On August 5, 2014, Gannet announced that they would be splitting their publishing and broadcast company into two independent companies. In addition, they announced that they had purchased the website Cars.com for $1.8 billion in cash.
Gannet has long been recognized as a print publishing mega company. The company owns many major newspapers including USA Today, Des Moines Register, The Desert Sun: Palm Springs, and smaller newspapers in 36 states. The company also owns Army Times Publishing Company, Nursing Spectrum, and Career Builder. They also own a collection of publications in the United Kingdom known as Newsquest Media Group. On the media side, Gannet owns numerous ABC and NBC affiliates throughout the United States.
Gannet that is being directed by new CEO Bob Dickey may be foreseeing a day when magazines and newspapers are outdated. Most experts believe that within five to ten years any profitability will be removed from publishing newspapers and magazines, although many young buyers are currently buying other large publishing companies. Last week, E.W. Scripps and Journal Communications announced similar moves.
The newspaper division has no debt, so this may make it very attractive to buyers. Media analyst Ken Doctor said upon hearing the news,”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. Their only route is to continue to manage decline at the same time they’re trying to find growth.”
Gannet hopes the move will maximize the value of the company for stockholders. They also hope that the move will unlock the value of their broadcast division. Currently, 60 percent of all profits come from this area, and 30 percent of the overall revenue. In order to impress the stockholders, Gannet needed to take steps to improve the company’s bottom line when compared to other similar companies. The television division will be known as GCI and be an independent company. CEO GraciaMartore will run the broadcast division.
The Cars website allows users to list their inventory and sell them to individuals. Buyers can also find automobile financing options, and research the value of cars. Just added to the website is an area where car owners can find repair shops in their area. An active blog also teaches buyers about buying and owning a car. Buyers can also find reviews of various automobiles that can be particularly useful when new car makes and models become available.