2021, the Company recorded interest expense of $50.5 million and $13.4 million for the 5-Year Term Loan and the Acquisition Term Loan, respectively, and paid interest expense of $50.5 million and $13.4 million for the 5-Year Term Loan and the Acquisition Term Loan, respectively. Additionally, during the three and nine months ended September 30, 2021, the Company had $3.8 million and $26.0 million, respectively, related to Loss on early extinguishment of debt, which related to the write-off of original issue discount and deferred financing fees as a result of early prepayments on the 5-Year Term Loan and Acquisition Term Loan. Included in the Loss on early extinguishment of debt for the nine months ended September 30, 2021, was $17.2 million related to the write-off of the remaining original issue discount and deferred financing fees from the Acquisition Term Loan and approximately $2.2 million related to the write-off of original issue discount and deferred financing fees as a result of early prepayments on the Acquisition Term Loan prior to the Payoff. For the three and nine months ended September 30, 2021, the Company recorded $0.9 million and $2.4 million, respectively, of amortization of deferred financing costs, and $3.4 million and $8.7 million, respectively, of amortization of original issue discount, for the 5-Year Term Loan. For the three and nine months ended September 30, 2020, the Company recorded $0.2 million and $0.7 million, respectively, of amortization of deferred financing costs, and $5.6 million and $17.0 million, respectively, of amortization of original issue discount for the Acquisition Term Loan.

Under the 5-Year Term Loan, the Company was contractually obligated to make prepayments with the proceeds from asset sales and could have elected to make optional payments with excess free cash flow from operations. For the three and nine months ended September 30, 2021, we made prepayments totaling $91.1 million and $145.6 million, respectively, which were classified as financing activities in the condensed consolidated statements of cash flows. These amounts are inclusive of both mandatory and optional prepayments. The 5-Year Term Loan was repaid in full on October 15, 2021. Refer to Note 15 — Subsequent events for further information regarding the debt refinancing.

Senior Secured Convertible Notes due 2027

On November 17, 2020, the Company issued $497.1 million in aggregate principal amount of the Company’s 6.0% Senior Secured Convertible Notes due 2027 (the "2027 Notes"). The 2027 Notes were issued pursuant to an Indenture dated as of November 17, 2020, as amended by the First Supplemental Indenture dated as of December 21, 2020 and the Second

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Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027 Notes Indenture"), between the Company and U.S. Bank National Association, as trustee.

In connection with the issuance of the 2027 Notes, the Company entered into an Investor Agreement (the "Investor Agreement") with the holders of the 2027 Notes (the "Holders") establishing certain terms and conditions concerning the rights and restrictions on the Holders with respect to the Holders' ownership of the 2027 Notes. The Company also entered into an amendment to the Registration Rights Agreement dated November 19, 2019, between the Company and FIG LLC.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) or any combination of cash and Common Stock, at the Company's election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price").

The conversion rate is subject to customary adjustment provisions as provided in the 2027 Notes Indenture. In addition, the conversion rate will be subject to adjustment in the event of any issuance or sale of Common Stock (or securities convertible into Common Stock) at a price equal to or less than the Conversion Price in order to ensure that following such issuance or sale, the 2027 Notes would be convertible into approximately 42% of the Common Stock after giving effect to such issuance or sale assuming the initial principal amount of the 2027 Notes remains outstanding.

Upon the occurrence of a "Make-Whole Fundamental Change" (as defined in the 2027 Notes Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time. If a "Fundamental Change" (as defined in the 2027 Notes Indenture) occurs, the Company will be required to offer to repurchase the 2027 Notes at a repurchase price of 110% of the principal amount thereof.

Holders of the 2027 Notes will have the right to put up to approximately $100 million of the 2027 Notes at par on or after the date that is 91 days after the maturity date of the 5-Year Term Loan or any Refinancing Facilities (as defined in the 2027 Notes Indenture) in respect thereof.

Under the 2027 Notes Indenture, the Company can only pay cash dividends up to an agreed-upon amount, provided the ratio of consolidated debt to EBITDA (as such terms are defined in the 2027 Notes Indenture) does not exceed a specified ratio. In addition, the 2027 Notes Indenture provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and the Company approves the declaration of a dividend, the Company must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend.

Until the four-year anniversary of the issuance date, the Company will have the right to redeem for cash up to approximately $99.4 million of the 2027 Notes at a redemption price of 130% of the principal amount thereof, with such amount reduced ratably by any principal amount of 2027 Notes that has been converted by the holders or redeemed or purchased by the Company.

The 2027 Notes are guaranteed by Gannett Holdings LLC ("Gannett Holdings") and any subsidiaries of the Company that guaranteed the 5-Year Term Loan. The 2027 Notes are secured by the same collateral that secured the 5-Year Term Loan. The 2027 Notes rank as senior secured debt of the Company and are secured by a second priority lien on the same collateral package that secured the indebtedness incurred in connection with the 5-Year Term Loan.

The 2027 Notes Indenture includes affirmative and negative covenants, including limitations on liens, indebtedness, dispositions, loan, advances and investors, sale and leaseback transactions, restricted payments, transactions with affiliates, restrictions on dividends and other payment restrictions affecting restricted subsidiaries, negative pledges and modifications to certain agreements. The 2027 Notes Indenture also requires that the Company maintain, as of the last day of each fiscal quarter, at least $30.0 million of Qualified Cash (as defined in the 2027 Notes Indenture). The 2027 Notes Indenture includes customary events of default.

Upon issuance, the $497.1 million principal value of the 2027 Notes was separated into two components: (i) a debt component and (ii) a derivative component. At that time, we determined that the conversion option was not clearly and closely related to the economic characteristics of the 2027 Notes, nor did the conversion option meet the scope exception related to contracts in an entity’s own equity, as we did not have the ability to control whether the settlement of the conversion feature, if settled in full, would be in cash or shares due to the approval requirement to issue those shares. As a result, we concluded that the embedded conversion option must be separated from the debt liability, separately valued, and accounted for as a derivative

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liability. The initial value allocated to the derivative liability was $115.3 million, with a corresponding reduction in the carrying value of the 2027 Notes. The derivative liability was reported within Convertible debt in the condensed consolidated balance sheets at December 31, 2020 and was marked to fair value through earnings.

The $389.1 million debt liability component of the 2027 Notes was initially measured at fair value using the present value of its cash flows at a discount rate of 10.7% and is reported as Convertible debt in the condensed consolidated balance sheets. The debt liability component of the 2027 Notes is classified as Level 2 because it is measured at fair value using commonly accepted valuation methodologies and indirectly observable, market-based risk measurements and historical data, and a review of prices and terms available for similar debt instruments that do not contain a conversion feature.

At the Special Meeting of stockholders of the Company, held on February 26, 2021 (the "Special Meeting"), our stockholders approved the issuance of the maximum number of shares of Common Stock issuable upon conversion of the 2027 Notes. As a result, the conversion option can be share-settled in full. The Company concluded that as of February 26, 2021, the conversion option qualified for equity classification and the bifurcated derivative liability no longer needed to be accounted for as a separate derivative on a prospective basis from the date of reassessment. As of February 26, 2021, the fair value of the conversion option of $316.2 million was reclassified to Equity as Additional paid-in capital. Any remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense. During the nine months ended September 30, 2021, the deferred tax asset related to the embedded conversion feature of the 2027 Notes was reclassified to Equity as a reduction to Additional paid-in-capital and reduced the carrying amount of the equity component of the 2027 Notes to $283.7 million.

As of February 26, 2021, the date of reassessment, and December 31, 2020, the estimated fair value of the derivative liability for the embedded conversion feature was $316.2 million and $189.6 million, respectively. At December 31, 2020, the derivative liability was reported within Convertible debt in the condensed consolidated balance sheets. The derivative liability was classified as Level 3 because it is measured at fair value on a recurring basis using a binomial lattice model using assumptions based on market information and historical data, and significant unobservable inputs. The increase in the fair value of the derivative liability of $126.6 million at the date of reassessment and reclassification to Equity was due to the increase in our stock price, partially offset by the increase in the discount rate, and was recorded in Non-Operating Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2021. The loss due to the revaluation of the derivative is not deductible for tax purposes. The assumptions used to determine the fair value as of February 26, 2021 and December 31, 2020 were:


	February 26, 2021			December 31, 2020
Annual volatility	70.0		%	70.0		%
Discount rate	12.2		%	9.3		%
Stock price	$	4.95		$	3.36

Total debt issuance costs of $2.3 million will be amortized over the 7-year contractual life of the 2027 Notes. The unamortized discount will be amortized over the remaining contractual life of the 2027 Notes. For the three and nine months ended September 30, 2021, interest expense on the 2027 Notes totaled $7.5 million and $22.4 million, respectively. Amortization of the discount was $2.9 million and $7.9 million for the three and nine months ended September 30, 2021, respectively. Amortization of debt issuance costs were immaterial and $0.2 million for the three and nine months ended September 30, 2021, respectively. The effective interest rate on the liability component of the 2027 Notes was 10.5% as of September 30, 2021. Additional information related to the liability component of the 2027 Notes includes the following:


In thousands	September 30, 2021		December 31, 2020
Net carrying value of liability component	$	396.6	$	388.4
Unamortized discount of liability component	$	100.5	$	108.7

For the nine months ended September 30, 2021, no shares were issued upon conversion, exercise, or satisfaction of the required conditions. Refer to Note 10 — Supplemental equity information for details on the convertible debt's impact to diluted earnings per share under the if-converted method.

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Senior Convertible Notes due 2024

The $3.3 million principal value of the remaining 4.75% convertible senior notes due 2024 (the "2024 Notes") outstanding is reported as convertible debt in the condensed consolidated balance sheets. The effective interest rate on the 2024 Notes was 6.05% as of September 30, 2021.

NOTE 8 — Pensions and other postretirement benefit plans

We, along with our subsidiaries, sponsor various defined benefit retirement plans, including plans established under collective bargaining agreements. Our retirement plans include the Gannett Retirement Plan (the "GR Plan"), the Newsquest and Romanes Pension Schemes in the U.K. (the "U.K. Pension Plans"), and other defined benefit and defined contribution plans. We also provide health care and life insurance benefits to certain retired employees who meet age and service requirements.

Retirement plan costs include the following components:


	Pension Benefits				Postretirement Benefits
	Three months ended September 30,				Three months ended September 30,
In thousands	2021		2020		2021		2020
Operating expenses:
Service cost - benefits earned during the period	$	490	$	693	$	23	$	27
Non-operating expenses:
Interest cost on benefit obligation	17,042		20,670		428		580
Expected return on plan assets	(41,355)		(39,573)		—		—

Amortization of actuarial loss (gain)	38		(26)		(13)		15


Total non-operating (benefit) expenses	$	(24,275)	$	(18,929)	$	415	$	595
Total expense (benefit) for retirement plans	$	(23,785)	$	(18,236)	$	438	$	622


	Pension Benefits				Postretirement Benefits
	Nine months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Operating expenses:
Service cost - benefits earned during the period	$	1,470	$	2,078	$	67	$	79
Non-operating expenses:
Interest cost on benefit obligation	51,179		61,803		1,330		1,740
Expected return on plan assets	(124,193)		(117,940)		—		—

Amortization of actuarial loss (gain)	115		(80)		(75)		44


Total non-operating (benefit) expenses	$	(72,899)	$	(56,217)	$	1,255	$	1,784
Total expense (benefit) for retirement plans	$	(71,429)	$	(54,139)	$	1,322	$	1,863

During the nine months ended September 30, 2021, we contributed $40.2 million and $4.4 million to our pension and other postretirement plans, respectively, including $11 million in minimum required contributions for the GR Plan attributable to the 2019 plan year, as required by the Employee Retirement Income Security Act of 1974 ("ERISA"), which were deferred until January 4, 2021. Additionally, in response to the COVID-19 pandemic, our GR Plan in the U.S. has deferred certain contractual contributions and negotiated a contribution payment plan of $5.0 million per quarter starting December 31, 2020 through the end of September 30, 2022.

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NOTE 9 — Income taxes

The following table outlines our pre-tax net income (loss) and income tax amounts:


	Three months ended September 30,					Nine months ended September 30,
In thousands	2021			2020		2021			2020
Income (loss) before income taxes	$	17,529		$	(28,350)	$	(101,880)		$	(572,085)
Provision (benefit) for income taxes	2,984			3,098		11,567			(22,200)
Effective tax rate	17.0		%	***		(11.4)		%	3.9		%

*** Indicates an absolute value percentage change greater than 100.

The provision for income taxes for the three months ended September 30, 2021 was mainly driven by pre-tax income and is impacted by forgiveness of PPP loans during the quarter. For federal tax purposes, book income from forgiven loans is not included in taxable income, and expenses paid utilizing the loan proceeds can be deducted. The impact of PPP loan forgiveness is partially offset by the creation of valuation allowances on non-deductible interest expense carryforwards. The provision was calculated using the estimated annual effective tax rate of 77.7%. The annual effective tax rate is principally impacted by the derivative revaluation, which is non-deductible for federal tax purposes, and the creation of valuation allowances on non-deductible interest expense carryforwards. The estimated annual effective tax rate is based on a projected tax expense for the full year.

The tax provision for the nine months ended September 30, 2021 was mainly driven by the pre-tax net loss generated during the first quarter of 2021. The tax provision is impacted by the derivative revaluation, which is nondeductible for federal tax purposes, the creation of valuation allowances on non-deductible interest expense carryforwards, and PPP loan forgiveness, in combination with state income tax and foreign tax expense.

During the nine months ended September 30, 2021, we reclassified $32.5 million (tax effected) in connection with the retirement of the deferred tax asset related to the embedded conversion feature associated with the Company’s 2027 Notes. The retirement of the deferred tax asset resulted from the reclassification of the embedded conversion feature from a derivative liability to Equity as a reduction to Additional paid-in-capital during the first quarter of 2021. See Note 7 - Debt for additional information about the Company's 2027 Notes.

The total amount of unrecognized tax benefits that, if recognized, may impact the effective tax rate was approximately $42.8 million as of September 30, 2021 and $39.5 million as of December 31, 2020. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $3.4 million as of September 30, 2021 and $2.6 million as of December 31, 2020.

It is reasonably possible that further adjustments to our unrecognized tax benefits may be made within the next twelve months due to audit settlements and regulatory interpretations of existing tax laws. At this time, an estimate of potential change to the amount of unrecognized tax benefits cannot be made.

The provision for income taxes for the three months ended September 30, 2020 was mainly impacted by a reduction in the year to date tax benefit as a result of a lower projected annualized effective tax rate. The provision for income taxes for the three months ended September 30, 2020 was calculated using the estimated annual effective tax rate of 6.2%. The estimated annual effective tax rate is based on a projected tax benefit for the full year. The tax benefit for the nine months ended September 30, 2020 is lower than the 21% statutory federal rate due to the impact of non-deductible asset impairments, non-deductible officers’ compensation and the creation of valuation allowances on non-deductible interest expense carryforwards and capital losses.

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NOTE 10 — Supplemental equity information

Income (loss) per share

The following table sets forth the information used to compute basic and diluted income (loss) per share:


	Three months ended September 30,				Nine months ended September 30,
In thousands, except per share data	2021		2020		2021		2020
Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)
Interest adjustment to Net income (loss) attributable to Gannett related to assumed conversions of the 2027 Notes, net of taxes	7,598		—		—		—
Net income (loss) attributable to Gannett for diluted earnings per share	$	22,285	$	(31,260)	$	(112,514)	$	(548,305)

Basic weighted average shares outstanding	135,002		132,223		134,610		131,425
Effect of dilutive securities:
Restricted stock grants	5,032		—		—		—
2027 Notes	99,419		—		—		—
Diluted weighted average shares outstanding	239,453		132,223		134,610		131,425

Income (loss) per share attributable to Gannett - basic	$	0.11	$	(0.24)	$	(0.84)	$	(4.17)
Income (loss) per share attributable to Gannett - diluted	$	0.09	$	(0.24)	$	(0.84)	$	(4.17)

The Company excluded the following securities from the computation of diluted income per share because their effect would have been antidilutive:


	Three months ended September 30,		Nine months ended September 30,
In thousands	2021	2020	2021	2020
Warrants	845	1,362	845	1,362
Stock options	6,068	6,068	6,068	6,068
Restricted stock grants (a)	42	7,130	10,442	7,130
2027 Notes (b)	—	—	99,419	—

(a)Includes Restricted stock awards ("RSAs"), Restricted stock units ("RSUs") and Performance stock units ("PSUs").

(b)Represents the total number of shares that would be convertible at September 30, 2021 as stipulated in the 2027 Notes Indenture.

The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s Common Stock or any combination of cash and Common Stock, at the Company’s election. Conversion of all of the 2027 Notes into Common Stock (assuming the maximum increase in the conversion rate as a result of a Make-Whole Fundamental Change but no other adjustments to the conversion rate), would result in the issuance of an aggregate of 294.2 million shares of Common Stock. The Company has excluded approximately 194.8 million shares from the loss per share calculation, representing the difference between the total number of shares that would be convertible at September 30, 2021 and the total number of shares issuable assuming the maximum increase in the conversion rate.

Share-based compensation

The Company recognized compensation cost for share-based payments of $4.6 million and $13.8 million for the three and nine months ended September 30, 2021, respectively, and $3.8 million and $22.8 million for the three and nine months ended September 30, 2020, respectively.

The total compensation cost not yet recognized related to non-vested awards as of September 30, 2021 was $29.6 million, which is expected to be recognized over a weighted-average period of 2.1 years through October 2023.

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Restricted stock awards

During the nine months ended September 30, 2021, a total of 4.1 million RSAs were granted. RSAs generally vest in equal annual installments over a three-year period subject to the participants' continued employment with the Company. The weighted average grant date fair value of RSAs granted during the nine months ended September 30, 2021 was $5.29.

Rights Agreement

On April 6, 2020, the Company's board of directors (the "Board") adopted a stockholder rights plan in the form of a Section 382 Rights Agreement ("Rights Agreement") to preserve and protect the Company's income tax net operating loss carryforwards ("NOLs") and other tax assets. The Rights Agreement was approved by the Company's stockholders on June 7, 2021 at the 2021 annual meeting of stockholders. As of December 31, 2020, the Company had approximately $543.5 million of NOLs available which could be used in certain circumstances to offset future federal taxable income.

Under the Rights Agreement, the Board declared a non-taxable dividend of one preferred share purchase right for each outstanding share of Common Stock. The rights will be exercisable only if a person or group acquires 4.99% or more of Gannett’s Common Stock. Gannett’s existing stockholders that beneficially own in excess of 4.99% of the Common Stock are "grandfathered in" at their current ownership level and the rights then become exercisable if any of those stockholders acquire an additional 0.5% or more of Common Stock of the Company. If the rights become exercisable, all holders of rights, other than the person or group triggering the rights, will be entitled to purchase Gannett Common Stock at a 50% discount or Gannett may exchange each right held by such holders for one share of Common Stock. Rights held by the person or group triggering the rights will become void and will not be exercisable. The Board has the discretion to exempt any person or group from the provisions of the Rights Agreement.

The Rights Agreement will continue in effect until April 5, 2023. The Board has the ability to terminate the plan if it determines that doing so would be in the best interest of the Company’s stockholders. The rights may also expire at an earlier date if certain events occur, as described more fully in the Rights Agreement filed by the Company with the Securities and Exchange Commission.

Preferred stock

The Company has authorized 300,000 shares of preferred stock, par value $0.01 per share, issuable in one or more series designated by the Board, of which 150,000 shares have been designated as Series A Junior Participating Preferred Stock, none of which are outstanding. There were no issuances of preferred stock during the nine months ended September 30, 2021.

Accumulated other comprehensive income (loss)

The following tables summarize the components of, and the changes in, Accumulated other comprehensive income (loss), net of tax for the nine months ended September 30, 2021 and 2020:


	Nine months ended September 30, 2021						Nine months ended September 30, 2020
In thousands	Pension and Postretirement Plans		Foreign Currency Translation		Total		Pension and Postretirement Plans		Foreign Currency Translation		Total
Beginning balance	$	40,441	$	9,732	$	50,173	$	936	$	7,266	$	8,202
Other comprehensive income (loss) before reclassifications	93		(700)		(607)		(5,675)		(8,908)		(14,583)
Amounts reclassified from accumulated other comprehensive income (loss)(a)(b)	29		—		29		(30)		—		(30)
Net current period other comprehensive income (loss), net of taxes	122		(700)		(578)		(5,705)		(8,908)		(14,613)
Ending balance	$	40,563	$	9,032	$	49,595	$	(4,769)	$	(1,642)	$	(6,411)

(a)This accumulated other comprehensive income (loss) component is included in the computation of net periodic benefit cost. See Note 8 — Pensions and other postretirement benefit plans.

(b)Amounts reclassified from accumulated other comprehensive loss are recorded net of tax impacts of $11 thousand and $6 thousand for the nine months ended September 30, 2021 and 2020, respectively.

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NOTE 11 — Fair value measurement

In accordance with ASC 820, "Fair Value Measurement," fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Level 1 refers to fair values determined based on quoted prices in active markets for identical assets or liabilities, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.

As of September 30, 2021 and December 31, 2020, assets and liabilities recorded at fair value and measured on a recurring basis primarily consist of pension plan assets. As permitted by U.S. GAAP, we use net asset values ("NAV") as a practical expedient to determine the fair value of certain investments. These investments measured at NAV have not been classified in the fair value hierarchy.

The 5-Year Term Loan was recorded at carrying value, which approximates fair value in the condensed consolidated balance sheets and was classified as Level 2. Refer to additional discussion regarding fair value of the 2027 Notes in Note 7 — Debt.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Assets held for sale (Level 3) are measured on a nonrecurring basis and are evaluated using executed purchase agreements, letters of intent or third-party valuation analyses when certain circumstances arise. Assets held for sale totaled $21.7 million as of September 30, 2021 and $14.7 million as of December 31, 2020. The Company performs its annual goodwill and indefinite-lived intangible impairment assessment during the second quarter of the year. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements. Refer to Note 5 — Goodwill and intangible assets for additional discussion regarding the annual impairment assessment.

NOTE 12 — Commitments, contingencies and other matters

Legal Proceedings

The Company is and may become involved from time to time in legal proceedings in the ordinary course of its business, including but not limited to matters such as libel, invasion of privacy, intellectual property infringement, wrongful termination actions, complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, the Company is 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 the Company’s consolidated results of operations or financial position.

We are also defendants in judicial and administrative proceedings involving matters incidental to our business. Although the Company is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, the Company does not expect its current and any threatened legal proceedings to have a material adverse effect on the Company’s 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 the Company’s financial results.

Other

Redeemable noncontrolling interests

Equity purchase arrangements that are exercisable by the counterparty to the agreement and that are outside the sole control of the Company are accounted for in accordance with ASC 480-10-S99-3A and are classified as Redeemable noncontrolling interests in the condensed consolidated balance sheets.

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NOTE 13 — Segment reporting

We define our reportable segments based on the way the Chief Operating Decision Maker ("CODM"), which is our Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance. Our reportable segments include the following:

•Publishing is comprised of our portfolio of local, regional, national, and international newspaper publishers. The results of this segment include Advertising and marketing services revenues from local, classified, and national advertising across multiple platforms, including print, online, mobile, and tablet as well as niche publications, Circulation revenues from home delivery, digital distribution and single copy sales of our publications, and Other revenues, mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues, and third-party newsprint sales. The Publishing reportable segment is an aggregation of two operating segments: Domestic Publishing and U.K. Publishing.

•Digital Marketing Solutions is comprised of our digital marketing solutions subsidiary, ReachLocal. The results of this segment include Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

In addition to the above operating segments, we have a Corporate and other category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions, including legal, human resources, accounting, finance and marketing as well as other general business costs.

In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results.

The CODM uses Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett to evaluate the performance of the segments and allocate resources. Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are non-GAAP financial performance measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income (expense), (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges, including gains or losses on the sale of investments. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues. We define Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Other operating expenses, including third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) Gains or losses on the sale of investments, and (9) the tax impact of the above items.

Management considers Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett to be the appropriate metrics to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as it eliminates the effect of items which we do not believe are indicative of each segment's core operating performance.

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The following tables present our segment information:


	Three months ended September 30, 2021
In thousands	Publishing		Digital Marketing Solutions		Corporate and other		Intersegment Eliminations		Consolidated














Advertising and marketing services - external sales	$	294,742	$	116,771	$	507	$	—	$	412,020
Advertising and marketing services - intersegment sales	34,042		—		—		(34,042)		—


Circulation	306,698		—		4		—		306,702
Other	80,325		—		1,138		—		81,463
Total operating revenues	$	715,807	$	116,771	$	1,649	$	(34,042)	$	800,185

Adjusted EBITDA (non-GAAP basis)	$	101,001	$	15,024	$	(13,958)	$	—	$	102,067


	Three months ended September 30, 2020
In thousands	Publishing		Digital Marketing Solutions		Corporate and other		Intersegment Eliminations		Consolidated














Advertising and marketing services - external sales	$	303,646	$	100,807	$	774	$	—	$	405,227
Advertising and marketing services - intersegment sales	25,862		—		—		(25,862)		—


Circulation	336,152		—		6		—		336,158
Other	66,566		4,636		1,952		—		73,154
Total operating revenues	$	732,226	$	105,443	$	2,732	$	(25,862)	$	814,539

Adjusted EBITDA (non-GAAP basis)	$	108,752	$	4,177	$	(24,949)	$	—	$	87,980


	Nine months ended September 30, 2021
In thousands	Publishing		Digital Marketing Solutions		Corporate and other		Intersegment Eliminations		Consolidated














Advertising and marketing services - external sales	$	890,665	$	328,184	$	1,638	$	—	$	1,220,487
Advertising and marketing services - intersegment sales	93,910		—		—		(93,910)		—


Circulation	942,392		—		6		—		942,398
Other	212,970		905		4,784		—		218,659
Total operating revenues	$	2,139,937	$	329,089	$	6,428	$	(93,910)	$	2,381,544

Adjusted EBITDA (non-GAAP basis)	$	317,398	$	36,725	$	(35,822)	$	—	$	318,301


	Nine months ended September 30, 2020
In thousands	Publishing		Digital Marketing Solutions		Corporate and other		Intersegment Eliminations		Consolidated














Advertising and marketing services - external sales	$	939,923	$	306,899	$	2,334	$	—	$	1,249,156
Advertising and marketing services - intersegment sales	85,472		—		—		(85,472)		—


Circulation	1,053,518		—		10		—		1,053,528
Other	207,355		14,388		5,796		—		227,539
Total operating revenues	$	2,286,268	$	321,287	$	8,140	$	(85,472)	$	2,530,223

Adjusted EBITDA (non-GAAP basis)	$	311,767	$	14,847	$	(61,548)	$	—	$	265,066

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The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Net income (loss) attributable to Gannett margin to Adjusted EBITDA margin:


	Three months ended September 30,						Nine months ended September 30,
In thousands	2021			2020			2021			2020
Net income (loss) attributable to Gannett	$	14,687		$	(31,260)		$	(112,514)		$	(548,305)
Provision (benefit) for income taxes	2,984			3,098			11,567			(22,200)
Interest expense	34,603			58,063			109,370			173,890
Loss on early extinguishment of debt	3,761			476			25,996			1,650
Non-operating pension income	(23,860)			(18,334)			(71,644)			(54,433)
Loss on convertible notes derivative	—			—			126,600			—
Depreciation and amortization	48,107			61,355			154,452			205,706
Integration and reorganization costs	13,619			13,417			35,467			73,978
Other operating expenses	4			1,913			11,354			10,261
Asset impairments	2,301			1,585			3,134			8,444
Goodwill and intangible impairments	—			—			—			393,446
(Gain) loss on sale or disposal of assets, net	(833)			795			9,206			1,540
Share-based compensation expense	4,602			3,844			13,804			22,812
Other items	2,092			(6,972)			1,509			(1,723)
Adjusted EBITDA (non-GAAP basis)	$	102,067		$	87,980		$	318,301		$	265,066
Net income (loss) attributable to Gannett margin	1.8		%	(3.8)		%	(4.7)		%	(21.7)		%
Adjusted EBITDA margin (non-GAAP basis)	12.8		%	10.8		%	13.4		%	10.5		%

The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted Net income (loss) attributable to Gannett:


	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)
Loss on early extinguishment of debt	3,761		476		25,996		1,650
Loss on convertible notes derivative	—		—		126,600		—
Integration and reorganization costs	13,619		13,417		35,467		73,978
Other operating expenses	4		1,913		11,354		10,261
Asset impairments	2,301		1,585		3,134		8,444
Goodwill and intangible impairments	—		—		—		393,446
(Gain) loss on sale or disposal of assets, net	(833)		795		9,206		1,540
Gain on sale of investments	—		(7,800)		—		(7,995)
Subtotal	33,539		(20,874)		99,243		(66,981)
Tax impact of above items	(7,033)		(25,449)		(28,042)		(61,364)
Adjusted Net income (loss) attributable to Gannett (non-GAAP basis)	$	26,506	$	(46,323)	$	71,201	$	(128,345)

Asset information by segment is not a key measure of performance used by the CODM function. Accordingly, we have not disclosed asset information by segment. Additionally, equity income in unconsolidated investees, net, interest expense, other non-operating items, net, and benefit for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level.

