Gannett Co., the owner of USA Today, will split into two publicly traded companies, one focused on broadcasting and digital businesses and the other on publishing, it said today, following the trend that has swept the media business.
Signaling its interest in digital investment, the company also said it has agreed to buy the 73% interest it doesn't already own in Classified Ventures, which owns Cars.com, for $1.8 billion in cash. Cars.com, which was started in 1998, lets users check prices, compare models and read reviews of auto dealers.
The publishing business, comprising 82 daily newspapers and many more non-daily local publications, will be separated from dozens of TV affiliates through a tax-free distribution of assets to shareholders. The split comes after similar moves by News Corp., Time Warner and Tribune Co., all of which wanted to cleave stronger entertainment businesses from newspapers or magazines facing long-term problems.
News Corp., which had owned everything from movie studios to The Wall Street Journal, divided last summer into the entertainment company 21st Century Fox and a publishing company that kept the News Corp. name. Time Warner spun off Time Inc. earlier this year. Now 21st Century Fox is trying to buy a Time Warner that's unencumbered by its magazine business; Time Inc. is reporting its first financial results as an independent company this morning. Even the Washington Post Company has sold off the Washington Post.
Tribune Co. just yesterday completed its spinoff of its newspaper holdings, which included the Chicago Tribune, the Los Angeles Times and the Baltimore Sun.
"The creation of two highly focused companies with enhanced financial and regulatory flexibility will accelerate growth and create additional value for our shareholders," Gannett Chairman Marge Magner said in the statement.
Newspapers have steadily lost money and readership since hitting a sales peak in 2005. Classified advertising, once newspapers' greatest profit engine, has been hardest hit, dropping by more than half between 2000 and 2008 to $9.9 billion, according to the Pew Research Center.
Classified Ventures is backed by four media companies in addition to Gannett: McClatchy Co., Tribune Media Co., AH Belo Corp. and Graham Holdings Co.
Gannett rose 4.4% to $34.32 yesterday, giving it a market value of about $7.7 billion. The shares advanced as much as 9% in after-hours trading.
~ Bloomberg News with Ad Age staff ~