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Gannett to spin off USA Today, publishing business

Similar transactions have seen the splitting of television and publishing businesses in order to increase profits for larger media companies.
By Ananth Baliga   |   Aug. 5, 2014 at 12:22 PM   |   Comments

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MCLEAN, Va., Aug. 5 (UPI) -- Gannett said Tuesday it plans to split its printing business, including USA Today, from its TV business, following in the footsteps of other media companies such as Time Warner and E.W. Scripps.

The media company also announced that it would acquire 73 percent of auto website Cars.com for $1.8 billion, adding to its digital portfolio. Gannett currently owns 27 percent of the website. The spin off means that Gannett's newspaper business will have to operate independently in a tough, shrinking market.

The company's television stations and websites will now operate under a new brand name, whereas the publishing company will retain the Gannett name.

Media companies are known to separate their more profitable television businesses from their slower-growing newspaper and magazine businesses. Investors have shown a preference for TV, which helps increase share prices without being burdened by their publishing divisions.

"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," said Gannett CEO Gracia Martore in a statement.

The publishing company will own 81 newspapers after the split, including USA Today, Florida Today and the Arizona Republic, whereas the new company will own television stations in major markets including Houston, Washington D.C., Seattle and Dallas.

Gannett was one of the last media companies to stick with the traditional newspaper-TV marriage.

"The main reason any company has done this is to separate out broadcasting, which is becoming a higher-valued asset, from publishing, which, even though it has been stabilizing, clearly has more challenges than the other part of the business," said Jim Goss, an analyst at Barrington Research in Chicago.

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