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NOTE 14 — Other supplemental information

Cash and cash equivalents, including restricted cash

Cash equivalents represent highly liquid certificates of deposit which have original maturities of three months or less. Restricted cash is held as cash collateral for certain business operations. Restricted cash primarily consists of funding for letters of credit and cash held in an irrevocable grantor trust for our deferred compensation plans. The restrictions will lapse when benefits are paid to plan participants and their beneficiaries as specified in the plans.

The following table presents a reconciliation of cash, cash equivalents and restricted cash:


	September 30,
In thousands	2021		2020
Cash and cash equivalents	$	141,302	$	188,960
Restricted cash included in other current assets	4,845		10,796
Restricted cash included in investments and other assets	21,267		24,177
Total cash, cash equivalents and restricted cash	$	167,414	$	223,933

Supplemental cash flow information

The following table presents supplemental cash flow information, including non-cash investing and financing activities:


	Nine months ended September 30,
In thousands	2021		2020
Net cash refund for taxes	$	(9,031)	$	(4,510)
Cash paid for interest	80,280		176,402
Non-cash investing and financing activities:
Accrued capital expenditures	$	2,836	$	758

Accounts payable and accrued liabilities

A breakout of Accounts payable and accrued liabilities is presented below:


In thousands	September 30, 2021		December 31, 2020
Accounts payable	$	134,805	$	131,797
Compensation	108,444		115,061
Taxes (primarily property and sales taxes)	29,104		30,834
Benefits	23,031		22,821
Interest	10,012		3,676
Other	51,928		74,057
Accounts payable and accrued liabilities	$	357,324	$	378,246

NOTE 15 — Subsequent events

Debt Refinancing

On October 15, 2021, Gannett Holdings, a wholly-owned subsidiary of the Company, entered into a five-year senior secured term loan facility in an aggregate principal amount of $516 million (the "New Senior Secured Term Loan"). Also, on October 15, 2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first

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lien notes due November 1, 2026 (the "2026 Senior Notes"). The proceeds of the New Senior Secured Term Loan, together with the net proceeds from the 2026 Senior Notes were applied towards the full repayment of the 5-Year Term Loan.

The 2026 Senior Notes were issued pursuant to an Indenture, dated October 15, 2021 (the "2026 Senior Notes Indenture"), among Gannett Holdings, the Company, the guarantors party thereto, U.S. Bank National Association, as trustee, U.S. Bank National Association, as collateral agent, and U.S. Bank National Association, as registrar, paying agent and authenticating agent. Interest on the 2026 Senior Notes is payable semi-annually.

Loans under the New Senior Secured Term Loan bear interest at a per annum rate equal to LIBOR (which shall not be less than 0.50% per annum) plus a margin of 5.00% or an alternate base rate plus a margin equal to 4.00% per annum (which shall not be less than 1.50% per annum). The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type that restrict, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan to EBITDA (as defined in the New Senior Secured Term Loan) of the Company and its restricted subsidiaries (the "First Lien Net Leverage Ratio") for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00 and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the Guarantors.

As of the closing of these transactions on October 15, 2021, total debt outstanding was $1.416 billion, which included the (i) $516 million New Senior Secured Term Loan, (ii) $400 million of 2026 Senior Notes, (iii) $497.1 million of 2027 Notes and (iv) $3.3 million of 2024 Notes.

The 5-Year Term Loan was repaid using the proceeds from the 2026 Senior Notes and the New Senior Secured Term Loan. As a result of the debt refinancing in October 2021, we estimate that we will recognize a loss on the early extinguishment of the 5-Year Term Loan and other fees of approximately $31.2 million during the fourth quarter of 2021.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under Cautionary Note Regarding Forward-Looking Statements, Risk Factors, and elsewhere throughout this Quarterly Report, as well as the factors described in our Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in the forward-looking statements.

OVERVIEW

We are a subscription-led and digitally-focused media and marketing solutions company committed to empowering communities to thrive. We aim to be the premier source for clarity, connections and solutions within our communities. Our strategy is focused on driving audience growth and engagement by delivering deeper content experiences to our consumers, while offering the products and marketing expertise our advertisers desire. The execution of this strategy is expected to allow us to continue our evolution from a more traditional print media business to a digitally-focused content platform.

Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S., and Newsquest, a wholly-owned subsidiary operating in the United Kingdom ("U.K.") with more than 120 local media brands. We also own the digital marketing services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream") which are marketed under the LOCALiQ brand, and run the largest media-owned events business in the U.S., USA TODAY NETWORK Ventures.

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Through USA TODAY, our local property network, and Newsquest, we deliver high-quality, trusted content where and when consumers want to engage with it on virtually any device or platform. Additionally, we have strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and digital marketing solutions product suite.

Business Trends

We have considered several industry trends when assessing our business strategy:

•Print advertising continues to decline as the audience increasingly moves to digital platforms. We look to optimize our print operations to efficiently manage for this declining print audience. We are focused on converting the growing digital audience into digital-only subscribers to our publications.

•Small and medium-sized businesses ("SMBs") are facing an increasingly complex marketing environment and need to create digital presence to capture audience online. We offer a broad suite of DMS products that offer a single, unified solution to meet their digital marketing needs.

•Consumers are looking for experience-based, emotional connections and communities. USA TODAY NETWORK Ventures was designed to celebrate local communities and create opportunities for meaningful in-person and virtual experiences. However, the COVID-19 pandemic has temporarily negatively impacted our ability to secure necessary permitting for in-person events and consumers' desire to attend or participate in live events.

•Digital consumer engagement has declined in comparison to such engagement at the height of the COVID-19 pandemic in the second quarter of 2020, as consumers have resumed certain pre-pandemic activities. In addition, the overall news cycle, specifically political coverage, has also slowed, driving less consumer engagement to our sites.

•Newsprint availability is constrained due to manufacturing facility closures and conversions to specialty paper and packaging grades. Further, transportation and other issues are challenging supplier deliveries, including delays, and are expected to worsen with increased seasonal demand associated with the holidays in the fourth quarter. Additionally, inflationary pressures are impacting the overall cost of newsprint and delivery services.

Recent Developments

Debt Refinancing

On October 15, 2021, Gannett Holdings LLC ("Gannett Holdings"), our wholly-owned subsidiary, entered into a five-year senior secured term loan facility in an aggregate principal amount of $516 million (the "New Senior Secured Term Loan"). Also on October 15, 2021, Gannett Holdings completed a private offering of $400 million aggregate principal amount of 6.00% first lien notes due November 1, 2026 (the "2026 Senior Notes"). The proceeds of the New Senior Secured Term Loan, together with the net proceeds from the 2026 Senior Notes were applied towards the full repayment of our five-year, senior-secured term loan facility (the "5-Year Term Loan"). Please see the disclosure below under "Liquidity and Capital Resources - Debt Refinancing" and Note 15 — Subsequent events for further information regarding the debt refinancing.

Certain matters affecting comparability

The following items affect period-over-period comparisons from 2020 and will continue to affect period-over-period comparisons for future results:

Reclassifications

Certain amounts in the prior period condensed consolidated financial statements have been reclassified to conform to the current year presentation. In the fourth quarter of 2020, we re-aligned the breakout of the Publishing segment's Circulation revenues related to Digital-only circulation. As a result of this updated presentation, Print circulation revenues increased and Digital-only circulation revenues decreased $3.2 million and $10.7 million for the three and nine months ended September 30, 2020, respectively. There was no impact on reported total Publishing segment or consolidated Circulation revenues.

2027 Notes

At the Special Meeting of stockholders of the Company held on February 26, 2021 (the "Special Meeting"), our stockholders approved the issuance of the maximum number of shares of Common Stock issuable upon conversion of the 6.0%

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Senior Secured Convertible Notes due 2027 (the "2027 Notes"). As a result, the conversion option can be share-settled in full and qualified for equity classification. Upon reclassification, the conversion feature was adjusted to fair value as of the stockholder approval date and the increase in the fair value resulted in a non-cash loss of $126.6 million due primarily to an increase in our stock price from December 31, 2020. The non-cash loss was recorded in Non-operating expense in the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2021. As of September 30, 2021, the deferred tax asset related to the embedded conversion feature of the 2027 Notes was reclassified to Equity as a reduction to Additional paid-in-capital and reduced the carrying amount of the equity component of the 2027 Notes to $283.7 million.

Integration and reorganization costs

For the three and nine months ended September 30, 2021, we incurred Integration and reorganization costs of $13.6 million and $35.5 million, respectively, including $2.7 million and $10.9 million, respectively, related to severance activities and $11.0 million and $24.6 million, respectively, related to other costs, including those for the purpose of consolidating operations, systems implementation, and outsourcing of corporate functions.

For the three and nine months ended September 30, 2021, we ceased operations of four and 14 printing operations, respectively, as part of the synergy and ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $1.1 million and $11.4 million during the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2020, we incurred Integration and reorganization costs of $13.4 million and $74.0 million, respectively, including $7.3 million and $54.8 million, respectively, related to severance activities and $6.1 million and $19.2 million, respectively, related to other costs, including those for the purpose of consolidating operations.

For the three and nine months ended September 30, 2020, we ceased operations of 11 and 35 printing operations, respectively, as part of the ongoing cost reduction programs. As a result, we recognized accelerated depreciation of $9.3 million and $45.0 million during the three and nine months ended September 30, 2020, respectively.

Goodwill and intangible impairment

There were no goodwill and intangible impairments incurred for the three and nine months ended September 30, 2021.

There were no goodwill and intangible impairments incurred for the three months ended September 30, 2020. For the nine months ended September 30, 2020, we incurred goodwill and intangible impairments of $393.4 million, primarily due to the impact of the COVID-19 pandemic on our operations.

Foreign currency

Our U.K. publishing operations are conducted through our Newsquest subsidiary. In addition, our ReachLocal subsidiary has foreign operations in regions such as Canada, Australia/New Zealand and India. Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Translation fluctuations impact revenue, expense, and operating income results for international operations.

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Outlook for 2021

Strategy

Our areas of strategic focus for 2021 include:

Accelerating digital subscriber growth

The broad reach of our newsroom network, linking leading national journalism at USA TODAY, our local property network in 46 states in the U.S., and Newsquest in the U.K. with more than 120 local media brands, gives us the ability to deepen our relationships with consumers at both the national and local levels. We bring consumers local news and information that impacts their day-to-day lives while keeping them informed of the national events that impact their country. We believe this local content is not readily obtainable elsewhere, and we are able to deliver that content to our customers across multiple print and digital platforms. As such, a key element of our consumer strategy is growing our paid digital-only subscriber base to 10 million subscribers over the next five years. We expect to do this through expansion of our current subscription products as well as through the launch of new digital subscription offerings tailored to specific users.

Driving digital marketing services growth by engaging more clients in a subscriber relationship

We have now achieved significant digital scale, with unique reach at both the national and local community levels. We expect to leverage our integrated sales structure and lead generation strategy to continue to aggressively expand our digital marketing services business into our local markets, both domestically and internationally. Given our extensive client base and volume of digital campaigns, we will also use data and insights to inform new and dynamic advertising products that we believe will deliver superior results.

Optimizing our traditional businesses across print and advertising

We will continue to drive the profitability of our traditional print operations through economies of scale, process improvements, and optimizations. We are focused on optimizing our pricing and improving customer service for our print subscribers. Print advertising continues to offer a compelling branding opportunity across our network due to our scale and unique reach at both the national and local community levels.

Prioritizing investments into growth businesses that have significant potential and support our vision

By leveraging our unique footprint, trusted brands, and media reach, we identify, experiment, and invest in potential growth businesses. USA TODAY NETWORK Ventures is a strong example of one such experiment that has grown significantly since its founding in 2015. During 2020, USA TODAY NETWORK Ventures was able to successfully pivot to holding its events virtually, hosting over 250 events. This success has continued in 2021, with over 160 events held through the end of the third quarter of 2021. While live events have resumed in 2021, the majority of events remain virtual. In addition, in connection with our company-wide priority to explore online gaming, in July 2021, we entered into an exclusive agreement with Tipico USA Technology, Inc. ("Tipico"), a U.S.-based subsidiary of European-based Tipico Group of Companies, the leading sports betting provider in Germany, utilizing their Tipico Sportsbook brand.

Impacts of the COVID-19 pandemic

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Protection Program ("PPP"), suspending our quarterly dividend, and debt refinancing, as well as reducing discretionary spending. In addition, we are continuing with our previously-disclosed plan to monetize non-core assets.

Seasonality

Our revenues are subject to moderate seasonality, due primarily to fluctuations in advertising volumes. Advertising and marketing services revenues for our Publishing segment are typically highest in the fourth quarter, due to holiday and seasonal advertising, and lowest in the first quarter, following the holiday season. The volume of advertising sales in any period is also impacted by other external factors such as competitors' pricing, advertisers' decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand, and general economic conditions.

RESULTS OF OPERATIONS

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Consolidated Summary

A summary of our segment results is presented below:


	Three months ended September 30,								Nine months ended September 30,
In thousands, except per share amounts					Change								Change
	2021		2020		$		%		2021		2020		$		%
Operating revenues:
Publishing	$	715,807	$	732,226	$	(16,419)	(2)	%	$	2,139,937	$	2,286,268	$	(146,331)	(6)	%
Digital Marketing Solutions	116,771		105,443		11,328		11	%	329,089		321,287		7,802		2	%
Corporate and other	1,649		2,732		(1,083)		(40)	%	6,428		8,140		(1,712)		(21)	%
Intersegment eliminations	(34,042)		(25,862)		(8,180)		32	%	(93,910)		(85,472)		(8,438)		10	%
Total operating revenues	800,185		814,539		(14,354)		(2)	%	2,381,544		2,530,223		(148,679)		(6)	%
Operating expenses:
Publishing	657,561		684,788		(27,227)		(4)	%	1,969,046		2,560,811		(591,765)		(23)	%
Digital Marketing Solutions	110,573		109,209		1,364		1	%	316,712		372,341		(55,629)		(15)	%
Corporate and other	34,991		44,924		(9,933)		(22)	%	105,208		148,509		(43,301)		(29)	%
Intersegment eliminations	(34,042)		(25,862)		(8,180)		32	%	(93,910)		(85,472)		(8,438)		10	%
Total operating expenses	769,083		813,059		(43,976)		(5)	%	2,297,056		2,996,189		(699,133)		(23)	%
Operating income (loss)	31,102		1,480		29,622		***		84,488		(465,966)		550,454		***
Non-operating expenses, net	13,573		29,830		(16,257)		(54)	%	186,368		106,119		80,249		76	%
Income (loss) before income taxes	17,529		(28,350)		45,879		***		(101,880)		(572,085)		470,205		(82)	%
Provision (benefit) for income taxes	2,984		3,098		(114)		(4)	%	11,567		(22,200)		33,767		***
Net income (loss)	14,545		(31,448)		45,993		***		(113,447)		(549,885)		436,438		(79)	%
Net loss attributable to redeemable noncontrolling interests	(142)		(188)		46		(24)	%	(933)		(1,580)		647		(41)	%
Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	45,947	***		$	(112,514)	$	(548,305)	$	435,791	(79)	%
Income (loss) per share attributable to Gannett - basic	$	0.11	$	(0.24)	$	0.35	***		$	(0.84)	$	(4.17)	$	3.33	(80)	%
Income (loss) per share attributable to Gannett - diluted	$	0.09	$	(0.24)	$	0.33	***		$	(0.84)	$	(4.17)	$	3.33	(80)	%

*** Indicates an absolute value percentage change greater than 100.

Intersegment eliminations in the preceding table represent digital advertising marketing services revenues and expenses associated with products sold by our U.S. local publishing sales teams but fulfilled by our DMS segment. When discussing segment results, these revenues and expenses are presented gross but are eliminated in consolidation.

Operating revenues

Total Operating revenues were $800.2 million and $2.382 billion for three and nine months ended September 30, 2021, respectively, a decrease of $14.4 million and $148.7 million, respectively, compared to the three and nine months ended September 30, 2020, for the reasons described below.

For the Publishing segment, Operating revenues decreased $16.4 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, reflecting lower Circulation revenues of $29.5 million offset by higher Other revenues of $13.8 million. Advertising and marketing services revenues remained essentially flat for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, reflecting lower print revenues offset by higher digital revenues. For the nine months ended September 30, 2021, Operating revenues decreased $146.3 million compared to the nine months ended September 30, 2020 due to lower Circulation revenues of $111.1 million and lower Advertising and marketing services revenues of $40.8 million, partially offset by higher Other revenues of $5.6 million. Advertising and marketing services revenues are generated by the sale of local, national, and classified print advertising products, digital advertising offerings such as digital classified advertisements, digital media such as display advertisements run on our platforms as well as third-party sites, and digital marketing services delivered by our DMS segment. Circulation revenues are derived from home delivery, digital distribution and single copy sales of our publications. Other revenues are

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derived mainly from commercial printing, distribution arrangements, revenues from our events business, digital content syndication and affiliate revenues and third-party newsprint sales.

For the DMS segment, Operating revenues increased $11.3 million and $7.8 million for the three and nine months ended September 30, 2021, respectively, compared to the three and nine months ended September 30, 2020, reflecting higher Advertising and marketing services revenues of $16.0 million and $21.3 million, respectively, partially offset by lower Other revenues of $4.6 million and $13.5 million, respectively. Our DMS segment generates Advertising and marketing services revenues through multiple services, including search advertising, display advertising, search optimization, social media, website development, web presence products, customer relationship management, and software-as-a-service solutions.

Operating expenses

Total Operating expenses were $769.1 million and $2.297 billion for the three and nine months ended September 30, 2021, respectively, a decrease of $44.0 million and $699.1 million compared to the three and nine months ended September 30, 2020, respectively. Operating expenses consist primarily of the following:

•Operating costs include labor, newsprint and delivery costs for the Publishing segment and the cost of online media acquired from third parties and costs to manage and operate our marketing solutions and technology infrastructure for the DMS segment;

•Selling, general and administrative expenses include labor, payroll, outside services, benefits costs and bad debt expense;

•Depreciation and amortization;

•Integration and reorganization costs include severance charges and other costs, including those for the purpose of consolidating our operations (i.e., facility consolidation expenses and integration-related costs);

•Other operating expenses include third-party debt expenses as well as acquisition-related costs;

•Gains or losses on the sale or disposal of assets; and

•Impairment charges, including costs incurred related to goodwill, intangible assets and property, plant and equipment.

For the three months ended September 30, 2021, Operating expenses at our Publishing segment decreased $27.2 million compared to the three months ended September 30, 2020, reflecting a decrease in Operating costs of $10.7 million, a decrease in Depreciation and amortization of $16.6 million, a decrease in Integration and reorganization costs of $1.6 million and a decrease in Loss on the sale or disposal of assets of $2.8 million, partially offset by an increase in Selling, general and administrative expenses of $3.0 million and an increase in Asset impairments of $1.4 million. For the nine months ended September 30, 2021, Operating expenses at our Publishing segment decreased $591.8 million compared to the nine months ended September 30, 2020, reflecting a decrease in Operating costs of $104.5 million, a decrease in Selling, general and administrative expenses of $51.7 million, a decrease in Depreciation and amortization of $57.3 million, a decrease in Integration and reorganization costs of $28.4 million, a decrease in Asset impairments of $4.6 million and a decrease in Goodwill and intangible impairments of $352.9 million, partially offset by an increase in Loss on the sale or disposal of assets of $7.7 million.

For the three months ended September 30, 2021, Operating expenses at our DMS segment increased $1.4 million compared to the three months ended September 30, 2020, reflecting an increase in Operating costs of $9.2 million and an increase in Depreciation and amortization of $1.2 million, partially offset by a decrease in Selling, general and administrative expenses of $8.9 million. For the nine months ended September 30, 2021, Operating expenses at our DMS segment decreased $55.6 million compared to the nine months ended September 30, 2020, reflecting a decrease in Selling, general and administrative expenses of $31.9 million, a decrease in Goodwill and intangible impairments of $40.5 million and a decrease in Integration and reorganization costs of $4.3 million, partially offset by an increase in Operating costs of $16.4 million and an increase in Depreciation and amortization of $5.6 million.

For the three months ended September 30, 2021, Operating expenses at Corporate and other decreased $9.9 million compared to the three months ended September 30, 2020, reflecting a decrease in Selling, general and administrative expenses of $11.2 million, a decrease in Other operating expenses of $1.9 million and a decrease in Operating costs of $1.4 million, partially offset by an increase in Depreciation and amortization of $2.2 million and an increase Integration and reorganization costs of $2.1 million. For the nine months ended September 30, 2021, Operating expenses at Corporate and other decreased $43.3 million compared to the nine months ended September 30, 2020, due to a decrease in Selling, general and administrative expenses of $36.0 million, a decrease in Integration and reorganization costs of $5.8 million and a decrease in Operating costs of $3.3 million, partially offset by an increase in Other operating expenses of $1.1 million and an increase in Depreciation and amortization of $0.5 million.

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Refer to the discussion of segment results below for further information.

Non-operating (income) expense

Interest expense: For the three and nine months ended September 30, 2021, Interest expense was $34.6 million and $109.4 million, respectively, compared to $58.1 million and $173.9 million for the three and nine months ended September 30, 2020, respectively. The decrease in interest expense for the three and nine months ended September 30, 2021 was mainly due to a lower effective interest rate driven by the refinancing of our five-year, senior-secured 11.5% term loan facility with Apollo Capital Management, L.P. (the "Acquisition Term Loan") in the first quarter of 2021 and a lower debt balance compared to the same period in 2020.

Loss on early extinguishment of debt: For the three and nine months ended September 30, 2021, Loss on early extinguishment of debt was $3.8 million and $26.0 million, respectively. For the three and nine months ended September 30, 2020, Loss on early extinguishment of debt was $0.5 million and $1.7 million, respectively. The increase in loss for the three months ended September 30, 2021 was mainly due to early prepayments on the 5-Year Term Loan. The increase in loss for the nine months ended September 30, 2021 was mainly due to the payoff of the Acquisition Term Loan in the first quarter of 2021.

Non-operating pension income: For the three and nine months ended September 30, 2021, Non-operating pension income was $23.9 million and $71.6 million, respectively, compared to $18.3 million and $54.4 million for the three and nine months ended September 30, 2020, respectively. The increase in non-operating pension income for the three and nine months ended September 30, 2021 was primarily due to an increase in the expected return on plan assets held by the Gannett Retirement Plan and lower interest costs on benefit obligations.

Loss on convertible notes derivative: For the nine months ended September 30, 2021, Loss on convertible notes derivative was $126.6 million, due to the increase in the fair value of the derivative liability as a result of the increase in the Company's stock price.

Other non-operating income, net: Other non-operating income, net consisted of certain items that fall outside of our normal business operations. For the three and nine months ended September 30, 2021, Other non-operating income, net was $0.9 million and $4.0 million, respectively, compared to $10.4 million and $15.0 million for the three and nine months ended September 30, 2020, respectively. The decrease in Other non-operating income, net for the three and nine months ended September 30, 2021 was primarily due to a gain on disposal of a cost method investment held by the DMS segment during the third quarter of 2020.

Provision (benefit) for income taxes

The following table summarizes our pre-tax net income (loss) before income taxes and income tax accounts:


	Three months ended September 30,					Nine months ended September 30,
In thousands	2021			2020		2021			2020
Income (loss) before income taxes	$	17,529		$	(28,350)	$	(101,880)		$	(572,085)
Provision (benefit) for income taxes	2,984			3,098		11,567			(22,200)
Effective tax rate	17.0		%	***		(11.4)		%	3.9		%

*** Indicates an absolute value percentage change greater than 100.

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tax purposes, the creation of valuation allowances on non-deductible interest expense carryforwards, and PPP loan forgiveness, in combination with state income tax and foreign tax expense.

During the three months ended June 30, 2021, we reclassified $32.5 million (tax effected) in connection with the retirement of the deferred tax asset related to the embedded conversion feature associated with the 2027 Notes. The retirement of the deferred tax asset resulted from the reclassification of the embedded conversion feature from a derivative liability to Equity as a reduction to Additional paid-in-capital during the first quarter of 2021. See Note 7 - Debt for additional information about the 2027 Notes.

The provision for income taxes for the three months ended September 30, 2020 was mainly impacted by a reduction in the year to date tax benefit as a result of a lower projected annualized effected tax rate. The provision for income taxes for the three months ended September 30, 2020 was calculated using the estimated annual effective tax rate of 6.2%. The estimated annual effective tax rate is based on a projected tax benefit for the full year. The tax benefit for the nine months ended September 30, 2020 is lower than the 21% statutory federal rate due to the impact of non-deductible asset impairments, non-deductible officers’ compensation, and the creation of valuation allowances on non-deductible interest expense carryforwards and capital losses.

Several economic relief bills have been enacted into law in response to the COVID-19 pandemic. We continue to monitor the applicability of federal and state legislation to the Company, as well as regulatory interpretations of enacted legislation that provide economic relief in response to the pandemic, and expect to utilize these provisions as we determine necessary or desirable.

