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Zacks Industry Outlook Highlights: Gannett, New York Times, InterActiveCorp and McClatchy

For Immediate Release

Chicago, IL – December 11, 2014 – Today, Zacks Equity Research discusses the Publishing (Part 2), including Gannett Co. Inc. (GCI-Free Report), New York Times Company (NYT-Free Report), InterActiveCorp (IACI-Free Report) and McClatchy Company (MNI-Free Report).

Industry: Publishing (Part 2)

Link: http://www.zacks.com/commentary/35988/time39s-ripe-for-publishing-stocks-here39s-why

The newspaper companies are transforming their business models to better position themselves in a multi-platform media universe. According to industry experts, newspaper companies will focus more on mobile devices, online advertising based on user experience and personalized content to make them less dependable on traditional advertising revenues. They are streamlining their cost structure, strengthening their balance sheet and restructuring their portfolio.

Let’s have a look at what is happening in the publishing industry and how newspaper companies are adapting to the changing face of the media to keep themselves fit to run the race for survival.

Business Reviving Endeavors

In an effort to offset declining revenues and shrinking market share, publishers are scrambling to slash costs. This has compelled many newspaper companies to undertake cost-cutting measures, such as headcount trimming, pay cuts, furloughs, voluntary retirement programs and closure of printing facilities. Gannett Co., Inc.’s (GCI-Free Report) flagship newspaper USA Today trimmed its workforce in September to rein in costs amid dwindling print advertising demand. The move involved the elimination of 60 to 70 staff across the newsroom section and other business operations.

Publishing companies have been offloading assets that bear no direct relation with the core operations. The New York Times Company (NYT-Free Report) in May 2012 divested its remaining stake (210 Class B units) in the Fenway Sports Group, the owner of the Boston Red Sox and the Liverpool Football Club, for $63 million. Another example of asset shedding by the company is the Dec 2011 sale of Regional Media Group, which was long grappling with shrinking advertising revenues.

Waning print advertising revenues, in an uncertain economy, compelled The New York Times Company to take this tough decision of divesting Regional Media Group, part of The New York Times Media Group. This helped the company to re-focus on its core newspapers and pay more attention to its online activities. The divestiture was also considered part of the cost-containment efforts undertaken to stay afloat in this anemic environment.

The New York Times Company on Sep 24, 2012 completed the sale of About Group, which it acquired in 2005, to InterActiveCorp (IACI-Free Report) for a consideration of $300 million. In Oct 2012, the company sold its stake in Indeed.com, a job portal, for approximately $167 million.

The New York Times Company on Oct 24, 2013 completed the sale of its New England Media Group, including The Boston Globe and its allied properties to an acquisition company spearheaded by John W. Henry, who owns Fenway Sports Group. Additionally, the company also offloaded its 49% stake in Metro Boston.

Diversifying Revenue Base, Focusing on Profitable Zones

Publishing companies are also diversifying their revenue base. For quite some time now, Gannett has been making endeavors to expand its presence in broadcasting and digital products with the aim of lowering its dependency on its soft print media business as well as traditional advertising and therefore reducing susceptibility to economic conditions.

The recent news of Gannett taking over Cars.com underscores the same. Cars.com gives online visitors price checks, model comparison and dealer reviews. Launched in 1998, Cars.com is owned by Classified Ventures, a consortium of five companies. Apart from Gannett, other companies that form the joint venture are Tribune Media Co., The McClatchy Company (MNI-Free Report), A. H. Belo Corp. and Graham Holdings .

Prior to this, Gannett bought six television stations of London Broadcasting Company and also acquired television-station operator, Belo Corp. We believe this will transform Gannett’s business model, which was largely focused on low margin newspapers to a high-margin multi-media business.

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