Gannett (GCI) is following in the footsteps of other major players in the media industry. The largest newspaper publisher in the U.S. is splitting its print operations, including USA Today and 81 other daily U.S. newspapers, from its broadcast and digital operations.
"The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses to compete effectively in today's increasingly digital landscape," Gannett's CEO Gracia Martore, said in a statement.
Gannett’s spinoff of its publishing unit follows similar moves by other media companies who have separated struggling newspaper businesses from more profitable broadcast assets. Rupert Murdoch split the print-focused News Corp (NWS) from 21st Century Fox (FOX) last year. Time Warner (TWX) spun off Time Inc. (TIME), which is composed of print magazines. And last week, Journal Communications (JRN) and Scripps (SSP) said they will combine their broadcasting assets into one company and their print in another.
“Print we know is dying, it’s kind of a wasting asset, but publishing - basically daily newspapers, magazines - they still can have a foothold here if they are run with a rational cost basis, and if they’re most likely combined into bigger companies,” said Yahoo Finance Senior Columnist Michael Santoli
Gannett said it expects its publishing business will basically be debt free once spun off, with the broadcasting and digital businesses holding all of its existing debt. The publishing business will keep the Gannett name. “Yes, there’s a future here. It’s not as thriving a future as there was before - before, when they were getting fat on classified advertising and lots of other national banner advertising from big brands,” Santoli said. He also expects to see consolidation in this industry. There has been chatter that USA Today is up for sale. Tribune's publishing business is often seen as a potential mate for the Gannett publishing business.
Gannett has been building its digital business. Last Year, it bought broadcaster Belo for $1.5 billion. Today, it announced it will buy the remaining 73% stake of Cars.com, which it doesn't already own for $1.8 billion in cash from Classified Ventures. Cars.com will be a part of the broadcast and digital operations which will include CareerBuilder.com and 46 television stations. Martore will head the broadcasting and digital company, which has not been named yet.
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