Net income (loss) attributable to Gannett and diluted income (loss) per share attributable to Gannett

For the three months ended September 30, 2021, Net income attributable to Gannett and diluted income per share attributable to Gannett were $14.7 million and $0.09, respectively, compared to Net loss attributable to Gannett and diluted loss per share attributable to Gannett of $31.3 million and $0.24, respectively, for the three months ended September 30, 2020. For the nine months ended September 30, 2021, Net loss attributable to Gannett and diluted loss per share attributable to Gannett were $112.5 million and $0.84, respectively, compared to $548.3 million and $4.17, respectively, for the nine months ended September 30, 2020. The change for the three and nine months ended September 30, 2021 reflects the various items discussed above.

Publishing segment

A summary of our Publishing segment results is presented below:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Operating revenues:
Advertising and marketing services	$	328,784	$	329,508	$	(724)	—	%	$	984,575	$	1,025,396	$	(40,821)	(4)	%
Circulation	306,698		336,152		(29,454)		(9)	%	942,392		1,053,517		(111,125)		(11)	%
Other	80,325		66,566		13,759		21	%	212,970		207,355		5,615		3	%
Total operating revenues	715,807		732,226		(16,419)		(2)	%	2,139,937		2,286,268		(146,331)		(6)	%
Operating expenses:
Operating costs	427,887		438,588		(10,701)		(2)	%	1,285,904		1,390,366		(104,462)		(8)	%
Selling, general and administrative expenses	189,032		186,000		3,032		2	%	541,165		592,856		(51,691)		(9)	%
Depreciation and amortization	35,861		52,481		(16,620)		(32)	%	118,664		175,990		(57,326)		(33)	%
Integration and reorganization costs	3,512		5,120		(1,608)		(31)	%	10,641		39,049		(28,408)		(73)	%
Asset impairments	2,301		868		1,433		***		3,134		7,727		(4,593)		(59)	%
Goodwill and intangible impairments	—		—		—		—	%	—		352,947		(352,947)		(100)	%
(Gain) loss on sale or disposal of assets, net	(1,032)		1,731		(2,763)		***		9,538		1,876		7,662		***
Total operating expenses	657,561		684,788		(27,227)		(4)	%	1,969,046		2,560,811		(591,765)		(23)	%
Operating income (loss)	$	58,246	$	47,438	$	10,808	23	%	$	170,891	$	(274,543)	$	445,434	***

*** Indicates an absolute value percentage change greater than 100.

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Operating revenues

The following table provides the breakout of Operating revenues by category:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Local and national print	$	118,292	$	132,013	$	(13,721)	(10)	%	$	363,291	$	422,849	$	(59,558)	(14)	%
Classified print	71,752		76,210		(4,458)		(6)	%	220,874		240,888		(20,014)		(8)	%
Print advertising	190,044		208,223		(18,179)		(9)	%	584,165		663,737		(79,572)		(12)	%

Digital media	91,344		84,054		7,290		9	%	265,450		235,865		29,585		13	%
Digital marketing services	34,078		25,498		8,580		34	%	95,652		79,677		15,975		20	%
Digital classified	13,318		11,733		1,585		14	%	39,308		46,117		(6,809)		(15)	%
Digital advertising and marketing services	138,740		121,285		17,455		14	%	400,410		361,659		38,751		11	%

Advertising and marketing services	328,784		329,508		(724)		—	%	984,575		1,025,396		(40,821)		(4)	%

Print circulation	280,980		315,833		(34,853)		(11)	%	869,489		1,000,210		(130,721)		(13)	%
Digital-only circulation	25,718		20,319		5,399		27	%	72,903		53,307		19,596		37	%
Circulation	306,698		336,152		(29,454)		(9)	%	942,392		1,053,517		(111,125)		(11)	%

Other	80,325		66,566		13,759		21	%	212,970		207,355		5,615		3	%

Total operating revenues	$	715,807	$	732,226	$	(16,419)	(2)	%	$	2,139,937	$	2,286,268	$	(146,331)	(6)	%

For the three and nine months ended September 30, 2021, the overall decline in Print advertising revenues of $18.2 million and $79.6 million, respectively, was driven by secular industry trends impacting all categories and the absence of revenues related to a business we divested in the fourth quarter of 2020. For the three and nine months ended September 30, 2021, Local and national print advertising revenues decreased $13.7 million and $59.6 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to lower advertising volumes, including a decrease in advertiser inserts. For the three and nine months ended September 30, 2021, Classified print advertising revenues decreased $4.5 million and $20.0 million, respectively, compared to the three and nine months ended September 30, 2020, due to decreased spend in classified advertisements, including legal, real estate, and obituaries.

For the three months ended September 30, 2021, Digital advertising and marketing services revenues increased $17.5 million, due to an increase of $7.3 million in Digital media revenues, an increase of $8.6 million in Digital marketing services revenues, and an increase of $1.6 million in Digital classified revenues, compared to the three months ended September 30, 2020. For the nine months ended September 30, 2021, Digital advertising and marketing services revenues increased $38.8 million, due to an increase of $29.6 million in Digital media revenues and an increase of $16.0 million in Digital marketing services revenues, offset by a decrease of $6.8 million in Digital classified revenues compared to the nine months ended September 30, 2020. For the three and nine months ended September 30, 2021, the overall increase in Digital advertising and marketing services revenues was due to an increase in Digital media spend and Digital marketing services revenues as well as continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic. The increase in Digital media revenues for the three and nine months ended September 30, 2021 was driven by a higher mix of premium media sold, including premium sports products, as well as an overall increase in rate across both owned and operated sites as well as third-party sites. The increase in Digital marketing services revenues for the three and nine months ended September 30, 2021 was due to higher average revenue per customer for digital marketing services sold primarily as a result of focusing on strategic initiatives across our local marketing sales force. The increase in Digital classified revenues for the three months ended September 30, 2021 was due to increased spend in obituaries, legal and employment advertisements. The decrease in Digital classified revenues for the nine months ended September 30, 2021 was due to reduced spend in automotive advertisements, partially offset by increased spend in employment advertisements.

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For the three and nine months ended September 30, 2021, Print circulation revenues decreased $34.9 million and $130.7 million, respectively, compared to the three and nine months ended September 30, 2020, driven by a reduction in the volume of home delivery subscribers, a decline in single copy sales reflecting the overall secular trends impacting the industry, and the absence of revenues related to a business we divested in the fourth quarter of 2020, as well as the impact of the COVID-19 pandemic on business travel and overall consumer activity, partially offset by an increase in rate. For the three and nine months ended September 30, 2021, Digital-only circulation revenues increased $5.4 million and $19.6 million, respectively, compared to the three and nine months ended September 30, 2020, driven by an increase of 46% in paid digital-only subscribers, including those subscribers on introductory subscription offers, to approximately 1.543 million compared to the prior year.

For the three and nine months ended September 30, 2021, Other revenues increased $13.8 million and $5.6 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to an increase in digital content syndication volume, as well as commercial print growth in local markets driven by continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic and customer retention, partially offset by the absence of revenues related to a business we divested in the fourth quarter of 2020. The growth in Other revenues for the nine months ended September 30, 2021 was negatively impacted by a decline in event revenues driven by the shift from in person events to virtual events as a result of the COVID-19 pandemic.

Operating expenses

For the three and nine months ended September 30, 2021, Operating costs decreased $10.7 million and $104.5 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of the decrease in Operating costs:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Newsprint and ink	$	26,176	$	31,250	$	(5,074)	(16)	%	$	78,160	$	101,097	$	(22,937)	(23)	%
Distribution	112,884		99,189		13,695		14	%	321,435		306,768		14,667		5	%
Compensation and benefits	129,620		153,643		(24,023)		(16)	%	414,513		478,996		(64,483)		(13)	%
Outside services	90,428		87,574		2,854		3	%	248,110		252,046		(3,936)		(2)	%
Other	68,779		66,932		1,847		3	%	223,686		251,459		(27,773)		(11)	%
Total operating costs	$	427,887	$	438,588	$	(10,701)	(2)	%	$	1,285,904	$	1,390,366	$	(104,462)	(8)	%

For the three and nine months ended September 30, 2021, Newsprint and ink costs decreased $5.1 million and $22.9 million, respectively, compared to the three and nine months ended September 30, 2020, mainly due to lower print circulation driven by the decline in volume of home delivery and single copy sales. In addition, the decrease in Newsprint and ink costs for the nine months ended September 30, 2021 was also impacted by declines in print advertising volumes.

For the three and nine months ended September 30, 2021, Distribution costs increased $13.7 million and $14.7 million, respectively, compared to the three and nine months ended September 30, 2020, primarily driven by an increase in distribution postage, as well as activity in our commercial print business. In addition, the increase in Distribution costs for the nine months ended September 30, 2021 was offset by the decline in print circulation and print advertising volumes incurred in the first quarter of 2021.

For the three and nine months ended September 30, 2021, Compensation and benefits costs decreased $24.0 million and $64.5 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, as well as the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic and $11.1 million of PPP loan forgiveness, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions in response to the COVID-19 pandemic.

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For the three months ended September 30, 2021, Outside services costs, which includes outside printing, professional services fulfilled by third parties, paid search and ad serving, feature services, and credit card fees, increased $2.9 million compared to the three months ended September 30, 2020, due to higher costs associated with the increase in Digital media and Digital marketing services revenues, including paid search fees and affiliate revenue share as well as other related costs, offset by a reduction in costs associated with ongoing integration efforts. For the nine months ended September 30, 2021, Outside services costs decreased $3.9 million compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts and the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset by higher costs associated with the increase in Digital media and Digital marketing services revenues.

For the three months ended September 30, 2021, Other costs, which primarily includes travel, and facility and equipment costs, increased $1.8 million compared to the three months ended September 30, 2020, due to an increase in travel costs in the period as travel began to resume after the height of the COVID-19 pandemic travel restrictions. For the nine months ended September 30, 2021, Other costs decreased $27.8 million compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts and cost containment initiatives, including the consolidation of print facilities.

For the three and nine months ended September 30, 2021, Selling, general and administrative expenses increased $3.0 million and decreased $51.7 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of Selling, general and administrative expenses:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Compensation and benefits	$	93,762	$	93,619	$	143	—	%	$	283,875	$	295,569	$	(11,694)	(4)	%
Outside services and other	95,270		92,381		2,889		3	%	257,290		297,287		(39,997)		(13)	%
Total Selling, general and administrative expenses	$	189,032	$	186,000	$	3,032	2	%	$	541,165	$	592,856	$	(51,691)	(9)	%

For the three months ended September 30, 2021, Compensation and benefits remained essentially flat compared to the three months ended September 30, 2020, due to an increase in costs associated with employee insurance benefits and the absence of the temporary reduction of expenses in the prior year period, such as furloughs and wage reductions, offset by PPP loan forgiveness of $4.0 million. For the nine months ended September 30, 2021, Compensation and benefits costs decreased $11.7 million compared to the nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, and PPP loan forgiveness of $4.0 million, partially offset by the impact of higher payroll and commission expenses driven by the growth in Advertising and marketing services revenues, an increase in costs associated with employee insurance benefits and the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions.

For the three months ended September 30, 2021, Outside services and other costs, which includes services fulfilled by third parties, increased $2.9 million compared to the three months ended September 30, 2020, due to an increase in promotion fees, offset by decreases in legal fees, facility related costs and bad debt expense. For the nine months ended September 30, 2021, Outside services and other costs decreased $40.0 million compared to the nine months ended September 30, 2020, due to lower facility related costs, lower bad debt expense, a reduction in costs associated with ongoing integration efforts, and the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, partially offset by an increase in promotion fees.

For the three and nine months ended September 30, 2021, Depreciation and amortization expenses decreased $16.6 million and $57.3 million, respectively, compared to the three and nine months ended September 30, 2020, due to a decrease in accelerated depreciation of $8.2 million and $33.6 million, respectively, as a result of fewer print facility shutdowns and strategic dispositions of real estate during the period related to ongoing cost reduction programs.

For the three months ended September 30, 2021, Integration and reorganization costs decreased $1.6 million compared to the three months ended September 30, 2020, due to a decrease in severance costs of $2.0 million, partially offset by an increase in other costs, including those for the consolidation of operations of $0.4 million. For the nine months ended September 30, 2021, Integration and reorganization costs decreased $28.4 million compared to the nine months ended September 30, 2020,

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due to a decrease in severance costs of $25.3 million, as well as a decrease in other costs, including those for the consolidation of operations of $3.1 million. For the three and nine months ended September 30, 2021, severance costs were primarily related to facility consolidation and ongoing integration activities. For the three and nine months ended September 30, 2020, severance costs were related to acquisition-related synergies and the consolidation of the business due to our acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred to as "Legacy Gannett") in the fourth quarter of 2019.

For the three and nine months ended September 30, 2021, we recorded Asset impairment charges of $2.3 million and $3.1 million, respectively, in the Publishing segment due primarily to the impairment of real estate held for sale. For the three months ended September 30, 2020, we recorded $0.9 million of Assets impairment charges as a result of fixed asset disposals related to the continued consolidation of operations. For the nine months ended September 30, 2020, we recorded $7.7 million of Assets impairment charges as a result of the Company’s recoverability test for long-lived assets, as well as fixed asset disposals related to the continued consolidation of operations.

For the nine months ended September 30, 2020, we recorded a goodwill and intangible impairment charge of $352.9 million at the Publishing segment, primarily due to the impact of the COVID-19 pandemic on our operations.

For the three months ended September 30, 2021, we recorded a Gain on the sale or disposal of assets, net of $1.0 million due to a gain on sale of real estate at Newsquest, offset by the loss on the sale of assets as part of our plan to monetize non-core assets, compared to a Loss on the sale or disposal of assets, net of $1.7 million for the three months ended September 30, 2020. For the nine months ended September 30, 2021, Loss on sale or disposal of assets increased $7.7 million compared to the nine months ended September 30, 2020, driven by the loss on the sale of assets in 2021 as part of our plan to monetize non-core assets, offset by a gain on sale of real estate at Newsquest.

Publishing segment Adjusted EBITDA


	Three months ended September 30,										Nine months ended September 30,
							Change										Change
In thousands	2021			2020			$		%		2021			2020			$		%
Net income (loss) attributable to Gannett	$	84,137		$	67,726		$	16,411	24	%	$	246,792		$	(213,490)		$	460,282	***
Interest expense	—			17			(17)		(100)	%	—			127			(127)		(100)	%

Non-operating pension income	(23,860)			(18,262)			(5,598)		31	%	(71,644)			(54,215)			(17,429)		32	%
Depreciation and amortization	35,861			52,481			(16,620)		(32)	%	118,664			175,990			(57,326)		(33)	%
Integration and reorganization costs	3,512			5,120			(1,608)		(31)	%	10,641			39,049			(28,408)		(73)	%
Asset impairments	2,301			868			1,433		***		3,134			7,727			(4,593)		(59)	%
Goodwill and intangible impairments	—			—			—		—	%	—			352,947			(352,947)		(100)	%
(Gain) loss on sale or disposal of assets, net	(1,032)			1,731			(2,763)		***		9,538			1,876			7,662		***
Other items	82			(929)			1,011		***		273			1,756			(1,483)		(84)	%
Adjusted EBITDA (non-GAAP basis)	$	101,001		$	108,752		$	(7,751)	(7)	%	$	317,398		$	311,767		$	5,631	2	%
Net income (loss) attributable to Gannett margin	11.8		%	9.2		%					11.5		%	(9.3)		%
Adjusted EBITDA margin (non-GAAP basis)(a)	14.1		%	14.9		%					14.8		%	13.6		%

*** Indicates an absolute value percentage change greater than 100.

(a)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Adjusted EBITDA for our Publishing segment was $101.0 million and $317.4 million for the three and nine months ended September 30, 2021, respectively, a decrease of $7.8 million and an increase of $5.6 million compared to the three and nine months ended September 30, 2020, respectively. The change for the three and nine months ended September 30, 2021 was primarily attributable to the changes discussed above.

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Digital Marketing Solutions segment

A summary of our Digital Marketing Solutions segment results is presented below:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Operating revenues:
Advertising and marketing services	$	116,771	$	100,807	$	15,964	16	%	$	328,184	$	306,899	$	21,285	7	%
Other	—		4,636		(4,636)		(100)	%	905		14,388		(13,483)		(94)	%
Total operating revenues	116,771		105,443		11,328		11	%	329,089		321,287		7,802		2	%
Operating expenses:
Operating costs	80,405		71,223		9,182		13	%	224,112		207,741		16,371		8	%
Selling, general and administrative expenses	21,342		30,228		(8,886)		(29)	%	68,252		100,120		(31,868)		(32)	%
Depreciation and amortization	7,986		6,768		1,218		18	%	23,665		18,103		5,562		31	%
Integration and reorganization costs	931		1,237		(306)		(25)	%	1,301		5,587		(4,286)		(77)	%
Asset impairments	—		717		(717)		***		—		717		(717)		***
Goodwill and intangible impairments	—		—		—		—	%	—		40,499		(40,499)		***
Gain on sale or disposal of assets, net	(91)		(964)		873		(91)	%	(618)		(426)		(192)		45	%
Total operating expenses	110,573		109,209		1,364		1	%	316,712		372,341		(55,629)		(15)	%
Operating income (loss)	$	6,198	$	(3,766)	$	9,964	***		$	12,377	$	(51,054)	$	63,431	***

*** Indicates an absolute value percentage change greater than 100.

Operating revenues

For the three and nine months ended September 30, 2021, Advertising and marketing services revenues increased $16.0 million and $21.3 million, respectively, compared to the three and nine months ended September 30, 2020, primarily driven by growth in the core ReachLocal business and a continued improvement in operating trends since the prior year impacts of the COVID-19 pandemic. The increase for the nine months ended September 30, 2021 was partially offset by the absence of $11.7 million of revenues in 2021 as a result of the change in media rebate programs, as well as the absence of revenues associated with a business we divested in the third quarter of 2020.

For the three and nine months ended September 30, 2021, Other revenues decreased $4.6 million and $13.5 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to the absence of revenues related to a business we divested in the fourth quarter of 2020.

Operating expenses

For the three and nine months ended September 30, 2021, Operating costs increased $9.2 million and $16.4 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of Operating costs:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Compensation and benefits	$	7,593	$	10,809	$	(3,216)	(30)	%	$	23,408	$	35,031	$	(11,623)	(33)	%
Outside services	70,332		56,787		13,545		24	%	193,423		160,722		32,701		20	%
Other	2,480		3,627		(1,147)		(32)	%	7,281		11,988		(4,707)		(39)	%
Total operating costs	$	80,405	$	71,223	$	9,182	13	%	$	224,112	$	207,741	$	16,371	8	%

For the three and nine months ended September 30, 2021, Compensation and benefits costs decreased $3.2 million and $11.6 million, respectively, compared to the three and nine months ended September 30, 2020, due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, as well as the benefit in 2021 of cost containment

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initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions.

For the three and nine months ended September 30, 2021, Outside services costs, which includes professional services fulfilled by third parties, media fees and other digital costs, increased $13.5 million and $32.7 million, respectively, compared to the three and nine months ended September 30, 2020, due to an increase in expenses associated with third-party media fees driven by a corresponding increase in revenues, partially offset by the absence of costs associated with a business we divested in the fourth quarter of 2020.

For the three and nine months ended September 30, 2021, Selling, general and administrative expenses decreased $8.9 million and $31.9 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of Selling, general and administrative expenses by category:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Compensation and benefits	$	17,046	$	28,426	$	(11,380)	(40)	%	$	52,283	$	92,145	$	(39,862)	(43)	%
Outside services and other	4,296		1,802		2,494		***		15,969		7,975		7,994		***
Total Selling, general and administrative expenses	$	21,342	$	30,228	$	(8,886)	(29)	%	$	68,252	$	100,120	$	(31,868)	(32)	%

*** Indicates an absolute value percentage change greater than 100.

For the three and nine months ended September 30, 2021, Compensation and benefits costs decreased $11.4 million and $39.9 million, respectively, compared to the three and nine months ended September 30, 2020, primarily due to a reduction in costs associated with ongoing integration efforts, including headcount reductions, as well as the benefit in 2021 of cost containment initiatives implemented in 2020 in connection with the COVID-19 pandemic, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions.

For the three and nine months ended September 30, 2021, Outside services and other costs increased $2.5 million and $8.0 million, respectively, compared to the three and nine months ended September 30, 2020, due to an increase in various miscellaneous expenses, including higher technology and marketing expenses.

For the three and nine months ended September 30, 2021, Integration and reorganization costs decreased $0.3 million and $4.3 million, respectively, compared to the three and nine months ended September 30, 2020 due to lower severance costs of $0.8 million and $5.0 million, respectively, offset by higher facility consolidation and other restructuring related expenses of $0.5 million and $0.7 million, respectively. For the three and nine months ended September 30, 2020, severance costs were related to acquisition-related synergies and the consolidation of the business due to our acquisition of Legacy Gannett in the fourth quarter of 2019.

For the three and nine months ended September 30, 2020, we recorded $0.7 million of Asset impairment charges as a result of ongoing cost efficiency programs.

For the nine months ended September 30, 2020, we recorded a goodwill and intangible impairment charge of $40.5 million at the DMS segment, primarily due to the impact of the COVID-19 pandemic on our operations.

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Digital Marketing Solutions segment Adjusted EBITDA


	Three months ended September 30,										Nine months ended September 30,
							Change										Change
In thousands	2021			2020			$		%		2021			2020			$		%
Net income (loss) attributable to Gannett	$	5,005		$	5,223		$	(218)	(4)	%	$	10,990		$	(43,076)		$	54,066	***
Depreciation and amortization	7,986			6,768			1,218		18	%	23,665			18,103			5,562		31	%
Integration and reorganization costs	931			1,237			(306)		(25)	%	1,301			5,587			(4,286)		(77)	%
Asset impairments	—			717			(717)		(100)	%	—			717			(717)		(100)	%
Goodwill and intangible impairments	—			—			—		—	%	—			40,499			(40,499)		(100)	%
Gain on sale or disposal of assets, net	(91)			(964)			873		(91)	%	(618)			(426)			(192)		45	%
Other items	1,193			(8,804)			9,997		***		1,387			(6,557)			7,944		***
Adjusted EBITDA (non-GAAP basis)	$	15,024		$	4,177		$	10,847	***		$	36,725		$	14,847		$	21,878	***
Net income (loss) attributable to Gannett margin	4.3		%	5.0		%					3.3		%	(13.4)		%
Adjusted EBITDA margin (non-GAAP basis)(a)	12.9		%	4.0		%					11.2		%	4.6		%

*** Indicates an absolute value percentage change greater than 100.

(a)We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues.

Adjusted EBITDA for our Digital Marketing Solutions segment was $15.0 million and $36.7 million for the three and nine months ended September 30, 2021, respectively, an increase of $10.8 million and $21.9 million compared to the three and nine months ended September 30, 2020, respectively. The change for the three and nine months ended September 30, 2021 was primarily attributable to the changes discussed above.

Corporate and other category

For the three months ended September 30, 2021, Corporate and other operating revenues were $1.6 million compared to $2.7 million for the three months ended September 30, 2020. For the nine months ended September 30, 2021, Corporate and other operating revenues were $6.4 million compared to $8.1 million for the nine months ended September 30, 2020.

For the three and nine months ended September 30, 2021, Corporate and other operating expenses decreased $9.9 million and $43.3 million, respectively, compared to the three and nine months ended September 30, 2020. The following table provides the breakout of the decrease in Corporate and other operating expenses:


	Three months ended September 30,								Nine months ended September 30,
					Change								Change
In thousands	2021		2020		$		%		2021		2020		$		%
Operating expenses:
Operating costs	$	6,039	$	7,424	$	(1,385)	(19)	%	$	14,534	$	17,864	$	(3,330)	(19)	%
Selling, general and administrative expenses	15,222		26,393		(11,171)		(42)	%	43,386		79,339		(35,953)		(45)	%
Depreciation and amortization	4,260		2,106		2,154		***		12,123		11,613		510		4	%
Integration and reorganization costs	9,176		7,060		2,116		30	%	23,525		29,342		(5,817)		(20)	%
Loss on sale or disposal of assets, net	290		28		262		***		286		90		196		***
Other operating expenses	4		1,913		(1,909)		(100)	%	11,354		10,261		1,093		11	%
Total operating expenses	$	34,991	$	44,924	$	(9,933)	(22)	%	$	105,208	$	148,509	$	(43,301)	(29)	%

*** Indicates an absolute value percentage change greater than 100.

For the three months ended September 30, 2021, Corporate and other operating expenses decreased $9.9 million compared to the three months ended September 30, 2020 due to a decrease in Selling, general and administrative expenses of $11.2 million, mainly consisting of cost containment initiatives, a decrease in Other operating expenses of $1.9 million, which was due to the absence of $1.9 million of Acquisition costs incurred during the three months ended September 30, 2020, and a

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decrease in Operating costs of $1.4 million due to the decline in revenues. The decreases for the three months were partially offset by an increase in Depreciation and amortization of $2.2 million and an increase in Integration and reorganization costs of $2.1 million, driven by an increase of $3.9 million in costs associated with systems implementation and outsourcing of corporate functions, partially offset by a decrease in severance of $1.8 million.

For the nine months ended September 30, 2021, Corporate and other operating expenses decreased $43.3 million due to a decrease in Selling, general and administrative expenses of $36.0 million, mainly consisting of cost containment initiatives, offset by the absence of the temporary reduction of expenses in the prior year, such as furloughs and wage reductions, a decrease in Integration and reorganization costs of $5.8 million, driven by a decrease in severance of $13.6 million, offset by an increase of $7.8 million in costs associated with systems implementation and outsourcing of corporate functions. The decreases for the nine months were offset by an increase in Other operating expenses of $1.1 million, which was primarily due to $10.9 million of third-party fees related to the 5-Year Term Loan expensed during the nine months ended September 30, 2021, compared to $10.3 million of Acquisition costs incurred during the nine months ended September 30, 2020.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash requirements are for working capital, debt obligations, and capital expenditures.

We expect to fund our operations through cash provided by operating activities. We expect we will have adequate capital resources and liquidity to meet our ongoing working capital needs, borrowing obligations, and all required capital expenditures.

Details of our cash flows are included in the table below:


	Nine months ended September 30,
In thousands	2021		2020
Net cash provided by operating activities	$	133,347	$	74,280
Net cash provided by (used for) investing activities	39,236		(1,979)
Net cash used for financing activities	(212,284)		(37,471)
Effect of currency exchange rate change on cash	389		439
(Decrease) increase in cash, cash equivalents and restricted cash	$	(39,312)	$	35,269

Cash flows provided by operating activities: Our largest source of cash provided by our operations is Advertising revenues, primarily generated from Local and national advertising and marketing services revenues (retail, classified, and online). Additionally, we generate cash through circulation subscribers, commercial printing and delivery services to third parties, and events. Our primary uses of cash from our operating activities include compensation, newsprint, delivery, and outside services.

Our net cash flow provided by operating activities was $133.3 million for the nine months ended September 30, 2021, compared to $74.3 million for the nine months ended September 30, 2020. The increase in net cash flow provided by operating activities was primarily due to a decrease in interest paid on debt of $96.1 million, a decrease in severance payments of $40.1 million, $16.4 million in PPP funding received in support of certain of our locations that were meaningfully affected by the COVID-19 pandemic and an increase in tax refunds, net of $4.5 million. These increases were partially offset by a decrease in working capital of $70.9 million due to the overall timing of payments, including accrued compensation and accounts receivable collections, and an increase in contributions to our pension and other postretirement benefit plans of $19.2 million.

