USA TODAY: The Newspaper That Sued the Toll Collector

Yahoo Finance ·

Picture a toll road that used to be fed by one giant highway. The highway was Google. For two decades it dumped anonymous strangers onto USA Today 's ( TDAY +0.82% ) pages, and the company monetized them with cheap, automated ads. Now Google has rerouted the highway. The toll booth is still standing. The traffic is not. Meanwhile, the same company is suing Google for allegedly rigging the market in which those ads were sold. It is a fascinating position. USA Today is the plaintiff, the dependent, and the casualty, all at once. Revenue was $519.2 million, down 7.4% (5.8% on a same-store basis). "Same-store" means excluding acquisitions, sales, and currency swings. It is the honest yardstick. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, a rough proxy for operating cash generation before accountants get involved) fell 36% to $36.6 million. Management's story is tidy. A small, low-quality slice of the business got hit, and everything important is growing. They announced $100 million of annualized cost cuts and a buyback. Some of that is true. Some of it is a magic trick. I'd like to show you how the trick works.

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