Sunday, August 30th21.1°C
27271
26827

Gannett splits publishing and broadcast wings, following Time Warner, News Corp. and Tribune

NEW YORK, N.Y. - The game of survival is on for newspapers, as USA Today owner Gannett on Tuesday became the most recent major media entity to say it will divide its print and broadcast divisions into separate companies.

As consumers continue to gravitate toward online sources of news and entertainment, newspapers are increasingly being asked to fend for themselves.

Gannett said its separation will leave the newspaper unit debt free and let both companies pursue growth and acquisitions more efficiently. But some observers see the rush to split less profitable print businesses from growing TV and digital operations as an ominous sign for the newspaper industry.

"To take a draconian view, over next 10 years a lot of newspapers could disappear or be much smaller print products," said Edward Atorino, an analyst with Benchmark Co.

As part of the move, Gannett also announced Tuesday that it will take full ownership of Cars.com for $1.8 billion, another sign of the increasing importance of digital properties.

Gannett's spinoff follows similar manoeuvrs by major operators such as Time Warner Inc. and News Corp. Earlier this week, the Tribune Co. completed a split with its division that publishes The Los Angeles Times and other newspapers.

The spinoff trend takes place amid a backdrop of declining newspaper revenue. As consumer tastes for digital content grow, advertisers continue to shift more of their spending online. Over the past eight years, annual print newspaper ad revenue has fallen 64 per cent to $17.3 billion in 2013, according to the Newspaper Association of America.

Gannett's publishing arm will retain the Gannett name and include USA Today, 81 local U.S. daily publications and Newsquest, a regional community news provider in the U.K.

The company touted the publishing unit as a debt-free company and said both entities will have "increased opportunities to grow organically across all businesses," as well as pursue strategic acquisitions.

CEO Gracia Martore said the "bold actions" will help increase value for shareholders "in today's increasingly digital landscape."

Benchmark Co.'s Atorino said the newspaper unit was "holding back the Gannett stock." But many other analysts say the recent rush to spin off print assets paints a dark picture for newspapers.

"Now, these stand-alone print companies won't have the profits to depend on from the broadcast companies," said Ken Doctor, a media analyst for consulting company Outsell. "For them, it's life without a parachute. They have to figure out how to make it completely on their own."

None of the spinoff print companies have very much debt, which is a positive, but they don't have any source of strong revenue growth either, Doctor added.

"Their only route is to continue to manage decline at the same time they're trying to find growth," he said.

Gannett acquired Belo Corp. last year for about $1.5 billion, nearly doubling the number of TV stations it controls. The deal raised talk of a split almost immediately as the broadcast division's dominance grew over the publishing wing.

Gannett's broadcasting and digital arm, which has yet to be named, will operate the company's 46 television stations and websites such as CareerBuilder. It will also include Cars.com.

Both companies will remain headquartered in McLean, Virginia. The broadcasting and digital company will trade on the New York Stock Exchange. The publishing business is also expected to trade on the NYSE.

Gracia Martore will serve as CEO of the broadcasting and digital company. Robert J. Dickey, currently president of Gannett's U.S. Community Publishing division, will become CEO of the publishing company.

If approved by the company's board, Gannett anticipates that the distribution of the new publishing business' shares will be completed by the middle of 2015.

Gannett is buying the 73 per cent interest in Classified Ventures LLC, owner of Cars.com that it doesn't already own. Cars.com lets people compare vehicles online and connects them with sellers and dealers. The website displays about 4.3 million new and used cars from nearly 20,000 dealers.

Gannett will finance the Cars.com transaction with available cash, approximately $650 million to $675 million in new senior notes and borrowings under its revolving credit agreement. The deal is expected to close in the fourth quarter.

Gannett's stock slipped 47 cents to $33.84 in late day trading. The stock is up about 16 per cent this year.

___

AP Business Writer Michelle Chapman contributed to this report.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX13865.07+98.40
S&P CDNX555.67+10.10
DJIA16643.01-11.76
Nasdaq4828.32+15.62
S&P 5001988.87+1.21
CDN Dollar0.7562-0.0006
Gold1119.50-5.10
Oil45.26+2.70
Lumber237.20-9.70
Natural Gas2.719+0.055

 
Okanagan Companies
Pacific Safety0.165+0.005
Knighthawk0.010.00
QHR Technologies Inc1.29+0.05
Cantex0.04-0.01
Anavex Life Sciences1.34-0.05
Metalex Ventures0.055+0.000
Russel Metals21.41+0.43
Copper Mountain Mining0.64-0.01
Colorado Resources0.075-0.005
ReliaBrand Inc0.004-0.000
Sunrise Resources Ltd0.025+0.005
Mission Ready Services0.07+0.01
Decisive Dividend Corp2.75+0.14

 





FEATURED Property
18665982365 George Court, West Kelowna, BC
3 bedrooms 4 baths
$2,999,999
more details
image2image2image2
Click here to feature your property
Please wait... loading


Agree to ask questions

Photo: Thinkstock.comThe STORY: I think, said Janet to herself, that I just figured out a solution to my problem of letting the prospect run the meeting.With that thought in mind, she got out of her c...


Your business is not a bank

Photo: Thinkstock.comYour plumbing business is not a bank. But when you are giving terms to customers that exceed what you get from your suppliers, you become one. And every time that someone does not...


Begin with the end in mind

Photo: ContributedWe humans love our dates: birthdays, anniversaries, 9/11, the Ides of March - our lives are intimately woven within the tapestry of the calendar. So it should come as no surprise whe...

_



26509

27298


Member of BC Press Council


26780