Cash flows provided by (used for) investing activities: Cash flows provided by investing activities totaled $39.2 million for the nine months ended September 30, 2021 compared to $2.0 million used for investing activities in the nine months ended September 30, 2020. This increase was primarily due to an increase in proceeds from the sale of real estate and other assets of $41.2 million and a decrease in purchases of property, plant and equipment of $1.7 million.

Cash flows used for financing activities: Cash flows used for financing activities totaled $212.3 million for the nine months ended September 30, 2021 compared to $37.5 million for the nine months ended September 30, 2020. This increase was primarily due to an increase in net repayments under term loans of $148.1 million and payments of debt issuance costs of $33.9 million.

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Debt

5-Year Term Loan

On February 9, 2021, we entered into a five-year, senior-secured term loan facility with the lenders from time to time party thereto and Citibank, N.A., as collateral agent and administrative agent for the lenders, in an aggregate principal amount of $1.045 billion (the "5-Year Term Loan"). The 5-Year Term Loan was to mature on February 9, 2026 and, at the Company's option, bore interest at a rate equal to LIBOR plus a margin equal to 7.00% per annum or an alternate base rate plus a margin equal to 6.00% per annum. Interest on the 5-Year Term Loan was payable at least every three months in arrears, beginning in May 2021.

The proceeds from the 5-Year Term Loan were used to repay the remaining principal balance and accrued interest of $1.043 billion and $13.3 million, respectively, on the Acquisition Term Loan (the "Payoff") and to pay fees and expenses incurred to obtain the 5-Year Term Loan.

The 5-Year Term Loan amortized in equal quarterly installments at a rate of 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the 5-Year Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the 5-Year Term Loan) was equal to or less than a specified ratio, 5% per annum) (the "Quarterly Amortization Installment"), beginning September 30, 2021. In addition, we were required to repay the 5-Year Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness that was not otherwise permitted under the 5-Year Term Loan and (iii) the aggregate amount of cash and cash equivalents on hand in excess of $100 million at the end of each fiscal year. The 5-Year Term Loan was subject to a requirement to have minimum unrestricted cash of $30 million as of the last day of each fiscal quarter. As of September 30, 2021, we were in compliance with all of the covenants and obligations under the 5-Year Term Loan.

As of September 30, 2021, we had $899.4 million in aggregate principal outstanding under the 5-Year Term Loan with an effective interest rate of 9.5%.

Senior Secured Convertible Notes due 2027

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Supplemental Indenture dated as of February 9, 2021 (collectively, the "2027 Notes Indenture"), between the Company and U.S. Bank National Association, as trustee.

Interest on the 2027 Notes is payable semi-annually in arrears. The 2027 Notes mature on December 1, 2027, unless earlier repurchased or converted. The 2027 Notes may be converted at any time by the holders into cash, shares of the Company’s Common Stock or any combination of cash and Common Stock, at the Company's election. The initial conversion rate is 200 shares of Common Stock per $1,000 principal amount of the 2027 Notes, which is equal to a conversion price of $5.00 per share of Common Stock (the "Conversion Price").

The 2027 Notes are guaranteed by Gannett Holdings and any subsidiaries of the Company that guaranteed the 5-Year Term Loan. The 2027 Notes are secured by the same collateral that secured the 5-Year Term Loan. The 2027 Notes rank as senior secured debt of the Company and are secured by a second priority lien on the same collateral package that secured the indebtedness incurred in connection with the 5-Year Term Loan.

For the nine months ended September 30, 2021, no shares were issued upon conversion, exercise, or satisfaction of the required conditions. Refer to Note 10 — Supplemental equity information to the condensed consolidated financial statements for details on the convertible debt's impact to diluted earnings per share under the if-converted method.

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Senior Convertible Notes due 2024

Debt Refinancing

On October 15, 2021, Gannett Holdings entered into the New Senior Secured Term Loan. Also, on October 15, 2021, Gannett Holdings completed a private offering of the 2026 Senior Notes. The proceeds of the New Senior Secured Term Loan, together with the net proceeds from the 2026 Senior Notes were applied towards the full repayment of the 5-Year Term Loan.

Loans under the New Senior Secured Term Loan bear interest at a per annum rate equal to LIBOR (which shall not be less than 0.50% per annum) plus a margin of 5.00% or an alternate base rate plus a margin equal to 4.00% per annum (which shall not be less than 1.50% per annum). The New Senior Secured Term Loan contains usual and customary covenants for credit facilities of this type that restrict, among other things, our ability to incur debt, grant liens, sell assets, and make investments and pay dividends, in each case with customary exceptions, including an exception that permits dividends and repurchases of outstanding junior debt or equity in (i) an amount of up to $25 million per fiscal quarter if the ratio of debt secured on an equal basis with the New Senior Secured Term Loan to EBITDA (as defined in the New Senior Secured Term Loan) of the Company and its restricted subsidiaries (the "First Lien Net Leverage Ratio") for such fiscal quarter is equal to or less than 2.00 to 1.00, (ii) an amount of up to $50 million per fiscal quarter if the First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.50 to 1.00, and (iii) an unlimited amount if First Lien Net Leverage Ratio for such fiscal quarter is equal to or less than 1.00 to 1.00. All obligations under the New Senior Secured Term Loan are secured by all or substantially all of the assets of the Company and the wholly-owned domestic subsidiaries of the Company (the "Guarantors"). The obligations of Gannett Holdings under the New Senior Secured Term Loan are guaranteed on a senior secured basis by the Company and the Guarantors.

Additional information

We continue to evaluate our results of operations, liquidity and cash flows, and as part of these measures, we have taken steps to manage cash outflow by rationalizing expenses and implementing various cost containment initiatives. We do not presently pay a quarterly dividend and have no current intention to reinstate the dividend. In addition, the terms of our indebtedness, including our credit facility, the New Senior Secured Term Loan, and the 2026 Senior Secured Notes Indenture and the 2027 Notes Indenture have terms that restrict our ability to pay dividends.

The CARES Act, enacted March 27, 2020, provided various forms of relief to companies impacted by the COVID-19 pandemic. As part of the relief available under the CARES Act, we deferred remittance of our 2020 Federal Insurance Contributions Act taxes as allowed by the legislation. We deferred $41.6 million of the employer portion of FICA taxes for payroll paid between March 27, 2020 and December 31, 2020. We have until December 31, 2021, to pay 50% of the FICA deferral with the remaining 50% to be remitted on or before December 31, 2022.

For the Gannett Retirement Plan in the U.S., we have deferred our contractual contribution and negotiated a contribution payment plan of $5.0 million per quarter through September 30, 2022.

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We expect our capital expenditures for the remainder of 2021 to total approximately $13.9 million. These capital expenditures are anticipated to be primarily comprised of projects related to digital product development, costs associated with our print and technology systems, and system upgrades.

Our leverage may adversely affect our business and financial performance and restricts our operating flexibility. The level of our indebtedness and our ongoing cash flow requirements may expose us to a risk that a substantial decrease in operating cash flows due to, among other things, continued or additional adverse economic developments or adverse developments in our business, could make it difficult for us to meet the financial and operating covenants contained in our New Senior Secured Term Loan, the 2026 Senior Secured Notes, and the 2027 Notes. In addition, our leverage may limit cash flow available for general corporate purposes such as capital expenditures and our flexibility to react to competitive, technological, and other changes in our industry and economic conditions generally.

Although we currently forecast sufficient liquidity, a resurgence of the COVID-19 pandemic and related counter-measures could have a material negative impact on our liquidity and our ability to meet our ongoing obligations, including obligations under the New Senior Secured Term Loan, the 2026 Senior Secured Notes, and the 2027 Notes. The Company continues to closely monitor the COVID-19 pandemic and will continue to take the steps necessary to appropriately manage liquidity.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

See our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for a discussion of our critical accounting policies and use of estimates. There have been no material changes to our critical accounting policies and use of estimates discussed in such report.

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position, or cash flows, but excludes or includes amounts that would not be so excluded or included in the most comparable U.S. GAAP measure.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are non-GAAP financial measures we believe offer a useful view of the overall operation of our businesses and may be different than similarly-titled measures used by other companies. We define Adjusted EBITDA as Net income (loss) attributable to Gannett before (1) Income tax expense (benefit), (2) Interest expense, (3) Gains or losses on the early extinguishment of debt, (4) Non-operating pension income (expense), (5) Loss on convertible notes derivative, (6) Depreciation and amortization, (7) Integration and reorganization costs, (8) Other operating expenses, including third-party debt expenses and acquisition costs, (9) Asset impairments, (10) Goodwill and intangible impairments, (11) Gains or losses on the sale or disposal of assets, (12) Share-based compensation, and (13) certain other non-recurring charges, including gains or losses on the sale of investments. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total Operating revenues. We define Adjusted Net income (loss) attributable to Gannett before (1) Gains or losses on the early extinguishment of debt, (2) Loss on convertible notes derivative, (3) Integration and reorganization costs, (4) Other operating expenses, including third-party debt expenses and acquisition costs, (5) Asset impairments, (6) Goodwill and intangibles impairments, (7) Gains or losses on the sale or disposal of assets, (8) Gains or losses on the sale of investments, and (9) the tax impact of the above items.

Management’s use of Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are not measurements of financial performance under GAAP and should not be considered in isolation or as an alternative to income from operations, net income (loss), or any other measure of performance or liquidity derived in accordance with U.S. GAAP. We believe these non-GAAP financial measures, as we have defined them, are helpful in identifying trends in our day-to-day performance because the items excluded have little or no significance on our day-to-day operations. These measures provide an assessment of controllable expenses and afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett provide us with measures of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation, non-cash impairments, and interest expense associated with our capital structure. These metrics measure our financial performance based on operational factors that management can impact in the short-term, namely

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the cost structure or expenses of the organization. Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are metrics we use to review the financial performance of our business on a monthly basis.

We use Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett as measures of our day-to-day operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our day-to-day business operating results.

Limitations of Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett have limitations as analytical tools. They should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings or cash flows. Material limitations in making the adjustments to our earnings to calculate Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett and using these non-GAAP financial measures as compared to U.S. GAAP net income (loss) include: the cash portion of interest/financing expense, income tax (benefit) provision, and charges related to asset impairments, which may significantly affect our financial results.

Management believes these items are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are not alternatives to net income and margin as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measures. We strongly urge you to review the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett along with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net income (loss) attributable to Gannett measures as presented in this report may differ from and may not be comparable to similarly titled measures used by other companies.

The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted EBITDA and Net income (loss) attributable to Gannett margin to Adjusted EBITDA margin:


	Three months ended September 30,						Nine months ended September 30,
In thousands	2021			2020			2021			2020
Net income (loss) attributable to Gannett	$	14,687		$	(31,260)		$	(112,514)		$	(548,305)
Provision (benefit) for income taxes	2,984			3,098			11,567			(22,200)
Interest expense	34,603			58,063			109,370			173,890
Loss on early extinguishment of debt	3,761			476			25,996			1,650
Non-operating pension income	(23,860)			(18,334)			(71,644)			(54,433)
Loss on convertible notes derivative	—			—			126,600			—
Depreciation and amortization	48,107			61,355			154,452			205,706
Integration and reorganization costs	13,619			13,417			35,467			73,978
Other operating expenses	4			1,913			11,354			10,261
Asset impairments	2,301			1,585			3,134			8,444
Goodwill and intangible impairments	—			—			—			393,446
(Gain) loss on sale or disposal of assets, net	(833)			795			9,206			1,540
Share-based compensation expense	4,602			3,844			13,804			22,812
Other items	2,092			(6,972)			1,509			(1,723)
Adjusted EBITDA (non-GAAP basis)	$	102,067		$	87,980		$	318,301		$	265,066
Net income (loss) attributable to Gannett margin	1.8		%	(3.8)		%	(4.7)		%	(21.7)		%
Adjusted EBITDA margin (non-GAAP basis)	12.8		%	10.8		%	13.4		%	10.5		%

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The table below shows the reconciliation of Net income (loss) attributable to Gannett to Adjusted Net income (loss) attributable to Gannett:


	Three months ended September 30,				Nine months ended September 30,
In thousands	2021		2020		2021		2020
Net income (loss) attributable to Gannett	$	14,687	$	(31,260)	$	(112,514)	$	(548,305)
Loss on early extinguishment of debt	3,761		476		25,996		1,650
Loss on convertible notes derivative	—		—		126,600		—
Integration and reorganization costs	13,619		13,417		35,467		73,978
Other operating expenses	4		1,913		11,354		10,261
Asset impairments	2,301		1,585		3,134		8,444
Goodwill and intangible impairments	—		—		—		393,446
(Gain) loss on sale or disposal of assets, net	(833)		795		9,206		1,540
Gain on sale of investments	—		(7,800)		—		(7,995)
Subtotal	33,539		(20,874)		99,243		(66,981)
Tax impact of above items	(7,033)		(25,449)		(28,042)		(61,364)
Adjusted Net income (loss) attributable to Gannett (non-GAAP basis)	$	26,506	$	(46,323)	$	71,201	$	(128,345)

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes during the quarter ended September 30, 2021, to the information disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risks of our Form 10-K for the fiscal year ended December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

Based on their evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were not effective because of the previously reported material weakness in internal control over financial reporting, which we describe in Part II, Item 9A, Controls and Procedures of our Form 10-K for the fiscal year ended December 31, 2020.

Remediation of Material Weakness

We continue to implement our remediation plan for the previously reported material weakness in internal control over financial reporting, described in Part II, Item 9A of our Form 10-K for the fiscal year ended December 31, 2020, which includes organizational enhancements, design enhancements, training, utilizing external resources and integration of related supporting technology. We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributing to the material weakness are remediated as soon as possible. We will consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

Changes in Internal Control over Financial Reporting

Other than changes made in connection with our implementation of the remediation efforts mentioned above, there have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a result of the COVID-19 pandemic, most of our workforce has shifted to a primarily work-from-home environment since March 2020. The change to remote working was rapid and while pre-existing controls were not specifically designed to operate in our current work-from-home operating environment, we believe that our internal control over financial reporting was not materially impacted. We are continually monitoring and assessing the COVID-19 pandemic's effect on our internal controls to minimize the impact on their design and effectiveness.

PART II. OTHER INFORMATION

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ITEM 1. LEGAL PROCEEDINGS

Please refer to Note 12 — Commitments, contingencies and other matters, for disclosures regarding material legal proceedings. There have been no material developments with respect to our potential liability for legal and environmental matters previously reported in our Form 10-K for the fiscal year ended December 31, 2020 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should consider the risks described in Part I, Item 1A, “Risk Factors” of our Form 10-K for the year ended December 31, 2020. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the Form 10-K for the year ended December 31, 2020. All of these risks and uncertainties, including those discussed below, could materially and adversely affect our business, results of operations, financial condition, our ability to make distributions on our Common Stock and/or the market price of our Common Stock. The risks described below and in our Annual Report on Form 10-K for the year ended December 31, 2020, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our financial condition and/or operating results.

Risks Related to our Indebtedness

Our substantial indebtedness could materially and adversely affect our business or financial condition.

On October 15, 2021, we issued the 2026 Senior Notes. Also as of such date, we entered into the New Senior Secured Term Loan in a principal amount up to $516 million. The net proceeds of the issuance of the 2026 Senior Notes, together with the proceeds of the New Senior Secured Term Loan, and real estate and asset sales, were used to prepay in full the obligations outstanding under the 5-Year Term Loan. We may incur additional indebtedness in the future.

The New Senior Secured Term Loan matures on October 15, 2026, and bears interest at the rate of LIBOR (which shall not be less than 0.50% per annum) plus a margin equal to 5.00% per annum or an alternate base rate plus a margin equal to 4.00% per annum (which shall not be less than 1.50% per annum). Accordingly, we are required to dedicate a substantial portion of cash flow from operations to fund interest payments. The New Senior Secured Term Loan amortizes at a rate equal to 10% per annum (or, if the ratio of Total Indebtedness secured on an equal priority basis with the New Senior Secured Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan) is equal to or less than a specified ratio, 5% per annum) payable in equal quarterly installments. In addition, we are required to repay the New Senior Secured Term Loan from time to time with (i) the proceeds of non-ordinary course asset sales and casualty and condemnation events, (ii) the proceeds of indebtedness that is not otherwise permitted under the New Senior Secured Term Loan and (iii) the aggregate amount of cash and cash equivalents on hand at the Company and its restricted subsidiaries in excess of $100 million as of the last day of any fiscal year of the Company (beginning with the fiscal year ending December 31, 2021). Our debt service obligations reduce the amount of cash flow available to fund our working capital, capital expenditures, investments and potential distributions to stockholders. Moreover, there can be no assurance that we will be able to generate sufficient cash flow to satisfy our debt service obligations. Our ability to satisfy our debt service obligations depends on our ability to generate cash flow from operations, which is subject to a variety of risks, including general economic conditions and the strength of our competitors, which are outside our control.

The terms of our indebtedness impose significant operating and financial restrictions on us. The New Senior Secured Term Loan, the 2026 Senior Notes, and the 2027 Notes require us to comply with numerous affirmative and negative covenants, including, in the case of the 2027 Notes, a requirement to maintain minimum liquidity of $30 million, and include restrictions limiting our ability to, among other things, incur additional indebtedness, make investments and acquisitions, pay certain dividends, sell assets, merge, incur certain liens, enter into agreements with our affiliates, change our business, engage in sale/leaseback transactions, and modify our organizational documents. These requirements may make it impractical to declare and pay dividends at any time that the requirements are in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared. See also "Risks Related to our Common Stock" below.

A failure to satisfy our debt service obligations on the New Senior Secured Term Loan, a breach of a covenant in our credit facility, or a material breach of a representation or warranty in our credit facility, among other events specified in the credit facility, could give rise to a default, which could give rise to the right of our lenders to declare our indebtedness, together with accrued interest and other fees, to be immediately due and payable. A failure to satisfy our debt service or conversion obligations on the 2026 Senior Notes or the 2027 Notes, among other events specified in the 2026 Senior Notes Indenture or the

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2027 Notes Indenture, could also give rise to a default, which could give rise to the right of noteholders to declare the principal of the 2026 Senior Notes and/or the 2027 Notes, together with accrued and unpaid interest, to be immediately due and payable. An acceleration of our indebtedness would have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.

Our inability to raise funds necessary to settle conversions of, or to repurchase, the 2026 Senior Notes or the 2027 Notes, when required by the indentures governing the respective notes, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.

Upon a "change of control" as described in the 2026 Senior Notes Indenture, we will be required to offer to repurchase any outstanding 2026 Senior Notes. Similarly, if we settle the 2027 Notes by cash, or by a combination of cash and shares of our Common Stock, upon a fundamental change as described in the 2027 Notes Indenture, we will be required to make cash payments with respect to the 2027 Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of the notes being surrendered or converted. In addition, our ability to repurchase the 2026 Senior Notes or the 2027 Notes or to pay cash upon conversion of the 2027 Notes is limited by the agreements governing our existing indebtedness (including the New Senior Secured Term Loan) and may also be limited by law, regulation, or by agreements that will govern our future indebtedness. Our failure to repurchase the 2026 Senior Notes or the 2027 Notes at a time when the repurchase is required by the governing indenture, or to pay cash payable on future conversions of the 2027 Notes as required by the 2027 Notes Indenture, would constitute a default under the respective indenture. A default under either indenture, or the change in control or fundamental change itself, could also lead to a default under agreements governing our existing or future indebtedness (including the New Senior Secured Term Loan).

Certain actions, including our ability to incur additional indebtedness, require the consent of our lenders and note holders which, if not provided, would limit our ability to take advantage of future opportunities.

Our loan agreements, including the New Senior Secured Term Loan, the 2026 Senior Notes and the 2027 Notes, contain restrictions and covenants that limit our ability to take certain actions without lender approval, approval of the holders of a majority in principal amount of the notes then outstanding, or modification of the loan agreements. These limitations include restrictions on our ability to incur additional indebtedness or refinance our existing debt, make certain investments and acquisitions, pay certain dividends, sell assets, merge, incur certain liens, enter into agreements with our affiliates, change our business, engage in sale/leaseback transactions, and modify our organizational documents. While we have historically partnered with lenders that we have established relationships with and whose priorities and interests are familiar to us, many of the lenders or holders under the New Senior Secured Term Loan and the holders of the 2026 Senior Notes are not historic relationships. There is no assurance that these lenders will approve or consent to our activities, even if the activities are in the best interests of our stockholders. If we are unable to secure the required consent of our lenders or noteholders, our ability to take advantage of future opportunities, including acquisition or financing opportunities, could be restricted.

Risks Related to the 2026 Senior Notes and the 2027 Notes

Our inability to raise funds necessary to repurchase the 2026 Senior Notes or the 2027 Notes, upon a change of control as described in the 2026 Senior Notes Indenture or fundamental change as described in the 2027 Notes Indenture, may lead to defaults under such indentures and under agreements governing our existing or future indebtedness. In addition, a change of control may constitute a default under the New Senior Secured Term Loan, the 2026 Senior Notes or the 2027 Notes.

Upon the occurrence of a change of control, as defined in the 2026 Senior Notes Indenture, we must, if certain other conditions are met, make an offer to repurchase the 2026 Senior Notes at a price equal to 101% of the principal amount thereof, together with any accrued and unpaid interest, if any, to, but excluding, the date of the repurchase. Similarly, upon the occurrence of a fundamental change, as defined in the 2027 Note Indenture, we must, if certain other conditions are met, make an offer to repurchase the 2027 Notes at a price equal to 110% of the principal amount thereof, together with any accrued and unpaid interest, if any, to, but excluding, the date of the repurchase. If we become obligated to repurchase the 2026 Senior Notes or 2027 Notes upon a change of control, we may not have enough available cash or may be unable to obtain financing at the time we are required to make purchases of the notes being surrendered. In addition, our ability to repurchase the notes is limited by the agreements governing our existing indebtedness (including the New Senior Secured Term Loan) and may also be limited by law or regulation, or by agreements that will govern our future indebtedness. Our failure to repurchase the 2026 Senior Notes or 2027 Notes at a time when the repurchase is required by the 2026 Senior Notes Indenture or the 2027 Notes Indenture, respectively, would constitute a default under the respective indenture. A default under the governing indenture or

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the change of control itself could also lead to a default under agreements governing our existing or future indebtedness (including the New Senior Secured Term Loan).

The New Senior Secured Term Loan provides, and future credit agreements or other agreements relating to indebtedness to which we become a party may provide, that the occurrence of certain change of control events with respect to Gannett would constitute a default thereunder. If we experience a change of control event that triggers a default under our New Senior Secured Term Loan, we may seek a waiver of such default or may attempt to refinance the New Senior Secured Term Loan. In the event we do not obtain such a waiver or refinance the New Senior Secured Term Loan, such default could result in amounts outstanding under our New Senior Secured Term Loan being declared due and payable.

The New Senior Secured Term Loan, the 2026 Senior Notes, and the 2027 Notes contain, and future indebtedness that we may incur may contain, prohibitions on the occurrence of certain events that would constitute a change of control or, in the case of the 2026 Senior Notes and the 2027 Notes, require the repurchase of such indebtedness upon a change of control. Moreover, the exercise by the holders of their right to require us to repurchase their 2026 Senior Notes or the 2027 Notes could cause a default under such indebtedness, even if the change of control itself does not, due to the financial effect of such repurchase on us. Finally, the ability to pay cash to the holders of 2026 Senior Notes or the 2027 Notes following the occurrence of a change of control may be limited by our then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases.

The definition of “change of control” includes a disposition of all or substantially all of the assets of Gannett to any person. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of "all or substantially all" of the assets of Gannett or would otherwise constitute a change of control under the governing indenture. As a result, it may be unclear as to whether a change of control has occurred and whether a holder of 2026 Senior Notes or 2027 Notes may require us to make an offer to repurchase such notes as described above, and we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations that would not constitute a change of control under the governing indenture but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or our credit ratings or the 2026 Senior Notes or 2027 Notes. As a result, our obligation to repurchase the 2026 Senior Notes or the 2027 Notes upon the occurrence of a change of control may not preserve the value of the 2026 Senior Notes or the 2027 Notes, respectively, in the event of a highly leveraged transaction, reorganization, merger or similar transaction.

Risks Related to our Business

Government imposed COVID-19 vaccine mandates could have a material adverse impact on our business and results of operations.

The Department of Labor’s Occupational Safety and Health Administration ("OSHA") issued an Emergency Temporary Standard ("ETS") requiring that most employers with at least 100 employees ensure that their employees are fully vaccinated for COVID-19 or require employees to obtain a negative COVID-19 test at least once a week. As a company with more than 100 employees, the ETS will require us to mandate COVID-19 vaccination of our workforce or have our unvaccinated employees undergo required weekly COVID-19 testing, which could be difficult and costly. Further, additional vaccine and testing mandates may be announced in jurisdictions in which we operate our business, and there could be potential conflict with actions by certain states that are in conflict with the federal mandate, the impacts of which remain uncertain. Requirements to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly could result in labor disruptions, employee attrition and difficulty securing future labor needs, and could have a material adverse effect on our revenues, costs, financial condition and results of operations.

Risks Related to our Common Stock

Future offerings of debt securities, which would rank senior to our Common Stock upon our liquidation, and future offerings of equity securities, may be senior to our Common Stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our Common Stock.

We may raise additional capital through the issuance of debt or equity securities (including preferred stock) from time to time. Upon liquidation, holders of our debt securities (including holders of our 2026 Senior Notes and 2027 Notes) and preferred stock, if any, and lenders with respect to other borrowings (including the lenders under the New Senior Secured Term Loan) will be entitled to our available assets prior to the holders of our Common Stock. Preferred stock could have a preference

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on liquidating distributions or a preference on dividend payments that could limit our ability to pay dividends to the holders of our Common Stock. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our Common Stock bear the risk of our future offerings reducing the market price of our Common Stock and diluting the value of their holdings in our stock.

We presently have no intention to declare or pay a dividend and we may not be able to pay dividends in the future or at all.

On April 1, 2020, we announced that our Board of Directors determined that it is in the best interests of our stockholders for the Company to preserve liquidity by suspending our quarterly dividend. We presently have no intention to reinstate the dividend, and there can be no assurance that we will resume paying dividends on a regular basis.

Our credit facility contains terms that restrict our ability to pay dividends or other distributions. Under the New Senior Secured Term Loan, we can only pay cash dividends up to an agreed-upon amount and provided that the ratio of Total Indebtedness secured on an equal priority basis with the New Senior Secured Term Loan (net of Unrestricted Cash) to Consolidated EBITDA (as such terms are defined in the New Senior Secured Term Loan) does not exceed a specified ratio. The 2026 Senior Notes Indenture and the 2027 Notes Indenture contain similar dividend restrictions. The 2027 Notes Indenture also provides that, at any time that the Company’s Total Gross Leverage Ratio (as defined in the 2027 Notes Indenture) exceeds 1.5 and we approve the declaration of a dividend, we must offer to purchase a principal amount of 2027 Notes equal to the proposed amount of the dividend. This repurchase offer requirement may make it impractical to declare and pay dividends at any time that the requirement is in effect. Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared.

