Gannett Co., Inc. (GCI) completed the buyout of six television stations of London Broadcasting Company. The acquisition is a step toward expanding presence in broadcasting and digital products and lowering dependency on the soft print media business as well as traditional advertising. This would make the company less susceptible to economic conditions.
The transaction, worth $215 million, will widen the company’s presence in the Texas market and add television stations — KCEN (:NBC) in Waco-Temple-Bryan, KYTX (CBS) in Tyler-Longview, KIII (ABC) in Corpus Christi, KBMT (ABC) and its digital sub-channel KJAC (:NBC) in Beaumont-Port Arthur, KXVA (FOX) in Abilene-Sweetwater and KIDY (FOX) in San Angelo — to its portfolio.
Earlier, Gannett had hinted that the deal will benefit earnings per share within the first 12 months and contribute approximately $50 million to revenues in 2014.
Phil Hurley, the chief operating officer of London Broadcasting Company, will continue to spearhead six stations under the supervision of Dave Lougee, the president of Gannett Broadcasting.
Prior to this acquisition, Gannett had acquired television-station operator, Belo Corp. The takeover firmed its foothold in the rapidly growing broadcast media business.
Gannett is taking initiatives to diversify its business model by adding new revenue streams. The company is adapting to the changing face of the multiplatform media universe with Internet, mobile, tablet, social media networks and outdoor video advertising in its portfolio. We believe that the company is well poised to capitalize on the promising digital media landscape.
Gannett initiated a subscription-based model, commenced Digital Marketing Services in top markets, and refurbished its iconic brand USA TODAY to generate new advertising and marketing revenue sources. Other publishing companies such as Journal Communications, Inc. (JRN), The E.W. Scripps Co. (SSP) and The New York Times Co. (NYT) are also trying to adapt to different revenue generating ways.
The stock currently carries a Zacks Rank #4 (Sell), highlighting the company’s waning publishing advertising revenue which fell 4.8% in the first quarter.