US media giant Gannett announced plans Tuesday to split into two separate firms, one for broadcast and digital, and the other for newspapers including its national daily USA Today.
"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 president and chief executive Gracia Martore.
Gannett becomes the latest media conglomerate to spin off struggling print news operations from faster-growth operations such as television.
It comes on the heels of similar moves by Rupert Murdoch's media-entertainment empire that split into 21st Century Fox and News Corp., and a spin-off by Tribune Co. of its newspaper assets. Time Warner spun off its magazine division as Time Inc. in June.
"As a standalone businesses each company will have even sharper management focus and resources more directly aligned with their individual needs and priorities," Gannett's Martore said in a conference call.
Gannett also has said it signed a deal to acquire the 73 percent it does not own of Cars.com, a major player in the online auto business. The other owners of the website include newspaper groups Belo Corp., McClatchy Co., Tribune Co. and Graham Holdings, which is the former owner of the Washington Post.
Gannett will create a new publicly traded broadcasting and digital company, which has yet to be named, and which will remain headquartered in McLean, Virginia. Martore will serve as chief executive.
The unit includes 46 television stations including network affiliates in the top 25 US markets. It also will include Cars.com and the online jobs site CareerBuilder.com.
The publishing group, which will retain the Gannett name, will include USA Today as well as 81 other daily newspapers, some 200 weeklies and magazines, and the community news service Newsquest.
Robert Dickey, who heads Gannett's community publishing, will be CEO of the unit, which will also be publicly traded.
The publishing unit will retain the websites and digital apps of USA Today and the other news organizations, according to Gannett in a statement.
- 'A more competitive position' -
Gannett said the split would lead to "a stronger growth profile and a more competitive position for each company with enhanced management focus and resources more directly aligned with strategic priorities to drive innovation and value creation."
The move would also create separate entities "with trading valuations that more accurately reflect the distinctive characteristics of each business."
The publishing business "will be virtually debt-free after the separation," Gannett said, adding that all existing debt would be retained by the broadcasting and digital company.
Media analyst Ken Doctor of the research firm Outsell said Gannett was among the last of the media groups that allowed other operations to subsidize newspapers.
"Gannett's newspapers are a drag on its earnings," Doctor said in a blog post Tuesday in anticipation of the announcement.
"Newspapers now produce 70 percent of Gannett revenues, but broadcast produces 60 percent of the profits. Those lines continue to diverge, making the mismatch clear from a financial point of view."