Any determination by our Board of Directors 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. There can be no guarantee regarding the timing and amount of any dividends. Our ability to resume payment of dividends in the future 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Table of Contents

Exhibit Number

Description

Location

4.1

Indenture, by and among Gannett Co., Inc., Gannett Holdings LLC, the Guarantors from time to time party hereto, U.S. Bank National Association, as trustee and U.S. Bank National Association, as collateral agent, registrar, paying agent and authenticating agent.

Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed October 18, 2021.

10.1

First Lien Credit Agreement, by and among Gannett Co., Inc., Gannett Holdings LLC, each Person listed as a “Guarantor” on the signature pages hereto, the lenders from time to time party hereto, Citibank, N.A., as collateral agent and administrative agent for the Lenders.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed October 18, 2021.

10.2

Strategic Alliance Agreement, dated as of July 26, 2021, by and between Tipico USA Technology, Inc. and Gannett Media Corp.

Filed herewith.*

31.1

Rule 13a-14(a) Certification of CEO

Filed herewith.

31.2

Rule 13a-14(a) Certification of CFO

Filed herewith.

32.1

Section 1350 Certification of CEO

Furnished herewith.

32.2

Section 1350 Certification of CFO

Furnished herewith.

101

The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statements of Cash Flow; (iv) Condensed Consolidated Statements of Equity; and (v) Notes to Condensed Consolidated Financial Statements

Attached.

104

Cover Page Interactive Data File (formatted as Inline XBRL and embedded within the Inline XBRL document)

Attached.

* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: November 5, 2021			GANNETT CO., INC.

			/s/ Douglas E. Horne
			Douglas E. Horne
			Chief Financial Officer and Chief Accounting Officer
			(On behalf of the Registrant and as principal financial and principal accounting officer)

EXHIBIT 10.2

STRATEGIC ALLIANCE AGREEMENT

This Strategic Alliance Agreement (this “Agreement”) is entered into on July 26, 2021 (the “Effective Date”), by and between Tipico USA Technology, Inc., a Delaware corporation (“Tipico”), and Gannett Media Corp., a Delaware corporation (“Gannett Media”). Tipico and Gannett Media are each individually referred to herein as a “Party” and collectively referred to herein as the “Parties.”

RECITALS

A. Tipico, through various subsidiaries, provides real money gambling products in various jurisdictions in the USA, including online sports betting services and online casino services.

B. Gannett Media is a subscription-led and digitally focused media and marketing solutions holding company, with the largest local-to-national reach in the USA.

C. The Parties desire to utilize Gannett Media’s various assets and solutions to market and promote the Tipico Gambling Services (as defined below) as set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein the Parties hereby agree as follows:

Article 1

DEFINITIONS; RULES OF CONSTRUCTION; RECITALS

1.1Defined Terms. Capitalized terms used in this Agreement, the Recitals above and its Schedules, Exhibits and Appendices, which are not otherwise defined herein, shall have the meanings ascribed to them as set forth in Schedule A hereto.

1.2Interpretation. In this Agreement, except to the extent otherwise provided or the context otherwise requires: (a) when a reference is made in this Agreement to an Article, Section, Clause, Exhibit or Schedule, such reference is to an Article, Clause or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated; (b) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without being limited to” and the words “include,” “includes,” “including,” “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; (c) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (e) any pronoun used in this Agreement shall include the corresponding masculine, feminine and neuter forms; (f) any notice under this Agreement shall be in writing and in English; (g) any reference to “days” means “calendar days” unless otherwise specified; (h) if a notice is to be given on a specified day, unless otherwise specifically provided herein, it must be given prior to 5:00 p.m., Trenton, New Jersey time; (i) references to a Person are also to its successors and permitted assigns; (j) the use of “or” is not intended to be exclusive unless expressly indicated otherwise; (k) any references to “$” and “dollars” is to the lawful money of the USA; (l) a reference to “unreasonably withheld” means “unreasonably withheld, conditioned or delayed”, (m) except as required by applicable Laws or any Governmental Entity, if any payment or other delivery requirement becomes due on a date that is not a Business Day, then such due date shall be extended to the next succeeding Business Day, and (n) unless otherwise expressly provided herein, any agreement, instrument, statute, rule or regulation defined or referred to herein or in any agreement or instrument defined or referred to herein (including this Agreement) means such agreement, instrument, statute, rule or regulation as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, rules and regulations) by succession of comparable successor statutes, rules and regulations.

1.3Recitals. The Recitals set forth above are true and correct and are hereby incorporated into this Agreement as if set forth at length herein.

Article 2

RELATIONSHIP AND OBLIGATIONS

2.1Gannett Media Obligations.

2.1.1During the Term and as more particularly set forth on Schedule B, and subject to applicable Law, Gannett Media agrees to provide Tipico advertising, marketing, promotions, events and services that are crafted to promote Tipico, Tipico’s brand and the Tipico Gambling Services within the Gannett Media Group’s assets within the USA and Canada, including the following, to the extent offered or operated in the USA and Canada (collectively, the “GM Assets”): (a) the print media owned or published by Gannett Media Group in the USA and Canada, (b) the GM Sites, (c) through its subscription products, video content productions, and podcasts owned, or controlled by Gannett Media Group and (d) through events (i.e., festivals, races, events, expo and experiences, etc.) that Gannett Media Group owns or controls (collectively, the “GM Promotions”). It is understood that Gannett Media is not guaranteeing any particular results with respect to the GM Promotions. Furthermore, it is understood that notwithstanding anything to the contrary contained herein, Gannett Media shall have complete editorial independence and discretion and full control over its editorial decisions related to news, articles, opinions, news events and similar content on any platform and in any media, but specifically excluding advertising.

2.1.2Subject to Section 3.2, Tipico shall have the right to elect and control which GM Promotions are provided during the Term in accordance with Schedule B, which schedule may be updated from time to time by the Parties. In the event the Gannett Media Group grants to any other Person pricing with respect to assets and service as it provides Tipico with respect to the GM Promotions that are more favorable to such Person than those provided to Tipico, Tipico shall receive that same pricing. The Parties further acknowledge that, given the duration of the Term and changes in the Law, the GM Promotions may evolve during the Term and the Parties agree to continually discuss in good faith additions, deletions or revisions to the GM Promotions.

2.1.3To the extent Gannett Media sells, discontinues or for other reasons is no longer able to include a GM Asset upon which it will engage in the GM Promotions, then the Parties shall discuss and mutually agree upon either (a) substitute GM Assets of equal or greater value as part of the GM Promotions or (b) some other equitable adjustment to the Media Fee or any other aspect of compensation hereunder, including, if applicable, a reimbursement of amounts paid by Tipico.

2.1.4All GM Promotions are subject to prior written approval from Tipico (email to the applicable Account Manager being sufficient), not to be unreasonably withheld and, as appropriate, shall use Tipico Content and be branded or co-branded with the Tipico Mark as set forth on Schedule B. Except as expressly contemplated by Schedule B, the inclusion of any Tipico Content in any GM Promotion is subject to Gannett Media’s prior approval, which approval shall not be unreasonably withheld; provided however that Gannett Media shall have complete editorial independence and discretion and full control over its editorial decisions related to news, articles, opinions, news events and similar content on any platform and in any media, but specifically excluding advertising. For any material changes to the Tipico Content with respect to any GM Promotions proposed by Gannett Media, Gannett Media will submit such change to Tipico prior making such change, and Tipico will notify Gannett Media of any objection thereto within 3 days after receipt of such proposal. If no objection is received within such 3 day-period, Gannett Media may publish the GM Promotion as proposed. Tipico shall be responsible for ensuring that all GM Promotions comply with Gaming Laws or, subject to Gannett Media’s compliance with Section 2.4.2, that a “self excluded” person will not be contacted by a member of the Gannett Media Group in connection with a GM Promotion.

2.1.5With 30 days of advance written notice to the other Party, either Party shall have the right to exclude any particular GM Assets from this Agreement (each, an “Excluded GM Asset”), if in good faith such Party believes (a) such GM Asset is not appropriate for the Tipico Content, as a result of the jurisdiction(s) that is the focus of such GM Assets not permitting the Gambling Services which are the focus of the Tipico Gambling Services, provided, any GM Asset that has a multijurisdictional focus (i.e., USA TODAY) should not become an Excluded GM Asset simply because there are jurisdictions within the focus of such GM Assets that do not permit the Gambling Services which are the focus of the Tipico Gambling Services or (b) inclusion of such Tipico Content in such GM Assets will violate the Law or the Gannett Guidelines, which Gannett Guidelines shall at all timed

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during the Term be applied on a non-discriminatory basis to all Persons advertising or using the GM Assets. Further, Tipico may notify Gannett Media in writing to remove or limit the duration of use of any GM Promotion at any time and from time to time and Gannett Media shall promptly comply with such notice. In addition, Gannett Media may immediately suspend a GM Asset(s), GM Promotion(s) and/or GM Link(s) if it reasonably believes such GM Asset, GM Promotion or GM Link to be in violation of any Law or the Gannett Guidelines. In such case, Gannett Media will provide Tipico with as much notice as practicable, or if notice is not able to be provided before such suspension, will provide notice as promptly as possible after such suspension, including the reason for such suspension. The Parties will cooperate in good faith to determine if any such suspension needs to be made permanent or whether changes can be made to address the reason for the suspension such that the GM Asset, GM Promotion and/or GM Link may be restored. In the event of an Excluded Asset or suspension of a GM Asset, GM Promotion or GM Link, then Parties shall discuss and mutually agree upon either (a) substitute GM Assets of equal or greater value as part of the GM Promotions or (b) some other equitable adjustment to the Media Fee or any other aspect of compensation hereunder, including, if applicable, a reimbursement of amounts paid by Tipico.

2.2Tipico Obligations

2.2.1From time to time during the Term, Tipico will provide Gannett Media:

(a)For use within the GM Assets Tipico Content that shall advertise and promote the Tipico Gambling Services, which may include unique attribution “promo” codes or other tracking methods agreed upon from time to time by the Parties (each, an “Attribution Codes”) and provide, as more particularly set forth on Schedule B, awards in connection with any sweepstakes provided as part of the GM Promotions and unique user promotion to incentivize use sign ups. With respect to those sweepstakes created solely by Tipico and that Tipico elects to offer within the GM Promotions (“Tipico Generated Sweepstakes”), Tipico shall be responsible for establishing the rules and terms of and shall ensure that such Tipico Generated Sweepstakes comply with applicable Law and Gannett Media shall have the right to review any such proposed rules and reserves of such Tipico Generated Sweepstakes and the right to decline any Tipico Generated Sweepstakes that it believes in good faith may violate applicable Law or any Gannett Guidelines. With respect to those sweepstakes a member of the Gannett Group offers or creates (i.e., not a Tipico Generated Sweepstake), regardless of whether Tipico Marks or Tipico Content is used or Tipico is otherwise provided sponsorship rights in connection therewith, Gannett Media shall be responsible for establishing the rules and terms of and shall ensure that such sweepstakes comply with applicable Law. Notwithstanding anything herein to the contrary, the terms and conditions for any sweepstakes provided under this Agreement will include permission, as required by applicable Law, for sharing of Personal Information of participants among the Parties for purposes of each being able to market its products and services to such participant. Further, if permitted by applicable Law, the Parties agree to use the “opt out” method for securing such permission;

(b)with guidelines and graphical artwork to use in linking GM Site(s) to the home pages of the Tipico Online Services, which will include special “tagged” link formats to be used in all links between the GM Site(s) and the Tipico Online Services. Links to the Tipico Online Service placed on the GM Site(s) pursuant to this Agreement and which properly utilize such special link formats provided by Tipico are referred to as “GM Links;” and

(c)with, to the extent permitted by applicable Law, subject to any applicable Gaming Approval and subject to the terms and conditions described on Schedule B:

(i)real-time live API for the Odds Data (“Odds Data Link”) to be integrated into the GM Assets by Gannett Media utilizing the APIs provided by Tipico, which the Parties agree the intention is for the Odds Data Link to be made available as part of the GM Promotions by the start of the 2021-2022 NFL season;

(ii)a betslip module that may be displayed on the GM Sites as set forth on Schedule B, so that viewers of such GM Site may place wagers, utilizing the Tipico Online Services, without leaving such GM Site (e.g., through the use of an iframe or similar technology on or within such GM Sites) that will be reviewed and approved by the Parties and the applicable Gaming Authorities prior to launch. Except for any integration developed by Gannett Media between the GM Site and the betslip module, the betslip module as

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described in this Section 2.2.1(c) shall be deemed Tipico Technology related to the Tipico Online Services. For purposes of clarification, with the integration of a betslip module, all activities relating to the operation of the Tipico Online Services will continue to be provided by Tipico and the betslip module will merely act as a window for interacting with the Tipico Online Services while remaining on GM Site; and

(iii)the Tipico Content associated with a to-be-developed single sign-on capability, which shall be developed by the Parties, that allows individuals to register and login to a Tipico Online Services via existing account details registered at GM Site.

2.3Subcontractors. Each Party shall be entitled to use third party contractors or subcontractors if necessary to perform their obligations hereunder; provided, that (a) the contracting Party shall remain primarily liable under all applicable provisions of this Agreement and (b) the contracting Party shall comply with applicable Gaming Laws in connection therewith. Further, in order for the Parties to best leverage the GM Assets as contemplated by this Agreement, a Party may request that the other Party contract directly with a contractor (e.g., to assist Gannett Media in mapping odds data) and, in such case, the Parties agree to work in good faith in connection therewith. This Section 2.3 is subject to any other terms applicable to use of subcontractors set forth in any data processing agreement entered into between the Parties pursuant to Section 9.5, which terms will govern and supersede in the event of any conflict with this Section 2.3.

2.4GM Promotions.

2.4.1The GM Promotions will (a) be prepared, performed and utilized in a workmanlike manner, in accordance with the standards of care and diligence and the level of skill, knowledge, and judgment normally practiced by companies in performing services of a similar nature and, at all times will comply with applicable Law and all privacy and Intellectual Property rights; (b) adhere to reasonable marketing policies and brand guidelines that Tipico makes available to Gannett Media ahead of performing such GM Promotion; provided such policies and guidelines shall not violate or conflict with Gannett Media Group policies and guidelines regarding content and advertising set forth on Exhibit 3, which may be updated from time-to-time (“Gannett Guidelines”); (c) appropriately disclose the connection between Gannett Media and Tipico, as and to the extent required by applicable Law; (d) not knowingly contain: (i) false, misleading, inaccurate, or deceptive statements or exaggerations; (ii) false or fabricated verbal or visual statements; (iii) dishonest or material distortions of opinions, findings or experiences depicted with respect to the Tipico Gambling Services; or (iv) content that otherwise violates the rights of any Person; and (d) otherwise comply with all other applicable Law and all privacy, publicity and Intellectual Property rights. In the event that any modification or removal of a posted GM Promotion is required as a result of a substantiated third party claim or due to a violation of this Agreement, Gannett Media shall make such modification or remove such GM Promotion.

2.4.2Tipico shall ensure that all Tipico Content provided by Tipico pursuant to this Agreement (a) complies with the requirements of applicable Gaming Laws, including any required message concerning problem gaming, (b) complies with all other applicable Law and all privacy and Intellectual Property rights; (c) complies with Gannett Guidelines and (d) does not knowingly contain (i) false, misleading, inaccurate, or deceptive statements or exaggerations; (ii) false or fabricated verbal or visual statements; (iii) dishonest or material distortions of opinions, findings or experiences depicted with respect to the Tipico Gambling Services; or (iv) content that otherwise violates the rights of any Person. Throughout the term of this Agreement, Tipico shall provide Gannett Media with a current and accurate list of individuals who have requested not to receive any commercial messages from or on behalf of Tipico, or have been put on a “disassociated persons,” “excluded,” “self-excluded,” “self-limited,” “administratively self-limited,” and “no-marketing” list (the “Do Not Contact List”). Gannett Media Group will scrub its applicable datasets used for any activities under this Agreement against the current Do Not Contact List to ensure the applicable individual(s) on the Do Not Contact List do not receive any future commercial messages from Gannett Media Group sent for or on behalf of Tipico or otherwise sent for purposes of promoting Tipico or the Tipico Gambling Service. To the extent any Person on the Do Not Contact List already appeared on any datasets of the Gannett Media Group, the Gannett Media Group may continue to send to such Persons communications and promotions unrelated to Tipico or the Tipico Gambling Service. The information contained in the Do Not Contact List shall be deemed Confidential Information of Tipico and Gannett Media Group shall not use such information for any purpose other than ensuring the applicable individual(s) do not receive any future commercial messages or other communication from Gannett Media Group sent on behalf of or in connection with

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Tipico. To the extent that Tipico reasonably determines that applicable Gaming Laws prohibit the provision of the Do Not Contact List to Gannett Media, Tipico shall so advise Gannett Media, and Tipico and Gannett Media will cooperate in good faith, at no material cost to Gannett Media, to take such steps as are necessary to ensure that no Gannett Media Group commercial messages or other communications are provided to any Persons on the Do Not Contact List without providing such list to Gannett Media. Gannett Media agrees that the Gannett Media Group will not send any form of direct marketing in relation to the Tipico Gambling Services, unless it has received a prior authorization in writing from Tipico.

2.4.3For any social media marketing with the GM Promotions, the Gannett Media Group (a) shall use language consistent with rules, guidelines, and consent decrees issued by the Federal Trade Commission (FTC), the applicable Gaming Authority, or other regulatory or enforcement body having authority over the Gannett Media Group’s marketing practices, in connection with all social media posts to indicate such posts are sponsored posts including, but not limited to, the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising; and (b) subject to Section 2.4.2 and Section 11.1 shall be solely responsible for ensuring that all social media distribution complies with all applicable Laws and, other than with respect to Tipico Content for which Tipico is solely liable and responsible, does not infringe on the rights of any third party.

Article 3

PROJECT MANAGEMENT

3.1Account Manager. Gannett Media will provide Tipico a team of 14 employees focused on the GM Promotions, with the goal of customizing and leveraging the GM Assets. In addition, each Party shall appoint a single United States employee as an account manager (each, an “Account Manager”), who will be tasked with the primary responsibility of interfacing with the other Party on a day-to-day basis with respect to the ongoing development, implementation and provision/operation of GM Promotions. Each Account Manager member shall be subject to the confidentiality obligation set forth in Article 8. The Account Managers (and any designee when the Account Manager is unavailable) will meet (in person or telephonically) at least weekly and have access to, and be kept fully and timely informed of, all relevant product information and roadmaps, and will be generally available between 9:00 AM and 5:00 PM Eastern Time on Gannett business days and will check email and voicemail regularly during such hours. For clarity, the appointment of the Account Managers will not limit either Party’s ability to contact other relevant personnel of the other Party for information or assistance as contemplated by this Agreement.

3.2Steering Committee. Each Party will appoint up to 4 representatives to serve as members of a joint steering committee charged with overseeing development, management, operation and other activities relating to GM Promotions (the “Steering Committee”). Each Steering Committee member shall be subject to the confidentiality obligation set forth in Article 8. The Steering Committee will meet on a monthly basis (in person or telephonically) and at such other mutually acceptable times and each Party will use reasonable efforts to cause its representatives to attend such meetings. The Steering Committee will be the appropriate forum to discuss any material concerns or major decisions relating to this Agreement. It is the intent of the Parties that the Steering Committee will act quickly to address issues and resolve concerns and disputes in a manner that is consistent with the status of the Parties as business collaborators. Tipico, following consultation and discussion at the Steering Committee, shall notify, on a quarter-by-quarter basis, Gannett Media of the GM Promotions its desires and that should be run, offered or provided during such calendar quarter (each, the “Quarterly Promotions Roadmap”). Each such Quarterly Promotions Roadmap shall be submitted to Gannett Media 30 days prior to the applicable calendar quarter; provided for the period between the Effective Date and December 31, 2021 there shall only be one Quarterly Promotions Roadmap, which shall be submitted by Tipico to Gannett Media on or prior to September 1, 2021.

Article 4

EXCLUSIVITY & COVENANTS

4.1Exclusivity.

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4.1.1During the Term, the Gannett Media Group:

(a)is prohibited from directly or indirectly (including through employees) promoting any product in the Exclusivity Category (other than Tipico Gambling Services) on any GM Assets or any other print media owned or published by a member of the Gannett Media Group or websites and mobile applications owned, operated or controlled (including through providing publishing services) by a member of the Gannett Media Group, in either case, within the USA and Canada (it being understood that it shall not be a breach of this Agreement if any of the Gannett Media Group inadvertently sells such promotion and corrects the situation within 24 hours of receiving written notice from Tipico);

(b)shall exclusively promote and market the Tipico Online Services, and shall not sell advertising space for the purposes of marketing any product in the Exclusivity Category (other than Tipico Gambling Services) on or through the GM Assets (it being understood that it shall not be a breach of this Agreement if any of the Gannett Media Group inadvertently sells such advertising and corrects the situation within 24 hours of receiving written notice from Tipico);

(c)shall exclusively use the Odds Data provided by Tipico and shall not use any odds data provided by any third party within the GM Assets (excluding in connection with editorial content or third party content (which does not consist solely of odds data));

(d)shall exclusively use the betslip module provided by Tipico in connection with any GM Assets and shall not offer or integrate a betslip module for any product in the Exclusivity Category (other than Tipico Gambling Services) within the USA and Canada;

(e)shall not, including in exchange for any affiliate fee relating to the acquisition of the user, actively promote within the USA or Canada or actively integrate links on GM Assets registering for or participating in any product in the Exclusivity Category (other than Tipico Gambling Services); and

(f)shall not provide any digital media content related to Sports Betting, including news or editorial articles or videos, to any Person that owns, operates or provides a product in the Exclusivity Category for inclusion or incorporation into such product within the USA and Canada, other than the Tipico Gambling Services, excluding any content distributed on social media channels or via platforms that allow distribution of content by third parties. For clarity, Gannett Media would not provide this content directly to another Person that owns, operates or provides a product in the Exclusivity Category but may make this content available through a platform that such operator may utilize to display or distribute this content (e.g., embeddable videos available on YouTube).

4.1.2 Notwithstanding the foregoing, no member of the Gannett Media Group shall be deemed in breach of any of the foregoing requirements in Section 4.1 due to the actions of any third party not controlled by Gannett Media Group, including any advertising fulfilled by real time bidding through an exchange; provided Gannett Media shall utilize commercially reasonable (both in price and availability) filters and obligate any Person acting on behalf of Gannett Media, including through an exchange, to comply with the restrictions set forth in this Section 4.1 and, if such filters or Person inadvertently violates this Section 4.1, Gannett Media shall correct the situation within 24 hours of receiving written notice from Tipico regarding the same. Further, Gannett Media agrees that it will not, without Tipico’s consent, engage with any “talent” who has an active sponsorship arrangement in the Exclusive Category in connection with any event that is within the GM Promotions or the focus of which is gambling or Fantasy Sports.

4.1.3In no event may any content created by Gannett Media for any GM Promotions be used or published anywhere in any manner or media other than through a GM Asset without Gannett Media’s prior written approval in its sole discretion; provided, however, that nothing in the foregoing shall prevent or prohibit Tipico from sharing, reposting, linking to or embedding (including via in-line linking) content created by Gannett Media on websites, mobile applications and social media platforms that are owned, operated or controlled by Tipico including paid advertising on these properties.

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4.1.4Notwithstanding anything to the contrary contained herein the Gannett Media Group may promote (including publishing advertisements) “brick and mortar” Gaming Services, other than Sports Betting, Online Gaming Services and Fantasy Sports, that (a) are not physically located within a media market (DMA) whereby Tipico is providing Gambling Services, (b) are not, nor are its Affiliates or its brands or its Affiliates’ brands, well-known for or generally associated with Online Gambling Services or Fantasy Sports, or (c) do not, nor do its Affiliates, operate an Online Gaming Service in more than one state or licensing jurisdiction within in the USA or Canada. Tipico may request, on a periodic and reasonable basis, to be provided a list of each entity that Gannett Media Group is promoting under this Section 4.1.4 and, to the extent Tipico reasonably believes such entity or promotion does not qualify under this Section 4.1.4, instruct Gannett Media Group to promptly cease such promotions.

4.2Tipico Content. The Gannett Media Group shall (a) use the Tipico Content only in a lawful manner and only in accordance with the terms of this Agreement; (b) not modify or alter any Tipico Content, other than to reasonably resize any Tipico Content that consists solely of a graphic image or other formatting changes; (c) not sell, redistribute, sublicense or transfer any Tipico Content (other than as permitted in this Agreement) (it being understood that Gannett Media may syndicate Tipico Content in a manner intended to send sales to Tipico or the Tipico Gambling Service); (d) not use any Tipico Content in a manner intended to send sales to any Person or site other than Tipico or the Tipico Gambling Service; and (e) promptly delete any Tipico Content that Tipico notifies Gannett Media in writing is no longer available for use by the Gannett Media Group.

4.3Age and Gaming Restrictions.

4.3.1Each Party shall comply with all restrictions imposed by applicable Laws or any Gaming Authority with respect to the marketing and operation of Gambling Service including age limitations and exclusion lists. Without limiting the foregoing, the Gannett Media Group will use commercially reasonable efforts to prevent marketing the Tipico Gambling Services to users (a) who are under the age of twenty-one (21) based on existing Technology and data available for its users, and (b) who have self-excluded or are otherwise prohibited from using a Gambling Service so long as Tipico has provided the Do Not Contact List in accordance with Section 2.4.2.

4.3.2Tipico represents and warrants that the Tipico Gambling Services are not “directed to children” as defined in the Children’s Online Privacy Protection Act of 1998. Tipico shall not knowingly collect or accept information from children under the age of thirteen (13) or where applicable, sixteen (16). In the event Tipico discovers that it has collected or accepted information from children under the age of thirteen (13) or where applicable sixteen (16), Tipico shall take all appropriate measures to comply with applicable Laws with respect to such information.

4.4Referrals.

4.4.1Throughout the Term, Tipico shall work in good faith to use new acquisition methods, as they become available and are practical, to effectively track and attribute Qualified Players, including implementing, subject to applicable Law and receipt of the Gannett Media of all requisite Vendor Licenses, new methods employed by Tipico with its other marketing partners or employed by other operators of Online Gambling Services in the Gaming Jurisdictions in order for Tipico to remain competitive in such applicable markets. For the first thirty (30) days following a Tipico Online Service going live in a particular Gaming Jurisdiction, Tipico agrees not allow any Person, other than a member of the Tipico Group or the Gannett Media Group, to do a targeted promotion to any FTP Player database (or subset thereof) for such Tipico Online Service.

4.4.2Tipico reserves the right to reject registrations or deposits that Tipico reasonably determines do not comply with applicable Law or any requirements or procedures that Tipico may establish and applies equitably to all potential customers and not in bad faith against any Referral or Gannett Media. Any reasonably rejected registrations will not be deemed a Qualified Player.

4.4.3No member of the Gannett Media Group may, under any circumstance, sell or otherwise transfer any Attribution Code or GM Link for use by another Person on a business-to-business basis, except as approved by Tipico in writing.

