(Adds updated share prices, adviser information)
By Supantha Mukherjee and Jennifer Saba
Aug 5 Gannett Co said on Tuesday it
would spin off its print operations, including USA Today,
becoming the latest media company to separate slower-growing
publishing assets from TV and digital properties.
In a widely expected move, Gannett joined the ranks of News
Corp, Time Warner Inc and Tribune Media
, which have all jettisoned print businesses as
newspapers and magazines face unprecedented challenges with
declines in advertising revenue and readership.
The print group which includes 81 local newspapers in the
United States and the British newspaper arm Newsquest, will
retain the Gannett name and split from its 46 TV stations and
digital properties including classified listing sites Cars.com
and CareerBuilder in a yet to be named company.
Additionally, Gannett announced it took full ownership of
Cars.com buying the 73 percent stake in Classified Ventures for
$1.8 billion from its joint venture partners McClatchy Co
, Graham Holdings Co AH Belo and Tribune
"We decided this was the right moment in time to do this,"
Gracia Martore, chief executive of Gannett, said in an
"We are separating into two strong (companies) with the
ability for each of them to pursue growth opportunities."
Several times during a conference call with analysts Martore
stressed that the newspaper company will be "virtually debt
free" -- a move that takes a page from Rupert Murdoch's play
Murdoch made sure to fortify News Corp, which is now home to
his publishing assets, with no debt and about $2.5 billion in
cash when he split it from the entertainment and cable
properties now known as Twenty-First Century Fox.
Tribune and Time Warner saddled their publishing arms with
debt when they spun out their newspapers and magazines into
Martore said that freed from cross-ownership restraints -
meaning the current company cannot own a TV station and
newspaper in the same market - Gannett's newspaper group could
go on an acquisition spree.
Shares of Gannett closed 1.3 percent lower, down 45 cents at
Gannett has been busy diversifying away from its newspaper
assets with big broadcast TV acquisitions over the last year. It
bought Belo and London Broadcasting, doubling its TV holdings.
The new broadcasting company will retain all the digital
properties because they are faster growing and have similar
capital structures, Martore said. Cars.com and CareerBuilder,
the recruitment site, will retain affiliate agreements with the
Still, the publishing assets will face an uphill battle even
though they will continue to operate their own digital
properties including their websites.
Time Inc, the magazine division that spun out from
Time Warner in June, on Tuesday reported for the first time as
a standalone company and cut its full year revenue
Shares of Time Inc are up about 17 percent since the
separation. Tribune Publishing, the group of newspapers
that include the Los Angeles Times, completed its spin off on
Monday. Its shares closed down 4.3 percent at $21.15.
Martore will remain CEO of the broadcasting company while
Robert Dickey, currently president of Gannett's U.S. Community
Publishing division, will head the newspaper company.
Greenhill & Co was financial adviser to Gannett on the
spinoff, while Wachtell, Lipton, Rosen & Katz was the legal
adviser. Greenhill and Citigroup were financial advisers and
Nixon Peabody LLP was legal adviser on the deal for Cars.com.
Moelis & Co was the financial adviser to Classified
Ventures, which owns Cars.com, while Skadden, Arps, Slate,
Meagher & Flom served as Classified Ventures' legal adviser.
(Additional reporting by Ankit Ajmera in Bangalore; Editing by
Saumyadeb Chakrabarty and Andrew Hay)