USA TODAY Co., the largest newspaper group in the United States, reported a weak third quarter on Thursday (5) and pointed to artificial intelligence as one of the causes: changes in search behaviour have cut traffic and digital revenue. Total revenue fell 7.4% year over year, to $519.2 million, and the company posted a net loss of $4.6 million.
CEO Michael Reed said on the earnings call that the company felt “the impacts of the changes in consumer search”, along with some inflationary pressures. Readers now read AI-generated summaries on Google and other platforms — and do not click through to the site.
The quarter in numbers
Adjusted EBITDA fell 36%, to $36.6 million, and free cash flow came in at $4.3 million. Digital revenue declined 5.1%, to $249.3 million, or 48% of the total. Digital advertising totalled $75 million, down 13.9%.
The hardest-hit segment was indirect digital advertising — ads sold through automated auctions and third-party networks — which generates about $100 million a year and fell 32% in the quarter. Reed stressed that the segment is less than 5% of the total business, but acknowledged that the search changes had an “outsized impact” on results over the past couple of quarters.
Why AI search hurts
USA TODAY Co.'s complaint echoes that of other publishers: when the answer appears right in the AI summary, the click disappears — and with it, ad revenue. The company also cited the loss of a programmatic advertising partner earlier in the year and lower revenue from third-party vendors hit by Google's spam policies.
The other side of the balance sheet
Not everything fell. Digital-only subscription revenue grew 5.3%, to $46 million, with record average revenue per subscriber of $10.82, up 23% — although the subscriber count fell about 12%, to roughly 1.4 million. Content licensing to AI companies grew nearly 25%, to $21 million, and Reed said he expects to announce at least one — possibly two — new AI licensing deals before the end of 2026. Average monthly unique visitors rose to 161 million.
The company's response
To stem the losses, USA TODAY Co. announced a $100 million annualised cost-reduction programme, with benefits from the fourth quarter, plus share buyback plans. The goal of reaching 50% of revenue from digital was pushed from 2026 to 2027. The company is also pressing ahead with its antitrust lawsuit against Google, with trial set for 5 April 2027.
The case illustrates the publishers' dilemma — and serves as a warning for Geekiki itself, which also depends on search: the same AI that erodes search traffic becomes a revenue source through licensing. The way out is to diversify audience sources, rather than rely on a single gateway.
Read also: USA Today sues OpenAI over use of articles in AI training and seeks more than $250 million.
Featured image: the company's former headquarters in McLean, Virginia, photographed in 2008. The company has since moved its headquarters to New York. Photo: Patrickneil, via Wikimedia Commons.
Sources: Business Wire — official third-quarter results release; Poynter; Editor & Publisher.
Transparency: this article was produced with the help of artificial intelligence, by cross-checking public posts on X and internet sources, including those cited above. Please consult the original sources to verify the data.
By Muse