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4.4.4No member of the Gannett Media Group may, under any circumstance, except as permitted by this Agreement or approved by Tipico: (a) in any way modify, redirect, suppress, or substitute the operation of any button, link, or other interactive feature of the Attribution Code or GM Link; (b) use the Attribution Code or GM Link for Account Creation on behalf of any third party; (c) attempt to intercept or re-direct (including via user-installed software) traffic from or on, or divert referral fees from, any web site that participates in any marketing partner program of Tipico Group; (d) seek to purchase or register any keywords, search terms or other identifiers that include any Tipico Mark or similar words for use in any search engine, portal, sponsored advertising service or other search or referral service; (e) include the Attribution Code or GM Link on a website dedicated to promoting coupon codes, promotional codes, discount codes or bonus codes; (f) promote any Tipico Gambling Service by placing any Attribution Codes or GM Links on self-help or problem gambling advice websites; (g) place the Attribution Codes or GM Link on any part of GM Assets that are aimed at individuals who are under 21 years of age or aimed at individuals who have self-excluded; or (h) directly or indirectly offer any Person any consideration or incentive (including payment of money (including any rebate), or granting of any discount or other benefit) for using any Attribution Code or GM Link.

4.4.5If Tipico reasonably believes that Gannett Media is engaging in practices to circumvent the limitations on use of the Attribution Code or GM Link or artificially inflate the CPA Payments in a manner that materially adversely affects the Tipico Group, Tipico shall notify Gannett Media and Gannett Media shall promptly cease such practice in question.

Article 5

GAMING REGULATORY ISSUE

5.1Gaming Jurisdictions. Each state or other jurisdiction in the USA or Canada in which the Tipico Gambling Services operates as of any such time of determination is referred to as a “Gaming Jurisdiction.” As of the Effective Date, the Gaming Jurisdictions include: Colorado and New Jersey. It is anticipated that other Gaming Jurisdictions will be added throughout the Term as Tipico expands the Tipico Gambling Services. Tipico will notify Gannett Media in writing (email to the applicable Account Manager being sufficient) at least 60 days before the expansion of the Tipico Gambling Services into a new Gaming Jurisdiction.

5.2Gannett Media Licensure.

5.2.1Gannett Media may be required to file or obtain registrations, approvals or licenses to market and promote the Tipico Gambling Services as contemplated herein and to be entitled to the benefits under this Agreement, including the Upfront Fee, Media Fee or CPA Payment, with or from Gaming Authorities under the applicable Gaming Laws of each Gaming Jurisdictions (each such registration, approval, license or authorization, a “Vendor License”). Gannett Media shall be solely responsible, at its sole cost and expense, for obtaining and maintaining any necessary Vendor Licenses; provided, Tipico will use its commercially reasonable efforts to assist Gannett Media in obtaining any required Vendor License if requested by Gannett Media.

5.2.2Gannett Media will submit a complete filing or application for any required Vendor License for a new Gaming Jurisdiction within 30 days after being notified by Tipico of the expansion into that Gaming Jurisdiction; provided, however, with respect to the Gaming Jurisdictions as of the Effective Date, as set forth in Section 5.1, Gannett Media shall submit an application for a Vendor License to the relevant Gaming Authority, as required, within 30 days after the Effective Date. Gannett Media agrees to diligently pursue and use commercially reasonable efforts to obtain all requisite Vendor Licenses or update thereof from the relevant Gaming Authority as soon as reasonably practical.

5.2.3The Parties acknowledge that to the extent Gannett Media does not hold the necessary Vendor License in a Gaming Jurisdiction (including any interim authorization or license temporary, if applicable), Tipico shall not be obligated to pay any amounts, including the CPA Payment on any Qualified Player in such Gaming Jurisdiction if and only if making any such payments in such event is prohibited by a Gaming Authority or Gaming Laws, unless and until Gannett Media obtains such required Vendor License (including any interim authorization or license temporary, if applicable), which can happen at any time during the Term. The Parties do not, as of the Effective Date of this Agreement, believe that the burden of obtaining and maintaining a Vendor License

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for payment of the Upfront Fee, Media Fee or CPA Payment is onerous on Gannett Media. If the Vendor License that Gannett Media would be required to obtain in order to promote the Tipico Gambling Services, receive the Upfront Fee, Media Fee or CPA Payment, and otherwise perform under this Agreement in that Gaming Jurisdiction would be a Major License, and if Gannett Media determines in its good faith but sole judgement that it cannot or does not desire to obtain or maintain a Major License in that Gaming Jurisdiction, then the Parties shall, in good faith, mutually agree upon an amendment to this Agreement reflecting an alternative economic or operational arrangement that permits Gannett Media to obtain a less restrictive Vendor License (which is not a Major License or is otherwise), with the intent of putting the Parties in the same position, as to rights, obligations and economics, in which it would have been had it been able to obtain the contemplated Vendor License. In no event shall this Section 5.2.3 modify any rights or obligations.

Article 6

FEES & ACCOUNTING

6.1Upfront Consideration.

6.1.1In consideration for entering into this Agreement, Tipico shall pay Gannett Media an amount of $10,000,000 (the “Upfront Fee”). Subject to Gannett Media’s receipt of all requisite Gaming Approvals, the Upfront Fee shall be paid within 30 days following the Effective Date. Payment shall be made via electronic or wire transfer at Gannett Media’s option elected at least three Business Days prior to such payment.

6.1.2On the Effective Date, Gannett SB, Inc., a Delaware corporation and member of the Gannett Media Group, shall be granted a warrant for a $0.00 strike price to acquire up to 4,990 shares of common stock of Tipico U.S. Group Corp, a Delaware corporation and parent company to Tipico (the “Tipico Stock”), representing a minority interest in Tipico, subject to the terms and conditions set forth therein and substantially in the form attached hereto as Exhibit 1, to be executed by the applicable parties (the “Tipico Warrant”).

6.2Media Fee. In exchange for the rights granted and services provided hereunder, Tipico shall pay to Gannett Media an aggerate amount of $80,000,000 (the “Media Fee”) over the Term as provided in Schedule B.

6.3CPA Payment. Pursuant to Schedule E, Tipico shall pay Gannett Media the CPA Payment for each Qualified Player Gannett Media generates during the Term in excess of 15,000 Qualified Players. In any event of a Chargeback, Credit or suspected underage gambler (proven or not verified to be over 21), such an Qualified Player will not be considered for the purpose of the this Agreement for a CPA, and any CPA Payment made to Gannett Media in respect of such Qualified Player shall be deducted from future payments to Gannett Media. Gannett Media will have access to a reporting portal, allowing for real time reporting of Qualified Players (24 hour delayed). Tipico shall deliver to Gannett Media a reasonably detailed written report, monthly in arrears setting forth the aggregate CPA Payments owed to Gannett Media for such month. Within 30 days of the end of such month, Tipico shall pay Gannett Media the CPA Payments due and owing for such month. Payment shall be made via electronic or wire transfer, at Gannett Media’s option elected at least three Business Days prior to such payment. For clarity, Gannett Media shall only be entitled to receive one CPA Payment for a specified end-user with regard to one Tipico Online Service and Gannett Media shall not receive an additional CPA Payment for such end-user with regard to any other Tipico Online Service. For the sake of clarity and solely as an example, in the event an end-user is an Qualified Player who registers on the Tipico Online Service in New Jersey for an online sportsbook with respect to whom Tipico owes or has paid to Gannett Media a CPA Payment, then Gannett Media shall not be eligible to receive a second CPA Payment for such end-user even in the event that he/she subsequently opens, funds, and placed a paid wager via another Tipico Online Service, including its online casino product in New Jersey or its online sportsbook in Colorado.

6.4Withholding; Taxation. Notwithstanding anything in this Agreement to the contrary, to the extent Tipico has any withholding obligation with respect to any payment made pursuant to this Agreement, it shall be entitled to deduct and withhold from the payments to be made pursuant to this Agreement any taxes required to be deducted and withheld with respect to the making of such payments under the Internal Revenue Code of 1986, as amended (the “Code”), regulations promulgated thereunder or any other provision of applicable Law and to request any reasonably necessary tax forms including IRS Form W-9 or the appropriate series of IRS Form W-8, as

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applicable, or any similar information for the purpose of determining whether such withholding is required. To the extent that amounts are so withheld and deducted pursuant to this Section 6.4 and paid to the proper Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to Gannett Media in respect of which such deduction and withholding was made. Tipico will agree to provide to Gannett Media whatever certificates or forms are required to be provided to Gannett Media under applicable Law and, to the extent that Tipico is required to withhold and remit amounts to a third party under applicable Law and fails to do so, then Tipico shall be liable for any fees, charges, penalties, costs, levies, assessments and the interest due as a result of such failure. To the extent a withholding obligation arises with respect to other than a cash payment, Gannett Media shall make arrangements satisfactory to Tipico for payment of any taxes required to be withheld in excess of any future cash payment due to Gannett Media. Tipico shall give Gannett Media sufficient notice of such obligations in order that such Party can provide any applicable forms to Gannett Media. Gannett Media represents that it uses the accrual method of accounting for tax purposes; therefore, pursuant to Treasury Regulation Section 1.409A-1(f)(1), the compensatory arrangements pursuant to this Agreement are not subject to requirements of the statutory provisions of Section 409A of the Code and any Treasury Regulations and other interpretive guidance issued thereunder. Gannett Media is solely responsible for all tax liabilities imposed on Gannett Media under the Code or any other applicable Law, and no provision of this Agreement shall be interpreted or construed to transfer any such liability from Gannett Media or any of its subsidiaries, affiliates or successors to Tipico or any of its subsidiaries, affiliates or successors.

6.5Right to Audit. Both Parties will keep and maintain accurate books of account and records in accordance with their normal procedures covering all transactions relating to this Agreement. Each Party is entitled, at its sole cost and expense, to: (a) audit such books and records up to one time each calendar year, upon at least 30 days’ prior written notice to the other Party or by either Party or its internal or external auditors based upon a reasonable belief that there may have been a violation of Law or breach of this Agreement, by sending an authorized representative, agent, attorney or accountant to the then current business address of the other Party where records are maintained; and (b) make or cause such authorized representative, agent, attorney or accountant to make copies and summaries of such books and records for use in auditing only (such books and records, and copies and summaries, will be deemed Confidential Information). The Parties agree to reasonably cooperate, answer reasonable questions, and provide reasonably requested information by the other Party’s auditors. All such information provided by a Party to the other Party pursuant to Article 8 shall constitute Confidential Information of the Disclosing Party. Any such audit shall be at the auditing Party’s expense; provided however that if discrepancy is found, the Party receiving the benefit of the error shall promptly pay to the other Party the amount in question and if such discrepancy is an underpayment in excess of 5% of the amount owed to the auditing Party for the period being examined, the audited Party shall pay the auditing Party’s reasonable costs of such audit (provided such audit shall not be done on a contingency fee basis). The acceptance of any report or amounts hereunder shall not prejudice or restrict the rights of a Party to conduct an audit hereunder.

Article 7

INTELLECTUAL PROPERTY

7.1Pre-Existing Rights and Independent Development.

7.1.1As between the Parties, each Party retains all right, title, and interest in and to any of its Intellectual Property rights and Technology that existed prior to the Effective Date of this Agreement. Each Party will retain all right, title, and interest to any Intellectual Property rights and Technology that is developed independently by such Party, without using any of the other Party’s Confidential Information. No Tipico Marks shall include any Gannett Media Intellectual Property. No Gannett Media Marks shall include any Tipico Intellectual Property.

7.1.2The Tipico Group shall retain all right, title and interest (including all patent, copyright, trade secret and other intellectual property rights) in and to the Tipico Gambling Services, the Odds Data Link, the betslip module as described in this Section 2.2.1(c), and any and all related and underlying Intellectual Property and Technology therein, reports and documentation, and Tipico Content, provided to Gannett Media hereunder (together with Tipico Marks, “Tipico Intellectual Property”). The Tipico Group also shall retain all right, title and interest in and to the applicable Tipico Marks, and all uses thereof shall inure to the benefit of the Tipico Group, and any right

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that may accrue to the Gannett Media Group related thereto and any goodwill associated therewith are hereby fully and irrevocably granted and assigned to Tipico or its designee. The Tipico Group expressly reserves all rights in and to the Tipico Intellectual Property not expressly granted herein.

7.1.3The Gannett Media Group shall retain all right, title and interest (including all patent, copyright, trade secret and other intellectual property rights) in and to GM Assets, including its technology, reports and documentation but excluding (a) any Tipico Content incorporated in any GM Asset or (b) any Tipico Intellectual Property displayed or otherwise incorporated in the GM Asset(s) (together with Gannett Media Marks, “Gannett Media Intellectual Property”). The Gannett Media Group also shall retain all right, title and interest in and to the applicable Gannett Media Marks to the extent same do not contain any Tipico Intellectual Property, and all uses thereof shall inure to the benefit of the Gannett Media Group, and any right that may accrue to the Tipico Group related thereto and any goodwill associated therewith are hereby granted and assigned to Gannett Media or its designee. The Gannett Media Group expressly reserves all rights in and to the Gannett Media Intellectual Property not expressly granted herein.

7.2License.

7.2.1Tipico hereby grants to the Gannett Media Group a non-exclusive, royalty-free, non-sublicensable, revocable, non-transferrable (except as permitted under Section 15.6) and limited license to use the Tipico Marks and certain Tipico Intellectual Property made available to Gannett Media by Tipico solely for the purpose of providing the GM Promotions in accordance with the terms of this Agreement and Tipico’s guidelines, attached hereto as Exhibit 2, which can be updated from time-to-time by Tipico. If Tipico reasonably objects to any member of the Gannett Media Group’s use of the Tipico Marks or Tipico Intellectual Property, Gannett Media must comply (or cause the applicable member of the Gannett Media Group to comply) within 24 hours with Tipico’s reasonable requests in writing for changes or removal. No member of the Gannett Media Group will disassemble, decompile or reverse engineer the Tipico Technology. The Parties acknowledge that Tipico is not expected to provide any source code to Gannett Media pursuant to this Agreement.

7.2.2Gannett Media hereby grants to the Tipico Group a non-exclusive, royalty-free, non-sublicensable, revocable, non-transferrable (except as permitted under Section 2.3 or Section 15.6) and limited license to use the Gannett Media Marks and Gannett Media Intellectual Property made available to Tipico by Gannett Media solely for the purpose of performing its obligations hereunder in accordance with the terms of this Agreement and Gannett Media’s brand standards, attached hereto as Exhibit 4, which can be updated from time-to-time by Gannett Media. If Gannett Media reasonably objects to Tipico’s use of the Gannett Media Marks or Gannett Media Intellectual Property, Tipico must comply (or cause the applicable member of the Tipico Group to comply) within 24 hours with Gannett Media’s reasonable requests in writing for changes or removal.

7.2.3No licenses are granted by the Parties except for those expressly set forth in this Section 7.2, and all rights to a Party’s Intellectual Property that are not expressly granted in this Section 7.2 are reserved by the applicable Party.

7.3Feedback. Neither Party has any obligation to provide ideas, suggestions, concepts, proposals, or other undocumented intangibles relating to the other Party’s business or Technology (collectively, “Feedback”). However, the Parties agree that any Feedback provided will not by itself give rise to any claim of ownership, and an alleged unauthorized or improper use of Feedback shall not form the basis of any claim or action brought against the other Party. The Parties further agree that use of any Feedback by a Party shall have no effect on underlying ownership of Intellectual Property.

7.4Enhancements.

7.4.1In connection with this Agreement, Tipico shall have the sole right to develop and implement changes related to the Tipico Gambling Services and related Technology (“Tipico Platform”) and Gannett Media shall have the sole right to develop and implement changes related to the GM Assets and related Technology (“Gannett Media Platform”). Each change to the Tipico Platform and the Gannett Media Platform (each, generally referred to herein as a “Platform”) including any required by third party application or platform providers is independently referred to herein as an “Enhancement”, and, collectively, the “Enhancements”.

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Enhancements may be developed based on Feedback provided by the other Party. Enhancements shall be developed at the sole discretion and sole cost of the Party whose Platform is modified by such Enhancement (the “Developing Party”). Subject to Section 7.2, the Developing Party shall own all right, title, and interest to any Intellectual Property in the Enhancements to the Developing Party’s Platform. In the event the other Party (the “Assigning Party”) contributes or otherwise participates in the development of an Enhancement, including, but not limited to, providing Feedback in connection with such Enhancement, the Assigning Party hereby assigns to the Developing Party any right, title or interest in and to such Enhancement the Assigning Party may otherwise have pursuant to applicable Law. The Parties acknowledge and agree that Enhancements may impact the display, distribution and/or functionality of the GM Assets, GM Promotions and/or GM Links and agree to co-operate in good faith to address any necessary changes, which may include requiring temporary suspension of the GM Assets, GM Promotions and/or GM Links affected in order to update them.

7.4.2The Assigning Party agrees, without further compensation, upon the request of the Developing Party (or its successors, assigns or legal representatives) to timely: (a) execute all oaths, assignments, powers and any other papers; (b) testify in all proceedings; and (c) otherwise take all actions, and fully cooperate with the Developing Party, in each case, as may be necessary or appropriate, in the opinion of the Developing Party, to convey, establish, evidence, maintain, protect, defend and enforce the Developing Party’s rights in the Enhancements or otherwise related to securing and enforcing the Developing Party’s rights under this Agreement; and the Assigning Party hereby irrevocably appoints the Developing Party and any of its officers as Assigning Party’s attorney in fact to undertake such acts in Assigning Party’s name.

Article 8

CONFIDENTIALITY

8.1Confidentiality. Each Party (such Party, including its Account Manager and members appointed to the Steering Committee, a “Receiving Party”) understands that any other Party (the “Disclosing Party”) may disclose to the Receiving Party, or the Receiving Party may otherwise acquire or have access to in the course of its performance under this Agreement, information and materials of a confidential nature (including product information; data; pricing; business plans and strategies; financial information; end user information; software; specifications; research and development; proprietary algorithms, software source and object code) that are (a) clearly and conspicuously marked as “confidential” or with a similar designation; (b) identified by the Disclosing Party as confidential and/or proprietary before, during, or promptly after presentation or communication; or (c) disclosed to (or otherwise acquired by) Receiving Party in a manner in which the Disclosing Party reasonably communicated, or the Receiving Party should reasonably have understood under the circumstances or from the nature of the information or data disclosed, that the information or materials should be treated as confidential, whether or not the specific designation “confidential” or any similar designation is used (“Confidential Information”).

8.2Disclosure and Use. Except as provided in Section 8.8 or with the prior written consent of the Disclosing Party, neither Party will (a) disclose any Confidential Information of the Disclosing Party other than on a need-to-know basis to its (including its Affiliates’) directors, employees, attorneys, accountants, financial advisors, lenders and contractors, solely to the extent and only for the purpose of performing or receiving services in furtherance of the Receiving Party’s rights and obligations under this Agreement, who have signed a non-disclosure agreement or are otherwise subject to confidentiality obligations that protect the Disclosing Party’s Confidential Information, which non-disclosure agreement or confidentiality obligations are no less stringent than the terms set forth herein; (b) except as otherwise provided in this Agreement, use Confidential Information other than for fulfilling the obligations or exercising the rights of the Receiving Party under this Agreement or assisting Receiving Party in determining its ongoing business opportunities; (c) make internal business copies or allow others to make copies of such Confidential Information except as is reasonably necessary to fulfill the Receiving Party’s obligations or exercise its rights under this Agreement; or (d) remove or export any such Confidential Information in violation of Laws. The Receiving Party will treat the Confidential Information of the Disclosing Party, and will cause its directors, employees, attorneys, accountants, financial advisors, and contractors to treat such Confidential Information, with at least the same degree of care and protection as it would use with respect to its own Confidential Information of a similar nature, but in no event less than a reasonable standard of care. The foregoing obligations will survive the termination or expiration of this Agreement.

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8.3Exceptions; Required Disclosures.

8.3.1Each Receiving Party agrees to keep confidential any Confidential Information obtained regarding the other in connection with the transactions contemplated hereby, and (a) will use such Confidential Information solely in connection with the transactions contemplated hereby, and (b) will not disclose such Confidential Information to any Person other than as allowed hereunder.

8.3.2Nothing in this Agreement prohibits or limits a Receiving Party’s use or disclosure of information (a) previously known to it without obligation of confidence, (b) independently developed by or for it without use of or access to the Disclosing Party’s Confidential Information and without breaching this Agreement, (c) acquired by it from a third party who was not known to the Receiving Party to be under an obligation of confidence to the Disclosing Party or its Affiliates with respect to such information, or (d) which is or becomes publicly available through no breach of this Agreement.

8.3.3Notwithstanding anything herein to the contrary, the Receiving Party may disclose such Confidential Information it reasonably deems necessary or advisable (a) to any Gaming Authority or pursuant to any Gaming Laws, or (b) for purposes of its and its Affiliates’ compliance with any Laws (other than Gaming Laws, which is addressed in clause (a) above) to which it is subject, including any securities Laws; provided that, with respect to disclosures pursuant to clause (b) above, Receiving Party agrees to promptly notify the Disclosing Party of the existence, terms and circumstances surrounding such disclosure unless prohibited by Law, and exercise its commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such Confidential Information, and if such order or assurance is not obtained, such Receiving Party shall be permitted to disclose only such portion of the Disclosing Party’s Confidential Information that it is advised by opinion of counsel is required to be disclosed.

8.3.4Notwithstanding anything to the contrary contained herein, there shall be no restriction to the disclosure of any information that the Parties have mutually agreed to previously publicly disclose.

8.4As requested by the Disclosing Party during the Term, upon expiration or any termination of this Agreement, or completion of the obligations of the Receiving Party, as applicable, the Receiving Party shall (a) return or destroy, as the Receiving Party may elect, all material in any medium that contains, refers to, or relates to the Disclosing Party’s Confidential Information, and (b) retain no copies other than copies solely to the extent, if any, in connection with any record retention policies or required by applicable Law; provided, however, that no Party will be obligated to erase Confidential Information subject to a license granted herein or contained in an archived computer system backup made in accordance with such Party’s security and/or disaster recovery procedures, provided that such archived copy will (i) eventually be erased or destroyed in the ordinary course of such Party’s data processing procedures and (ii) will remain fully subject to the obligations of confidentiality and security stated herein.

8.5In the event of any actual or suspected misuse, disclosure or loss of, or inability to account for, any Confidential Information of the Disclosing Party, the Receiving Party promptly shall (a) (and in any event within five Business Days) notify the Disclosing Party upon becoming aware thereof; (b) furnish to the Disclosing Party full details of the unauthorized possession, use or knowledge, or attempt thereof, and use its reasonable best efforts to assist the Disclosing Party in investigating or preventing the reoccurrence of any unauthorized possession, use, or knowledge, or attempt thereof, of confidential information; (c) take such actions as may be necessary or reasonably requested by the Disclosing Party to minimize the violation; and (d) cooperate in all reasonable respects with the Disclosing Party to minimize the violation and any damage resulting therefrom.

8.6Confidential Information, including permitted copies thereof, will be deemed to be the exclusive property of the Disclosing Party. The Disclosing Party’s disclosure of Confidential Information will not constitute an express or implied grant to the Receiving Party of any rights to or under the Disclosing Party’s Intellectual Property rights. The Parties agree that an impending or existing violation of the terms of this Article 8 may cause the Disclosing Party irreparable injury for which it would have no adequate remedy at Law, and agree that the Disclosing Party will be entitled to seek immediate temporary and permanent injunctive relief (without the necessity of proving actual damages) prohibiting such violation, in addition to any other rights and remedies available to it.

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8.7The Parties shall mutually agree on a press release with respect to the entry into this Agreement and the transactions contemplated hereby. No Party shall or shall permit its Affiliates to issue to the public any report, written statement or press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby, except (a) with the prior written consent of the other Party, such consent not to be unreasonably withheld, or (b) as necessary for purposes of a Party’s or its Affiliate’s compliance with any Laws to which it is subject, including any securities or Gaming Laws.

8.8This Article 8 shall survive the termination of this Agreement for any reason for a period of 5 years and indefinitely as it relates to any trade secrets.

Article 9

PRIVACY; DATA; SECURITY

9.1Gannett Media Information. Gannett Media acknowledges that, by using the GM Links and Attribution Codes to promote the Tipico Gambling Service, Tipico may receive information from or about visitors to the GM Assets or communications between the Gannett Media Group and those visitors (“Referral Tracking Information”). The Gannett Media Group’s participation in such promotions constitutes such member of the Gannett Media Group’s specific and unconditional consent to, and authorization for, Tipico’s access to, receipt, storage, use, and disclosure of Referral Tracking Information collected as a direct result of registration and use of the Tipico Gambling Services consistent with applicable Law and the policies and procedures set forth in the privacy policies and terms of use on the Tipico Gambling Service.

9.2Data Ownership and Use. As between Gannett Media and Tipico, all Personal Information (a) collected in connection with a user’s use of features or areas of GM Assets (specifically excluding any data collected in connection with such user’s use of any Tipico betslip module within the GM Assets) will be owned exclusively by the Gannett Media Group; and (b) collected in connection with such user’s use of features or areas of the Tipico Gambling Services will be owned exclusively by the Tipico Group.

9.3Compliance. Each of Gannett Media and Tipico will collect, use, and share personal data only in accordance with applicable Laws, including all Gaming Laws and, if applicable, the California Consumer Privacy Act, the Virginian Consumer Data Protection Act, the Canadian Personal Information Protection and Electronic Documentation Act (PIPEDA) and other state, provincial and federal privacy Laws as may come in to effect from time to time, and such Party’s respective privacy policies. Except for the Referral Tracking Information, Tipico will not collect any data regarding a user’s use of GM Assets, and to the extent Tipico is able to independently derive or collect such data, Tipico will not use or process such data for any purpose.

9.4Privacy Policies. Each Party will ensure that each website, mobile application, or other access point used for the marketing or operation of the Tipico Gambling Services contains a privacy policy that complies with all applicable Laws and, in all material respects with industry best practices and applicable Federal Trade Commission and, if applicable, Canadian governmental guidance.

9.5Sharing of User Data. With respect to any Personal Information that is shared between the Parties, the Parties will (a) document the user data elements to be shared; and (b) mutually agree upon (i) the method of sharing such data elements and (ii) the process for obtaining any applicable user consents. The Parties may enter into a data processing addendum to this Agreement for such purpose. All user consent flows, if any, to enable the sharing of user data between the Parties will be subject to prior mutual agreement. To the extent Gannett Media shares any unique identifiers for Gannett Media Group users (e.g., Gannett Media GUID, B-cookies, etc.) with Tipico under this Agreement, Tipico agrees that such information will be used solely to perform Tipico’s obligations under this Agreement and for compliance with applicable Law, Tipico will not have any independent rights to use such information, and Tipico will not share such information with any third parties other than as required by Law. To the extent Tipico shares personal information regarding a user with Gannett Media, Gannett Media shall use such user information only for the performance of its obligations under this Agreement or for compliance with Law. Notwithstanding anything herein to the contrary, neither Party shall share any Personal Information with the other Party expect as expressly provided for on Schedule B or otherwise agreed to by such Party in writing. Notwithstanding anything herein to the contrary, the Parties agree the terms and conditions for any free-to-play

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game or registration or activity associated with an event included in the GM Promotions will include permission, as required by applicable Law, for sharing of Personal Information of participants among the Parties for purposes of each being able to market its products and services to such participant. Further, if permitted by applicable Law, the Parties agree to use the “opt out” method for securing such permission. Further, Tipico may only share Personal Information with Gannett Media if permitted by the applicable Gaming Authority and Gaming Laws and, if applicable, any third party in which it has secured marked access in a Gaming Jurisdiction.

