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Gannett Co., the media darling of the go-go '80s, is getting a dose of '90s reality.

From 1973 to '89, Gannett spent $1.5 billion on acquisitions, launched USA Today and built the combined circulation of its 100-plus newspapers to 6.3 million.

Now, with soaring newsprint costs and a buffeted stock price, the company clearly needs to lessen its stubborn dependency on newspapers-representing 80% of revenues-and expand its presence in broadcast and new media.

That fact was underscored last week with the resignations of Geneva Overholser, editor of Gannett's Des Moines Register, and the paper's managing editor, David Westphal, reportedly due to longstanding conflicts between the newsroom and business management. The departures followed the resignation last December of USA Today Editor Peter Prichard.

The company's best bet now would seem to be making a big, dazzling acquisition. With substantial cash flow expected in the next few years-as much as $720 million, say some analysts-the company could go so far as to make a credible bid for CBS.

But there's no indication that might happen. At the PaineWebber Media Conference last December, Gannett President-CEO John Curley chided analysts for sending the company's stock price down, even as revenues were rising: "Many of you have deep-seated fears newspapers are passe, despite the fact that newspapers continue to draw audiences advertisers covet most."

Indeed, later that month an affiliate of Warren Buffett's Berkshire Hathaway disclosed it had acquired a 4.9% stake in Gannett for investment purposes.

With the disclosure, the stock jumped about 8%, but has since flattened out with little movement. It closed Feb. 17 at 531/4.

Even that hasn't placated the analysts.

"They are a stick-to-the-knitting type of company," said Kevin Gruenich, publishing and information analyst at CS First Boston. He noted that Gannett stock "has not beaten the market since 1987."

Mr. Curley would not comment to Advertising Age last week.

Consider where Gannett stacks up against three other companies whose names are synonymous with newspapering. Gannett reaped $3.5 billion in total media revenues in 1993, according to Ad Age figures. Of that, $2.8 billion, or 80%, came from newspapers. That year, The New York Times Co. posted media revenue of $2 billion, of which 75% ($1.5 billion) came from newspapers. Tribune Co. totaled $1.8 billion, 67% ($1.2 billion) from newspapers, and the Washington Post Co. totaled $1.4 billion, 49% ($692 million) from newspapers.

Even the Times Co. recognizes the need to expand its horizons. Last December, the company conceded it's "too dependent on print media" and said it would spend $1.5 billion during the next five years on expansion in electronic media.

Gannett has been slow to embrace emerging media. Its cautious efforts weren't helped when top new-media executive Thomas Farrell resigned last month following Securities & Exchange Commission insider trading charges relating to a Rochester, N.Y., bank. At the time, Gannett phased out its CD-ROM activities and shut down its unprofitable USA Today Sky Radio service.

The company has yet to develop an online service for flagship USA Today. Gannett said in December it would create the online USA Today Information Network, but details are sketchy. A spokesman said that it will start this spring, based initially on the paper's sports section.

Gannett's focus remains fixed on the bottom line of its core business. Its biggest challenge there is how to keep a tight lid on costs without damaging news products.

"It's going to be really difficult for them to duplicate the profits that they had last year," said Edward Atorino, a media analyst with Dillon Read. "The stock has been underachieving."

Debra Aho Williamson contributed to this story.

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