The publisher of USA Today will take a second-quarter impairment charge of between $2.5bn and $3bn before taxes, about 19% of the company's total assets.
Gannett said that it had suffered from the tough economic challenges in the US and the UK, driven primarily by the softening housing market, which was hurting newspaper classified advertising revenues at its UK regional newspapers.
The Newsquest business comprises almost 300 newspapers in the UK including 17 daily papers, including The Herald and Evening Times in Scotland, and the South Wales Argus and Bournemouth Echo.
Gracia Martore, executive vice-president and chief financial officer of Gannett, said that classified advertising at Newsquest weakened significantly during the second quarter of 2008, but achieved strong growth in online revenues.
Martore said: "The impairments are non-cash charges to GAAP earnings and do not in any way impact our ability to operate our businesses, make strategic investments and acquisitions, reduce debt, pay dividends or progress with our strategic efforts."
Officials said that Gannett's broadcasting business had also been affected, however they expect to benefit from US election-related spending and the Beijing Olympics.
The company expects second-quarter earnings of $1.01 to $1.03 per share.
Gannett is the largest newspaper publisher in the US, publishing 85 daily newspapers. It also operates 23 US television stations.
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