9.6Data Security. Each Party represents and warrants that it shall (a) maintain reasonable and appropriate technical, organizational and physical measures to protect any data that such Party collects, accesses, stores, processes or receives from, or on behalf of, the other Party the (“Shared Information”) against (i) unauthorized or unlawful disclosure, transfer, access, processing, use, alteration or destruction and (ii) against accidental disclosure, access, loss, damage, processing, use, transfer, alteration or destruction including any such measures required by applicable Law (any of the foregoing in (i) or (ii), a “Shared Information Compromise”); (b) take all steps necessary to ensure the reliability and security of systems operated by it or on its behalf to protect the Shared Information referenced in clause (a) above; (c) immediately (no later than 24 hours after discovery) notify the other Party of any (i) any breach or suspected breach of the security of any such systems that may result in a Shared Information Compromise or (ii) any other occurrence of a Shared Information Compromise (whether electronically or physically), including the other Party’s reasonable belief that such access or use may have occurred), and without limiting the rights of the Party being notified with respect thereto, cooperate with respect to any such Shared Information Compromise; and (d) ensure it has reasonable network and data security policies including any such measures required by applicable Law. If either Party becomes aware of a Shared Information Compromise or any other breach or potential breach of security caused by its personnel or contractors or occurring on its or any of its third party contractor’s applications, networks or systems relating to the Shared Information or any information subject to this Agreement, it shall be responsible for, and bear all costs arising from, any and all notification and mitigation efforts related to such breach. Such Party shall conduct any recovery necessary to remediate the impact of such breach as required by applicable Laws. The Parties shall cooperate in the investigation, mitigation and remediation efforts undertaken to ensure that any potential breach does not become an actual breach or to remedy any actual breach and its consequences. A Party’s obligations under this Section 9.6 shall survive termination or expiration of this Agreement to the extent that such Party continues to maintain such Shared Information.

9.7Further Co-operation. Each Party will throughout the Term co-operate in good faith with the other Party to determine any additional data privacy and/or data security measures to be undertaken in connection with this Agreement, including (i) by reviewing and assessing the impact of new data privacy Laws and entering into amendments to this Agreement or making changes to operations or procedures to accommodate them as needed, (ii) by making reasonably available to the other Party its personnel with appropriate expertise and knowledge of such Party’s privacy and security practices and systems to determine whether different or additional privacy or security measures should be undertaken , (iii) by completing data privacy and security questionnaires and assessments requested by the other Party, and (iv) by entering into additional data protection agreements as needed. If at any time, the Parties elect to expand the GM Promotions beyond the US and Canada, the Parties will jointly assess and determine any necessary amendments to the Agreement and/or additional operational and technical measures that may be required, including entering into a data processing addendum compliant with the EU General Data Protection Regulation (GDPR) and ePrivacy Directive

Article 10

REPRESENTATIONS AND WARRANTIES

10.1Tipico Representations and Warranties. Tipico represents and warrants to Gannett Media that:

10.1.1Incorporation. Tipico is a corporation duly incorporated and validly existing under the Laws of the State of Delaware.

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10.1.2Authority and Validity. Tipico has the authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery by Tipico of, and the performance by Tipico of its obligations under this Agreement have been duly authorized by the requisite action on its part. This Agreement is the valid and binding obligation of Tipico, enforceable against Tipico in accordance with its terms, except insofar as enforceability may be affected by Bankruptcy Laws or by principles governing the availability of equitable remedies.

10.1.3Non-Contravention. The execution, delivery and performance by Tipico of this Agreement does not and will not (a) conflict with or violate any provision of Tipico’s organizational documents, (b) result in any violation of or breach or default under or loss of rights under any contract or agreement to which a member of the Tipico Group is a party or by which it is bound, (c) violate any Law to which a member of the Tipico Group is subject, including, for the sake of clarity, the Gaming Laws, or (d) violate, conflict with or result in a default, right to accelerate or loss of rights under any order, judgment or decree to which a member of the Tipico Group is a party or by which it is bound or affected.

10.1.4No Consents. Except with respect to any applicable Gaming Approval, no material approval of, notice to, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Tipico in connection with the execution, delivery and performance of this Agreement.

10.1.5Gaming Approvals. Before offering the Tipico Gambling Services in any Gaming Jurisdiction, Tipico will have obtained all necessary licenses or approvals under any applicable Gaming Laws from the relevant Gaming Authorities, and the offering of the Tipico Gambling Services will otherwise be conducted in compliance with all applicable laws, rules, regulations and industry security standards, including but not limited to, any licensing, qualification, registration, data protection and privacy, or other requirements imposed thereunder.

10.1.6No Litigation. There is no pending or, to Tipico’s knowledge, threatened claims, lawsuits, governmental actions or other proceedings against the Tipico Group or its or their assets before any court, agency or other judicial, administrative or other governmental body or arbitrator which could reasonably be expected to have a material adverse effect on Tipico’s ability to perform its obligations under this Agreement.

10.1.7Compliance with Laws. Tipico is in material compliance with all Laws, including all Gaming Laws (including but not limited to, any licensing, qualification, registration, data protection, or other requirements imposed thereunder), applicable to the operation of its business.

10.2Gannett Media Representations and Warranties. Gannett Media represents and warrants to Tipico that:

10.2.1Incorporation. Gannett Media is a Delaware corporation, duly incorporated and validly existing under the Laws of the State of Delaware.

10.2.2Authority and Validity. Gannett Media has authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery by Gannett Media of, and the performance by Gannett Media of its obligations under this Agreement have been duly authorized by the requisite action on its part. This Agreement is the valid and binding obligation of Gannett Media, enforceable against Gannett Media in accordance with its terms, except insofar as enforceability may be affected by Bankruptcy Laws or by principles governing the availability of equitable remedies.

10.2.3Non-Contravention. The execution, delivery and performance by Gannett Media of this Agreement does not and will not (a) conflict with or violate any provision of Gannett Media’s organizational documents, (b) result in any violation of or breach or default under or loss of rights under any contract or agreement to which a member of the Gannett Media Group is a party or by which it is bound, (c) violate any Law to which a member of the Gannett Media Group is subject, including, for the sake of clarity, the Gaming Laws, or (d) violate, conflict with or result in a default, right to accelerate or loss of rights under any order, judgment or decree to which a member of Gannett Media Group is a party or by which it is bound or affected.

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10.2.4No Consents. Except with respect to any applicable Gaming Approval, no material approval of, notice to, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Gannett Media in connection with the execution, delivery and performance of this Agreement.

10.2.5Gaming Approvals.

(a)Before undertaking any activity in a particular Gaming Jurisdiction for which a Vendor License is required, Gannett Media will have completed and filed with each Gaming Authority (as defined below), at its sole expense, all required forms and documents required for that Vendor License.

(b)No Gaming Authority has denied Gannett Media’s request or application for a Vendor License and Gannett Media has no reason to believe it would ever be denied such request or application.

(c)Gannett Media shall comply, and shall ensure that all of its employees and contractors engaged in connection with the Tipico Gambling Services or Gannett Media’s performance hereunder comply, with all applicable requirements of applicable Law, including but not limited to, any licensing, qualification, registration, data protection, or other requirements imposed thereunder.

(d)Gannett Media does not, and during the Term will not, advertise or otherwise promote any activities known to or believed by Gannett Media to be illegal, including, the operation of unlicensed online gambling sites on the GM Assets.

10.2.6No Litigation. There is no pending or, to Gannett Media’s knowledge, threatened claims, lawsuits, governmental actions or other proceedings against the Gannett Media Group or its or their assets before any court, agency or other judicial, administrative or other governmental body or arbitrator which could reasonably be expected to have a material adverse effect on Gannett Media’s ability to perform its obligations under this Agreement.

10.3Warranty Disclaimer. THE GM PROMOTIONS, THE GM ASSETS AND THE TIPICO GAMBLING SERVICES ARE PROVIDED “AS IS” AND, EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY SPECIFICALLY DISCLAIMS ANY AND ALL WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE SERVICE WILL PRODUCE ANY LEVEL OF PROFIT, REVENUE, ECONOMIC BENEFIT, OR BUSINESS FOR EITHER PARTY.

Article 11

INDEMNIFICATION; INSURANCE

11.1Tipico Indemnity of Gannett Media. Tipico, at its own expense, will, to the maximum extent allowed by applicable Laws, indemnify, defend and hold harmless the Gannett Media Group and their officers, directors, employees, representatives and agents (collectively, the “Gannett Media Indemnified Parties”), from and against any losses, liability, judgment, penalty, fee, damage or expense (including reasonable expenses of investigation and reasonable attorneys’ fees and costs) (collectively, “Damages”) incurred or suffered by any Gannett Media Indemnified Party as a result of any third-party claim, suit, action, or administrative, regulatory or other proceeding brought against such Gannett Media Indemnified Party arising from or related to (a) the Tipico Group’s operation and management of the Tipico Gambling Services or any Tipico Generated Sweepstakes, (b) the Tipico Group’s fraud, misrepresentations, or false or misleading advertisements in violation of any Law, in each case, with respect to the Tipico Content provided by Tipico to Gannett Media; (c) any breach or alleged breach by a member of the Tipico Group of any of its covenants, obligations, representations or warranties under this Agreement; (d) any allegation that any of the Tipico Intellectual Property or Tipico Marks, or any portion or element of any of the foregoing, infringes any Intellectual Property, any other right of any third party, is or contains any material or information that is false or misleading, obscene, defamatory, libelous, slanderous, or that violates any Law, or violates any rights of any person or entity, including rights of publicity, privacy or personality, or has

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otherwise resulted in any consumer fraud, product liability, tort, deceptive trade practice, breach of contract, injury, damage or harm of any kind to any third party; (e) any claim or allegation that Personal Information has been collected, accessed, disclosed, damaged, destroyed, transferred, altered, distributed, lost, compromised or otherwise used by the Tipico Group in a manner that violates any Law, including applicable privacy legislation, or agreements between consumers and the Tipico Group (including Tipico’s and its Affiliates’ privacy policies concerning such information) and including for purposes of this subclause (e) any Shared Information Compromise caused by any of the Tipico Group or occurring on any of the Tipico Group’s or its subcontractors’ applications, networks or systems; excluding in each case, any violation of Law that is caused by Gannett Media’s breach of this Agreement; or (f) any action or inquiry of any Gaming Authority alleging that the Tipico Content violate any Gaming Laws in each of the foregoing cases, provided that the Gannett Media Indemnified Party cooperates as set forth in Section 11.5.

11.2Tipico Infringing Matter. If any of the Tipico Intellectual Property or Tipico Marks become, or in Tipico’s reasonable opinion may become, the subject of a claim or allegation of infringement of Intellectual Property, Tipico may, as may be commercially reasonable under the facts and circumstances and within a reasonable time, at its sole expense and option, select one of the following options in its discretion:

(a)Procure for Gannett Media the right to continue using the Tipico Intellectual Property or Tipico Marks;

(b)Replace the Tipico Intellectual Property with a non-infringing substitute reasonably acceptable to Gannett Media and of equivalent form, fit, function and performance;

(c)Modify the Tipico Intellectual Property to be non-infringing, without materially detracting from form, fit, function or performance; or

(d)If none of the foregoing options is commercially achievable, notify Gannett Media that it must stop use of the applicable Tipico Intellectual Property. Upon receipt of such notice, Gannett Media will cease with a commercially reasonable time all use of the applicable Tipico Intellectual Property.

Tipico will reimburse Gannett Media and the Gannett Media Indemnified Parties for any reasonable associated costs and expenses related to the above listed actions.

11.3Gannett Media Indemnity of Tipico. Gannett Media, at its own expense, will indemnify, defend and hold harmless the Tipico Group and its and their officers, directors, employees, representatives and agents (collectively, the “Tipico Indemnified Parties”), from and against any Damages incurred or suffered by any Tipico Indemnified Party as a result of any third-party claim, suit, action, or administrative, regulatory or other proceeding brought against such Tipico Indemnified Party arising from or related to (a) the Gannett Media Group’s operation and management of the GM Assets; (b) the Gannett Media Group’s fraud, misrepresentations, or false or misleading advertisements in violation of any Law (excluding with respect to Tipico Content or other materials provided by Tipico); (c) any breach or alleged breach by the Gannett Media Group of any of its covenants, obligations, representations or warranties under this Agreement; (c) any allegation that any Gannett Media Intellectual Property or Gannett Media Marks, or any portion or element of the foregoing infringes any Intellectual Property, or any other right of any third party, is or contains any material or information that is false or misleading, obscene, defamatory, libelous, slanderous, or that violates any Law, or violates any rights of any person or entity, including rights of publicity, privacy or personality, or has otherwise resulted in any consumer fraud, product liability, tort, deceptive trade practice, breach of contract, injury, damage or harm of any kind to any third party; or (d) any claim or allegation that Personal Information has been collected, accessed, disclosed, damaged, destroyed, transferred, altered, distributed, lost, compromised or otherwise used by the Gannett Media Group in a manner that violates any Law, including applicable privacy legislation, or agreements between consumers and the Gannett Media Group (including Gannett Media’s or its Affiliates’ privacy policy concerning such information) and including for purposes of this subclause (e) any Shared Information Compromise caused by any of the Gannett Media Group or occurring on any of the Gannett Media Group’s or its subcontractors’ applications, networks or systems, excluding any violation of Law that is caused by Tipico’s breach of this Agreement; in each of the foregoing cases, provided that the Tipico Indemnified Party cooperates as set forth in Section 11.5.

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11.4Gannett Media Infringing Matter. If any Gannett Media Intellectual Property or Gannett Media Marks become, or in Gannett Media’s reasonable opinion may become, the subject of a claim or allegation that triggers the indemnity obligation in Section 11.3, Gannett Media may, as may be commercially reasonable under the facts and circumstances and within a reasonable time, at its sole expense and option, select one of the following options in its discretion:

(a)Procure for Tipico the right to continue using the Gannett Media Intellectual Property or Gannett Media Marks;

(b)Replace the Gannett Media Intellectual Property or Gannett Media Marks with a non-infringing substitute reasonably acceptable to Tipico and of equivalent form, fit, function and performance;

(c)Modify the Gannett Media Intellectual Property or Gannett Media Marks to be non-infringing, without materially detracting from form, fit, function or performance; or

(d)If none of the foregoing options is commercially achievable, notify Tipico that it must stop use of the Gannett Media Intellectual Property. Upon receipt of such notice, Tipico will cease within a commercially reasonable time all use of the applicable Gannett Media Intellectual Property or Gannett Media Marks.

Gannett Media will reimburse Tipico and the Tipico Indemnified Parties for any reasonable associated costs and expenses related to the above listed actions.

11.5Procedure. If any action is brought against a Gannett Media Indemnified Party or Tipico Indemnified Party (the “Indemnified Party”) in respect to which indemnity may be sought from the other party to this Agreement (the “Indemnifying Party”), the Indemnified Party will promptly notify the Indemnifying Party in writing, specifying the nature of the action and the total monetary amount sought or other such relief as is sought therein (provided that failure to promptly provide such notice will relieve the Indemnifying Party of its obligations hereunder only to the extent that the Indemnifying Party is materially prejudiced by such failure). The Indemnified Party will cooperate with the Indemnifying Party at the Indemnifying Party’s expense in all reasonable respects in connection with the defense of any such action. The Indemnifying Party may upon written notice to Indemnified Party undertake to control and conduct all proceedings or negotiations in connection therewith, assume and control the defense thereof, and if it so undertakes, it will also undertake all other required steps or proceedings to settle or defend any such action, including the employment of counsel reasonably satisfactory to the Indemnified Party, and payment of all reasonably incurred expenses and reasonable attorney’s fees; provided, however, that the Indemnifying Party will not, without the Indemnified Party’s prior written consent, settle, compromise, or otherwise enter into any agreement regarding the disposition of such action without the prior written consent and approval of the Indemnified Party unless such settlement (a) imposes no monetary or financial burden on the Indemnified Party (or is solely for a cash payment to be made by the Indemnifying Party), (b) requires no admission of liability or wrongdoing on the part of the Indemnified Party, (c) imposes no affirmative obligation on the Indemnified Party, (d) imposes no restriction on the Indemnified Party’s business, (e) provides that the parties to such settlement shall keep the terms of the settlement confidential, (f) provides for a full and complete release of the Indemnified Party, and (g) does not require the sign off or involvement of any Gaming Authority. The Indemnified Party will have the right to employ separate counsel and participate in the defense, at the Indemnified Party’s sole cost and expense.

11.6Insurance.

11.6.1During the Term, Tipico shall obtain and maintain throughout the Term, the insurance coverage described on Schedule C, attached hereto. Tipico shall cause Gannett Media and its Affiliates to be included as additional insureds on such insurance. Such insurance policies shall also provide that Gannett Media receive written notice within 30 days prior to the effective date of the cancellation, non-renewal or any material change in coverage. Tipico shall furnish Gannett Media with certificates of insurance evidencing compliance with the above requirements.

11.6.2During the Term, Gannett Media shall obtain and maintain throughout the Term, the insurance coverage described on Schedule D, attached hereto. Gannett Media shall cause Tipico to be included as additional insureds on such insurance. Such insurance policies shall also provide that Tipico receive written notice

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within 30 days prior to the effective date of the cancellation, non-renewal or any material change in coverage. Gannett Media shall furnish Tipico with certificates of insurance evidencing compliance with the above requirements.

Article 12

TERM & TERMINATION

12.1Term. Unless terminated earlier pursuant to the terms of this Agreement, the term of this Agreement will begin as of the Effective Date and continue until the fifth anniversary of the Co-Branding Date (the “Term”). The Parties agree to enter into an exclusive good faith negotiation period commencing on the date that is 6 months prior to expiration of the Term and continuing for ninety (90) days, or such other time agreed to by the Parties in writing, thereafter (the “Exclusive Extension Negotiation Period”) regarding the possible extension or renewal of this Agreement. If the Parties are unable to reach an agreement regarding an extension or renewal during such Exclusive Extension Negotiation Period, the Parties agree that Gannett Media can enter into an agreement to provide exclusive advertising and promotional rights consistent to what is provided in this Agreement to a Person operating in the Exclusivity Category following the expiration of the Term (a “Third Party Agreement”) provided such Third Party Agreement is, in Gannett Media’s good faith opinion, more beneficial, in the aggregate taking into consideration the entire economic package to Gannett Media than Tipico’s last written offer to Gannett Media during such Exclusive Extension Negotiation Period. If such Third Party Agreement is, in Gannett Media’s good faith opinion, less beneficial, in the aggregate taking into consideration the entire economic package to Gannett Media than Tipico’s last written offer to Gannett Media during such Exclusive Extension Negotiation Period, then Gannett Media shall have promptly provide written notice to Tipico, including reasonable detail of the material, including financial, terms of such Third Party Operating Agreement (the “Matching Extension Notice”). Tipico shall have thirty (30) days of receiving such Matching Extension Notice to provide Gannett Media with written notice of its intent to match such Third Party Agreement offer. If Tipico fails to provide such written notice to match such Third Party Agreement, then Gannett Media can execute a Third Party Agreement, which shall not be effective until expiration of the Term.

12.2Early Termination.

12.2.1Either Party may terminate this Agreement if the other Party (a) fails to cure any material breach of this Agreement within 30 days (or 5 days for payment breaches), after written notice; provided, if such cure cannot be reasonably accomplished with such 30-day period and the breaching Party shall in good faith have commenced such cure within such 30-day period and shall thereafter proceed diligently to completion, then such 30-day period shall be 180-days; or (b) seeks protection under any bankruptcy, receivership, trust deed, creditors’ arrangement, composition, or comparable proceeding, or if any such proceeding is instituted against that Party (and not dismissed within 60 days thereafter).

12.2.2Either Party shall have the right to terminate this Agreement immediately upon notice to the other Party in the event the terminating Party determines in its reasonable judgment that: (a) any Law relating to wagering or other games, make it impossible, illegal, or otherwise materially affect Tipico’s ability to continue operating Tipico Gambling Services within the USA or Canada; (b) the other Party or any of its officers, directors, employees, agents, designees, or representatives is or might be engaged in, or about to be engaged in, any activity, or is or has been involved in, any relationship which does or could jeopardize the terminating Party or any of its Affiliates Gaming Approvals that it holds or will be obtaining, could subject the terminating Party or any of its Affiliates to any significant fines, penalties or other damages with respect to any Gaming Approval; (c) the existence of this Agreement jeopardizes or may jeopardize businesses or licenses of a member of the terminating Party or any of its Affiliates, could subject any member of the terminating Party or any of its Affiliates to any fines, penalties or other damages or could materially negatively affect the terminating Party or any of its Affiliates Gaming Approvals; (d) any of members of the terminating Party or any of its Affiliates Gaming Approvals are threatened to be, or are denied, curtailed, suspended, or revoked as a result of the terminating Party’s relationship with the other Party under this Agreement; or (e) pursuant Section 2.1.1 or Section 13.2.

12.3Effect of Termination. Upon termination or expiration of this Agreement: (a) all licenses and grants of right under this Agreement will terminate unless otherwise specified; and (b) each Party must immediately

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destroy (or return to the other if requested by such other Party) all Confidential Information of the Disclosing Party (except to the extent such information is archived in such Party’s computer system in accordance with its company retention policy, provided that such Party shall not access, use, or otherwise refer to such retained information); (c) Tipico will not be obligated to make any further payments to Gannett Media with the exception that Tipico will continue to pay CPA Payment, if any, and to the extent applicable, for Qualified Players acquired prior to the termination of this Agreement and other outstanding payments and payments accrued to date; and (d) this Section 12.3 (Effect of Termination), Article 7 (Intellectual Property), Article 8 (Confidentiality), Article 11 (Indemnification) and Article 15 (Miscellaneous), will survive the termination or expiration of this Agreement, as well as any other section expressly stated herein to survive termination or expiration of this Agreement. Notwithstanding anything herein to the contrary, if this Agreement is terminated early by Tipico pursuant to Section 12.2.1 or Section 12.2.2, then Gannett Media shall refund any Upfront Fee or Media Fees, adjusted proportionally prorated for benefits not received as of the effective date of termination for the annual period in which the termination date occurs. The right of termination as a result of Sections 12.2.1 does not prejudice or limit the rights of the aggrieved Party to exercise its rights under the Warrant Agreement or to claim damages it may have suffered as a result thereof.

Article 13

INVESTIGATION AND GOVERNMENT APPROVALS

13.1Investigation. As a holder of privileged gaming licenses, Tipico is required to adhere to strict laws and regulations regarding vendor, supplier, provider, operator, licensee and other business relationships, including its relationship with Gannett Media. Tipico may, in its sole discretion, require Gannett Media to submit to Tipico certain information in conjunction with a diligence investigation of Gannett Media, to be conducted at Tipico’s sole expense (a “Diligence Investigation”) and Gannett Media shall promptly comply with any such reasonable requests.

13.2Gaming Approval. The Agreement is subject to all applicable Gaming Laws. Gannett Media acknowledges that Tipico, Tipico’s Affiliates and certain of their respective affiliates are license holders or applicants for licensure by, and subject to the authority of, the applicable Gaming Authorities. Gannett Media understands that Tipico will submit this Agreement to each applicable Gaming Authority as necessary or advisable in Tipico’s sole discretion for review and approval. If (a) any Gaming Authority disapproves the Agreement or its terms and conditions and (b) notwithstanding Gannett Media’s compliance with Section 5.2.2, Gannett Media does not obtain necessary approval from the applicable Gaming Authority in a Gaming Jurisdiction within 45 days of Tipico launching its Tipico Gambling Service in such Gaming Jurisdiction (or 45 days of the Effective Date with respect to the Gaming Jurisdictions as of the Effective Date, as set forth in Section 5.1), as a result of (a) or (b), Gannett Media cannot engage in the GM Promotions as contemplated herein in such Gaming Jurisdiction, then this Agreement shall be deemed terminated as it relates to the applicable Gaming Jurisdiction and the Parties (i) shall discuss in good faith equitable adjustments to Media Fee taking into various factors, including the demographics of such Gaming Jurisdiction as compared to the other Gaming Jurisdictions, and (ii) agree Tipico shall not have any further liability or financial obligation to Gannett Media with respect to such Gaming Jurisdiction, including payment of the CPA Payment for Qualified Players on Tipico Online Services within such Gaming Jurisdiction. If the Parties are unable to agree on such equitable adjustment to the Media Fee, then Tipico can terminate this Agreement.

13.3Laws.

13.3.1Each Party shall perform its respective obligations in compliance with all applicable Laws. Without limiting the foregoing, Gannett Media agrees to comply with its Vendor Licenses or other requirements, as applicable, to process and timely provide all information requested by Tipico either in conjunction with a Diligence Investigation or in order for Tipico to successfully complete and file any required disclosure or registration or notice with any Gaming Authority and any other forms or reports and maintain all licenses required to be filed or maintained pursuant to the Gaming Laws or to any rules, regulations, resolutions or orders promulgated by the Gaming Authority, as the same may be modified, amended or supplemented from time to time. In addition, Gannett Media agrees to provide Tipico with any information which it, in its reasonable discretion, deems necessary to (a) enable Tipico to file any required reports, (b) maintain any licenses of Tipico required to be filed or maintained pursuant to the Gaming Laws, or (c) comply with any regulatory compliance policy (as now in effect or hereafter adopted and as amended from time to time) and with the request of any Gaming Authority.

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13.3.2The Parties agree that if Tipico is notified by any Gaming Authority that Gannett Media has not cooperated with the Gaming Authority’s requests in any material respect, and if the compliance committee of Tipico’s board of directors (or other comparable governing body having ultimate responsibility for overseeing Tipico’s compliance with Gaming Laws) determines, in its reasonable judgment, that Tipico’s continued business association with Gannett Media could result in a material adverse regulatory action taken against Tipico or its business interests, then Tipico shall be entitled to immediately terminate this Agreement pursuant to Section 12.2.2.

Article 14

DISPUTE RESOLUTION

14.1Negotiation. In the event of any controversy or claim arising from or relating to this Agreement, the Parties will use commercially reasonable efforts to resolve the matter. To this end, all matters will initially be brought before the Steering Committee. To the extent that the Steering Committee is unable to resolve the issue, representatives of the Parties having an interest in the matter (collectively, the “Participating Parties”), will consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to all Participating Parties. If they do not reach such solution within a period of 10 Business Days from the date of their first meeting, then either Participating Party may commence. Any controversy or claim relating to a Party’s Intellectual Property is not subject to this Section 14.1 and may be filed in accordance with Section 14.2.2.

14.2Formal Arbitration.

14.2.1If a matter is not resolved by the conclusion of the negotiation period referred to in Section 14.1, then the Parties shall resolve the dispute by binding arbitration administered by American Arbitration Association (“AAA”) under the AAA Commercial Arbitration Rules then in effect before a panel of three arbitrators. The Party seeking arbitration shall deliver a written request for arbitration to the other Party (the “Arbitration Notice”). The Arbitration Notice shall include the name and contact information of one arbitrator who is acceptable to such Party, but which shall have experience in the media and/or gambling/Sports Betting industry, who may not be affiliated with such Party. Within 10 days after receipt of the Arbitration Notice, the other Party shall provide the Party that triggered the arbitration with the name and contact information of one arbitrator who is acceptable to such Party, who may not be affiliated with such Party but which shall have experience in the media and/or gambling/Sports Betting industry. Within ten (10) days after receipt of the notice for the second arbitrator, the two arbitrators shall jointly select a third arbitrator who may not be affiliated with either Party but shall have experience in the sports and sports betting industry. If the arbitrators cannot agree on the third arbitrator, then the third arbitrator shall be selected by the AAA. The Parties and arbitrators shall use good faith efforts to commence the arbitration within 60 days after the arbitration panel has been selected, at a time and place mutually agreed upon by the Parties. If the disputing Parties cannot agree upon the time and place for the Arbitration, the arbitration panel shall make such determinations. The decision rendered by the panel shall determine the rights and obligations of the Parties according to and consistent with the terms of this Agreement and the arbitrators shall have the authority to award damages and provide for other remedies as are available at law or in equity, provided, that the arbitrators may not order this Agreement, as applicable, terminated unless (a) the terms of such agreement permit termination as a remedy or (b) no other remedy would be just and equitable. All expenses, fees and administrative costs of the arbitrators and the Arbitration shall be borne half by each Party unless agreed otherwise in writing; provided, however, each Party shall pay its own legal fees and expenses related to its expert witnesses and consultants.

14.2.2A Party may only institute proceedings in the United States District Court for the District of Delaware and only for one or more of the following reasons: (a) to enforce any arbitral award issued by the Arbitrators; (b) to the extent not available in a timely fashion under the AAA Rules of Arbitration, to seek a temporary restraining order, immediate injunctive relief or specific performance without the posting of a bond or other security or proof of irreparable harm; (c) to bring an action because a third party necessary to the resolution of the dispute cannot or will not be joined in the proceedings described in this Section 14.2; (d) to resolve a dispute relating to the Party’s Intellectual Property or (e) to compel arbitration pursuant to this Section 14.2. Notwithstanding the foregoing, relief pursuant to subsection (b) of this Section 14.2.2) shall (i) be permitted if, and only if a Party makes a determination that the other Party has breached or is about to breach this Agreement, and (ii)

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not extend beyond such time as is necessary for the Arbitrators to issue a decision as to the propriety of such provisional relief (at which point, the relief granted by such court shall no longer apply to the dispute between the Parties). If the conditions set forth in this Section 14.2.2 have been met, the Parties consent to the exclusive jurisdiction and venue in such courts to the greatest extent allowed by Law. If a Party files a pleading with a court as set forth in this Section 14.2.2 seeking immediate injunctive relief and this pleading is challenged by the other Party, and the injunctive relief sought is not awarded, or if the Third Party claimed to be necessary for resolution of the alleged dispute is found not to be necessary, the Party that filed the pleading shall pay all reasonable costs and expenses (including reasonable legal fees) incurred by the other Party in connection with that other Party’s successful challenge. Any provisional relief obtained pursuant to this Section 14.2.2 shall be limited as appropriate to preserve the jurisdiction of the AAA to resolve the dispute between the Parties.

Article 15

MISCELLANEOUS

15.1Governing Law; Jurisdiction and Venue. This Agreement shall be governed by the laws of the State of Delaware applicable to contracts performed wholly therein. The jurisdiction and venue for actions related to the subject matter hereof shall be brought only before a court of competent jurisdiction in Delaware, and both Parties hereby submit to the personal jurisdiction of such courts. The Parties agree to resolve any disputes, claims or controversies related to the subject matter hereof on an individual basis, and that any such claims will be brought in an individual capacity, and not on behalf of, or as part of, any purported class, consolidated, or representative proceeding. The Parties agree that they will not participate in any consolidated, class, or representative proceeding (existing or future) brought by any third party related to the subject matter hereof.

15.2Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.

15.3Severability. If any portion of this Agreement is found to be unenforceable, the remaining provisions of this Agreement will remain in full force. Neither Party will be responsible for any reasonable delay in its performance due to causes beyond its control, provided such non-performing Party gives prompt notice and resumes performance as soon as possible.

15.4Limitation of Liability.

15.4.1WITHOUT LIMITING EITHER PARTY’S INDEMNIFICATION OBLIGATIONS SET FORTH IN ARTICLE 11, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR DELAYS, INDIRECT, SPECIAL, INCIDENTAL, RELIANCE, OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS), INTERRUPTIONS, SERVICE FAILURES, AND OTHER PROBLEMS INHERENT IN USE OF THE INTERNET AND ELECTRONIC COMMUNICATIONS OR OTHER SYSTEMS OUTSIDE OF THE PARTY’S REASONABLE CONTROL REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE, EXCEPT IN THE CASE OF FRAUD, WILLFUL MISCONDUCT, OR BREACH OF Article 7, Article 8 AND Article 9.

15.4.2The Parties agree that the limitations specified in this Section 15.4 will survive and apply even if any limited remedy specified in this Agreement is found to have failed of its essential purpose.

15.5Specific Performance & Equitable Relief. If a Party defaults on any provision in this Agreement, the non-defaulting Party, at its option, either may (a) in accordance with the applicable provision of this Agreement

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terminate this Agreement and pursue actual damages or (b) pursue and obtain specific performance and other equitable relief of such defaulting Party’s obligations hereunder (without the necessity of proving irreparable harm or posting a bond or other security). Pursuit of specific performance or other equitable relief shall not prejudice future claims by a Party for actual damages.

15.6Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign this Agreement or any of its rights, interests or obligations hereunder, whether by operation of law or otherwise, without the prior written approval of the other Party, which may be withheld in its sole and absolute discretion; provided, however, except as set forth below, each Party shall have the right to assign this Agreement by reason of its merger, acquisition or consolidation, or to an acquirer of all or substantially all of its equity or assets, provided that such assignee has the ability to perform the obligations of the assigning Party hereunder. Notwithstanding the foregoing, any and all assignments shall be conditioned upon that in each case (a) such assignee/transferee party assumes or is otherwise fully bound by all obligations of the assigning Party under the Agreement; (b) advance notice is provided to the other Party and such assignee or transferee (i) agrees to undergo such other Party’s background investigation (and Diligence Investigation of Tipico, if applicable) and (ii) if Gannett Media is the assigning party, is not otherwise deemed by Tipico to cause an issue under Section 13.2; (c) such assignee or transferee has the requisite experience and acquired, through ownership or license, the tangible and intangible assets necessary to continue to perform its obligations as contemplated by this Agreement; and (d) such assignee or transferee will possess the same or greater financial strength as the assigning Party. In addition, Tipico shall be entitled to assign this agreement without Gannett Media’s consent in connection with a partnership, joint venture or similar business relationship it may enter into whereby it agrees that the operation of all or substantially all Gambling Services of the Tipico in the USA and Canada will be operated by such partnership, joint venture or similar business relationship, provided that the assignee in this instance is able to perform all Tipico obligations contemplated under this Agreement, no change or amendment is required be made to this Agreement in connection with such assignment, all applicable Gaming Approvals are granted and such assignment is considered a Strategic Transaction under the Warrant.

15.7Notices. Unless otherwise specified in this Agreement, all notices, demands, elections, requests or other communications that any Party may desire or be required to give hereunder must be in writing and must be given (a) by hand delivery signature required, (b) by a recognized overnight courier service providing confirmation of delivery, or (c) by email or other electronic means in Portable Document Format (PDF), to the addresses set forth below or at such other address as the Parties may specify by notice given to the other Parties in accordance with this Section 15.7. Notice sent by overnight courier shall be deemed given on the next Business Day after the day said notice is delivered to the overnight courier. A notice sent by hand delivery or by email or other electronic means shall be deemed given on the day sent (provided such PDF document is electronically confirmed received and is followed by delivery pursuant to (a) or (b) above).

If to Tipico:

Tipico USA Technology, Inc.

80 River Street, Suite 4B

Hoboken, NJ 07030

Attn: Tipico US Legal Department

Email: USLegal@tipico.com

With a copy to:

Brownstein Hyatt Farber Schreck, LLP

410 17th Street, Suite 2200

Denver, CO 80202

Attn: Elizabeth Dickson Paulsen

Email: epaulsen@bhfs.com

and

Brandl & Talos

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A-1070 Vienna, Mariahilfer Straße 116

Attn: Thomas Talos

Email: talos@btp.at

If to Gannett Media:

Gannett Media Corp.

175 Sully’s Trail

Pittsford, New York 14534

Attn: Michael E. Reed, CEO

Email: ___________

with copies to:

Gannett Media Corp.

175 Sully’s Trail

Pittsford, New York 14534

Attn: Polly Grunfeld Sack, Chief Legal Officer

Email: ___________

15.8Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its own costs and expenses incurred in connection with the preparation, execution and performance of this Agreement, including all fees and expenses of agents, representatives, financial advisors, legal counsel and accountants.

15.9No Third Party Beneficiaries. This Agreement is intended for the sole benefit of the Parties and is not intended to benefit any third party.

15.10Joint Preparation of Agreement. The Parties and their respective counsel have participated jointly in the negotiation and drafting of this Agreement. Each of the Parties acknowledges that it is sophisticated in business matters of the type contemplated hereby and has been advised by experienced counsel and, to the extent it has deemed necessary, other advisers in connection with the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

15.11Headings. Sections and other headings contained in this Agreement (including, in any Schedules to this Agreement) are for reference purposes only and are not intended to describe, interpret, define or limit the scope or extent of this Agreement or any provision hereof.

15.12Severability. Any portion of this Agreement that is declared contrary to any Law or is otherwise invalid, shall be deemed stricken without impairing the validity of the remainder of such.

15.13Attorneys’ Fees. In the event of any breach or action to compel compliance with this Agreement, the prevailing Party shall be entitled to recover all costs and expenses, including its reasonable attorneys’ fees.

15.14Further Assurances. In case any further action is necessary to carry out the purposes of this Agreement, each Party will take such further action (including the execution and delivery of further instruments and documents) as the other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefore under this Agreement).

15.15Amendment and Waiver. No modification, amendment, or waiver of any provision of this Agreement will be effective unless such modification, amendment, or waiver is approved in writing by each Party. Any failure by either Party, at any time, to enforce or require the other Party’s compliance with any of the terms and conditions of this Agreement shall not constitute a waiver of such terms and conditions, nor limit the right of the

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non-defaulting Party to avail itself of any and all remedies it may have. The remedies provided for in this Agreement shall be cumulative with all other remedies at law or in equity.

15.16Force Majeure. Neither Party shall be liable to the other for any delay or failure to perform any obligation under this Agreement (except for a failure to pay fees) if the delay or failure is due to unforeseen events which occur after the signing of this Agreement and which are beyond the reasonable control of such Party, such as a strike, blockade, war, act of terrorism, riot, natural disaster, failure or diminishment of power or telecommunications or data networks or services, epidemic, pandemic or governmental restrictions.

15.17Independent Contractors. The Parties are independent contractors. There is no relationship of partnership, joint venture, employment, franchise or agency created hereby between the Parties. Neither Party will have the power to bind the other or incur obligations on the other Party’s behalf without the other Party’s prior written consent.

15.18Counterparts; Facsimile; Electronic and Digital Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument and may be sufficiently evidenced by one counterpart. Each Party may rely upon the facsimile (or by other electronic means) signature of the other. In addition, at all times while the Agreement is in force, each Party expressly agrees to the use and acceptance of signatures by digital or other electronic means. In addition, each Party agrees (except with respect to documents required to be signed in the presence of a third party or documents having an additional qualifying requirement in addition to the signature) that the use of a message which represents the document and is transformed by a digital signature (including via DocuSign or similar service), constitutes a sufficient signing of record. Subject to the foregoing restrictions, each Party further agrees that a digital or other electronic signature (including via DocuSign or similar service) will be accorded the full legal force and effect of a handwritten signature under the law governing the Agreement. Execution of this Agreement at different times and places by the Parties shall not affect the validity thereof.

[Signature page(s) to follow]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.


TIPICO USA TECHNOLOGY, INC. By: /s/ Adrian Vella Name: Adrian Vella Title: President			GANNETT MEDIA CORP. By: /s/ Michael E. Reed Name: Michael E. Reed Title: CEO

Schedule A

Defined Terms

The following terms shall have the following meanings for all purposes of this Agreement. Such meanings shall be equally applicable to both the singular and the plural forms of the terms herein defined.

“AAA” has the meaning set forth in Section 14.2.1.

“Account Creation” has the meaning set forth in the definition of Qualified Player on Schedule E.

“Account Manager” has the meaning set forth in Section 3.1.

“Affiliate” means in respect of a Party, any current or future company or other business entity Controlled by, Controlling or under common Control with that Party, including in the case of Gannett Media any joint operating agency under the Newspaper Preservation Act or joint venture.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“APIs” has the meaning set forth in the definition of Technology.

“Arbitration Notice” has the meaning set forth in Section 14.2.1.

“Assigning Party” has the meaning set forth in Section 7.4.1.

“Attribution Codes” has the meaning set forth in Section 2.2.1(a).

“Bankrupt” or “Bankruptcy” means with respect to any Person, that

(a) such Person (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary bankruptcy petition, (iii) becomes the subject of an order for relief or is declared insolvent in any Governmental Entity bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a), or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties, or

(b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law has been commenced against such Person and 120 days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and 90 days have expired without the appointment having been vacated or stayed, or 90 days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.

“Bankruptcy Laws” means any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally.

“Brands” means any trademark, service marks, names, corporate names, trade names, domain names, logos, slogans, trade dress, and other similar designations of source or origin, together with the goodwill symbolized by any of the forgoing, that in each case are owned by a Party or its Affiliates or such Party or its Affiliates has the right to use.

“Business Day” means any day in which banks are generally open for business in Trenton, New Jersey.

“Canada” mean Canada, including all its provinces and territories.

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"Chargeback" or "Credit" is a credit card transaction which is not collectable by a credit card company as a result of a Qualified Player’s non-payment or fraudulent credit card use, or other Qualified Player payment transaction which is revoked and for which a credit is given.

“Co-Branding Date” has meaning set forth on Schedule B.

“Code” has the meaning set forth in Section 6.4.

“Confidential Information” has the meaning set forth in Section 8.1.

“Control” means, for the purposes of the definition of “Affiliate,” the direct or indirect power to direct, or cause the direction of, the management and policies of a company or other business entity, whether through ownership of 50% or more of the voting interest, by contract, or otherwise (and “controlling” and “controlled” will be construed accordingly).

“CPA Payments” has the meaning set forth on Schedule E.

“Damages” has the meaning set forth in Section 11.1.

“Developing Party” has the meaning set forth in Section 7.4.1.

“Diligence Investigation” has the meaning set forth in Section 13.1.

“Disclosing Party” has the meaning set forth in Section 8.1.

“Do Not Contact List” has the meaning set forth in Section 2.4.2.

“Effective Date” has the meaning set forth in the preamble of this Agreement.

“Enhancement(s)” has the meaning set forth in Section 7.4.1.

“Excluded GM Asset” has the meaning set forth in Section 2.1.5.

“Exclusivity Category” means any business or product within the gambling category, including Gambling Services, Online Gambling Services (both free to play and paid games), Fantasy Sports contests (but not subscription services for tools to assist with Fantasy Sports (i.e., analytics tools, podcasts and data) such as Gannett Media’s BBHQ and Huddle).

“Exclusive Extension Negotiation Period” has the meaning set forth in Section 12.1.

“Fantasy Sports” means a type of game where participants, either for free or by payment of a fee, assemble imaginary or virtual teams composed of proxies of real players of a professional sport, and the assembled teams compete based on the statistical performance of those players in actual live sports games.

“Feedback” has the meaning set forth in Section 7.3.

“FTP Player” means an individual that engaged in a free-to-play product and such engagement was through the GM Promotions.

“Gambling Service(s)” means the conduct of gaming or gambling activities that require Gaming Approvals, including operation of Online Gambling Services, retail sportsbooks, casinos, racinos, off-track betting, or hotel/casino resorts involving gambling, wagering or Sports Betting services or products.

“Gaming Approvals” means any and all required approvals, authorizations, licenses, permits, consents, findings of suitability, registrations, clearances, exemptions and waivers of or from any Gaming Authority, including those

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relating to the offering or conduct of gaming or gambling activities, or the use of gaming devices, equipment, supplies and associated equipment in the operation of a casino or other gaming enterprise (including Online Gambling Services) or the receipt or participation in revenues or revenues directly or indirectly derived therefrom and, with respect to Gannett Media, includes the Vendor Licenses.

“Gaming Authority” means any international, federal, state, local, tribal, foreign and other governmental regulatory and administrative authorities, agencies, commissions, boards, bodies and officials responsible for or involved in the regulation of gaming or gaming activities or the ownership of an interest in any Person that conducts gaming activities.

“Gaming Jurisdiction” has the meaning set forth in Section 5.1.

“Gaming Laws” means those Laws pursuant to which any Gaming Authority possesses regulatory, licensing or permit authority over gaming within any jurisdiction.

“Gannett Media” has the meaning set forth in the preamble of this Agreement.

“Gannett Media Group” means Gannett Media and its Affiliates.

“Gannett Media Indemnified Parties” has the meaning set forth in Section 11.1.

“Gannett Media Intellectual Property” has the meaning set forth in Section 7.1.3.

“Gannett Media Marks” means such Brands owned by or licensed to the Gannett Media Group for use with the GM Promotions.

“Gannett Media Platform” has the meaning set forth in Section 7.4.1.

“GM Assets” has the meaning set forth in Section 2.1.1.

“GM Links” has the meaning set forth in Section 2.2.1(b).

“GM Promotions” has the meaning set forth in Section 2.1.1.

“GM Sites” means websites, mobile applications and social media platforms that are owned, operated or controlled by Gannett Media Group.

“Governmental Entity” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority having or asserting executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing, including any Gaming Authority.

“Indemnified Party” has the meaning set forth in Section 11.5.

“Indemnifying Party” has the meaning set forth in Section 11.5.

“Intellectual Property” means patents, trademarks, service marks, copyrights, applications for any of the preceding, any foreign counterparts to and divisionals, provisionals, reversions, continuations, continuations-in-part, reissues, reexaminations, renewals and extensions of any of the foregoing, trade secrets and other forms of comparable property rights protected by any applicable Laws.

“Laws” means any current or future federal, state, provincial, county, municipal, local or other laws, rules, regulations, ordinances or judicial decisions or orders enacted or issued by a court or other governmental authority of any country, state, province, county, city, municipality or other Governmental Entity in the Territory, including any Gaming Laws as well as any applicable industry governing body rules or regulations such as without limitation those of the Payment Card Industry (PCI).

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“Major License” means a Vendor License for which the Gaming Authority or Gaming Laws of that Gaming Jurisdiction impose upon the licensee, registrant or applicant, or an affiliate thereof, (i) restrictions on the transfer or pledge of direct or indirect ownership interests or financing or capitalization of the company (e.g. by requiring prior approval by the Gaming Authority), (ii) requirements that key personnel (e.g. members of the board of directors of Gannett Media or any parent entity) or owners, other than those executives involved in the day-to-day management of Gannett Media, file detailed personal disclosure forms or submit to personal suitability investigations, (iii) requirements to adopt or abide by minimum internal controls that are prescribed by the Gaming Authority or for which Gaming Authority approval would be required, or (iv) other requirements that the board of directors of Gannett Media finds, in its good faith, to be too onerous on Gannett Media. For clarity, any Vendor License held by Gannett Media as of the date hereof, under the Gaming Laws as of the date hereof, is not a Major License.

“Matching Extension Notice” has the meaning set forth in Section 12.1.

“Media Fee” has the meaning set forth in Section 6.2.

“Odds Data” means the sports betting odds data provided by Tipico under this Agreement and applicable Law, which will include betting odds data offered by Tipico or its subsidiaries for sports competitions, including, sporting events, games, tournaments, and matches for the leagues and sporting events for the leagues and associations, including NFL, NBA, NHL, MLB, Premier League and other major European soccer leagues, MLS, FIFA WORLD Cup, Olympics Games, NCAA, NASCAR, and cricket.

“Odds Data Link” has the meaning set forth in Section 2.2.1(c)(i).

“Online Gambling Service” means, as permitted by Law, the consumer facing interactive online gaming service offered or conducted via the internet, mobile or other remote or electronic device or data network, whereby participants stake money or goods of monetary value and can win money or goods of monetary value on casino-style games of chance, simulated and studio produced and/or live casino table games, peer-to-peer casino games such as poker and bingo or engage in Sports Betting, but specifically does not include any free play games, daily fantasy sports games, and paid fantasy sports games.

“Participating Parties” has the meaning set forth in Section 14.1.

“Party(ies)” has the meaning set forth in the preamble of this Agreement.

“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, or Governmental Entity.

“Personal Information” means any information about a user or where applicable, household, that: (a) can be used to identify, contact or locate a specific individual or household; (b) can be used in conjunction with other personal or identifying information to identify or locate a specific individual or household, including, for example, a persistent identifier, such as a customer number held in a “cookie” or processor serial number; or (c) is defined as “personal information”, “personal data” or sensitive or otherwise restricted information by applicable Laws, data privacy governing body decisions or orders, or schemes relating to the collection, use, storage and/or disclosure of information about an identifiable individual.

“Platform” has the meaning set forth in Section 7.4.1.

“Qualified Player” means any natural person who: (a) visits a Tipico Online Service through the GM Link provided by Tipico or is tracked through an Attribution Code, and not any other attribution or tracking method, registers for a Tipico Online Service (a “Referral”); (b) has not previously opened an account of any type with Tipico Group (specifically excluding any Tipico Group account created by an individual for a free-to-play product that was established through a GM Promotion); (c) completes the registration process and know-your-consumer processes for a new user account for a Tipico Online Service, including agreeing to all end-user agreements then required by Tipico within a time period as established by Tipico (the actions required by this clause (c), “Account Creation”); provided, that, in the event that, between the Referral and Account Creation the person does any of the following,

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the person shall not be considered a Qualified Player: the person removes, disables, deletes, destroys, or otherwise impairs any component necessary for the proper functioning of Tipico’s affiliate marketing tracking systems (e.g., by deleting the Tipico tracking cookie placed with the person’s internet browser, thereby eliminating Tipico’s ability to reasonably attribute to Gannett Media the person’s interaction with Tipico) instead of completing Account Creation via the Referral; (d) makes a minimum real money deposit (i.e., excluding any deposit match, free bet, bonus amounts or other promotions) to his or her Tipico Online Service account of any amount and within a time period as established by Tipico; (e) from such Tipico Online Service account makes a minimum number of real money wagers or bets that settle on the Tipico Online Service as established by Tipico; and (f) is not an employee of Gannett Media Group or an immediate family member (e.g., spouse, parents, siblings, or children), or individuals who live in the same household as such employee. For purposes of this definition, any FTP Player that registers for a Tipico Online Service, and not any other attribution or tracking method, within thirty (30) days following such Tipico Online Service going live a in particular Gaming Jurisdiction shall be deemed a Referral, provided, the Gannett Media Group is actively promoting such Tipico Online Service.

“Quarterly Promotions Roadmap” has the meaning set forth in Section 3.2.

“Receiving Party” has the meaning set forth in Section 8.1.

“Referral” has the meaning set forth in the definition of Qualified Player on Schedule E.

“Referral Tracking Information” has the meaning set forth in Section 9.1.

“Shared Information” has the meaning set forth in Section 9.6.

“Shared Information Compromise” has the meaning set forth in Section 9.6.

“Sports Betting” means any wagering or betting activity conducted online in which a Person risks cash or something of monetary value on the results of, or any outcomes or occurrences during or in connection with, any sporting game, event or contest (including motor racing and e-sports), including the individual performance statistics of an athlete or participant in any sporting game, event or contest (including motor racing and e-sports) or combination of sporting games, events or contests.

“Steering Committee” has the meaning set forth in Section 3.2.

“Technology” means any inventions, methods, processes, know-how, designs, information, data, systems, hardware, software programs in both source and object codes, application programming interfaces (“APIs”), software development kits, tools, user interfaces, input screens, business rules, databases, documentations, specifications, techniques, devices, apparatuses, and other forms of technology.

“Term” has the meaning set forth in Section 12.1.

“Third Party Agreement” has the meaning set forth in Section 12.1.

“Tipico” has the meaning set forth in the preamble of this Agreement.

“Tipico Content” means any data, graphics, images, text, or other information obtained by Gannett Media from Tipico or from the Tipico Online Services in connection with this Agreement, including the Odds Data, any specific artwork and/or other creative assets to be used by Gannett Media in connection with the GM Promotions.

“Tipico Indemnified Parties” has the meaning set forth in Section 11.3.

“Tipico Intellectual Property” has the meaning set forth in Section 7.1.2.

“Tipico Gambling Services” means any Gambling Service offered by a member of the Tipico Group in various jurisdictions in the USA and Canada, including any Tipico Online Gaming Service.

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“Tipico Generated Sweepstakes” has the meaning set forth in Section 2.2.1(a).

“Tipico Group” means Tipico and its Affiliates.

“Tipico Marks” means such Brands owned by or licensed to the Tipico Group for use with the Tipico Gambling Service.

“Tipico Online Services” means any Online Gambling Service offered by a member of the Tipico Group in various jurisdictions within the USA and Canada.

“Tipico Platform” has the meaning set forth in Section 7.4.1.

“Tipico Stock” has the meaning set forth in Section 6.1.2.

“Tipico Warrant” has the meaning set forth in Section 6.1.2.

“Upfront Fee” has meaning set forth in Section 6.1.1.

“USA” means the United States of America, including any state, territory or possession thereof.

“Vendor License” has the meaning set forth in Section 5.2.1.

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EXHIBIT 31-1

CERTIFICATIONS

I, Michael E. Reed, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Gannett Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 5, 2021

/s/ Michael E. Reed
Michael E. Reed
President and Chief Executive Officer
(principal executive officer)

EXHIBIT 31-2

CERTIFICATIONS

I, Douglas E. Horne, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Gannett Co., Inc.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 5, 2021

/s/ Douglas E. Horne
Douglas E. Horne
Chief Financial Officer and
Chief Accounting Officer (principal financial and principal accounting officer)

EXHIBIT 32-1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Gannett Co., Inc. (“Gannett”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael E. Reed, President and Chief Executive Officer of Gannett, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Gannett.


/s/ Michael E. Reed

Michael E. Reed

President and Chief Executive Officer

(principal executive officer)

November 5, 2021

EXHIBIT 32-2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Gannett Co., Inc. (“Gannett”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas E. Horne, Chief Financial Officer of Gannett, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Gannett.


/s/ Douglas E. Horne

Douglas E. Horne

Chief Financial Officer and

Chief Accounting Officer (principal financial and

principal accounting officer)

November 5, 2021