Gannett announced this morning that it – like other media companies – is spinning off its print business. “Such transactions,” notes Michael de la Merced, “are intended to free faster-growing television and other media operations from slower-growing newspaper and magazine businesses, pushing up stock prices while allowing each division focus on its own needs.”
Here’s the letter CEO Gracia Martore sent to employees this morning:
I am writing today with some very exciting news. This morning, we announced two important next steps in our transformation — one that catapults our businesses to the next level and another that adds further scale and breadth to our Digital businesses. A press release announcing the news is attached.
First, we will be separating our Publishing business from our Broadcasting and Digital businesses. We will create two, individual, publicly traded companies that will have greater strategic and financial agility to grow, innovate, and ultimately better serve our local communities with fewer regulatory constraints.
We also announced that we have entered into an agreement to acquire full ownership of Cars.com, a leading destination for online car shoppers that will double our fast-growing digital business. We currently own 27% of that business and will be acquiring the remaining 73% for $1.8 billion, creating additional scale in an exciting growth business at an attractive price./CONTINUES
Importantly, we will retain many of the advantages we have today from our great scale and deep, local connections. After the separation, we will have certain shared services supporting both companies, which will include corporate functions, G/O Digital and other resources. Both companies will continue to collaborate on permissible cross-platform sales and content sharing opportunities.
Over the past two and a half years, we’ve made terrific progress on our strategy to best position Gannett to compete in today’s increasingly digital media landscape. Our recent acquisitions of Belo and London Broadcasting, coupled with today’s Cars.com announcement, have meaningfully expanded our footprint in Broadcasting and Digital.
In fact, today’s acquisition of Cars.com, now the #2 auto-related site with approximately 30 million visits per month, secures our digital leadership in the largest and most important local and national advertising category — automotive — and accelerates our strategy to focus on local media and marketing services.
We’ve also made huge strides on the Publishing side. Our all-access content subscription model and the development of enhanced offerings such as our USA TODAY local editions have resulted in even better content and have helped improve customer engagement and meaningfully grow our subscriber base.
As a result of these tremendous efforts, each of our businesses has grown stronger, and at this stage, we believe that we can grow faster and achieve more as two, independent and more highly focused companies — one with laser-sharp focus on Broadcasting and Digital, and the other dedicated exclusively to Publishing.
The Publishing business will be virtually debt-free, which means it will have the flexibility to invest in the business and explore new growth opportunities. Both organizations will have greater strategic focus and an enhanced ability to devote resources to initiatives that will enable us to continue our strong tradition of outstanding journalism and provide better content and services to our local communities. In addition, both companies will be more flexible from a regulatory perspective, opening doors to pursue strategic acquisitions and partnership opportunities without the geographic overlap issues we might face today.
These actions represent the next decisive steps in our journey to reinvent our businesses and serve to ensure that we continue to meet the ever-evolving needs of our audiences. When the spin-off is completed next year, I will serve as CEO of the Broadcasting and Digital company, and Dave Lougee, our president of Broadcasting, will continue to lead our Broadcasting business. As we near the completion of the separation, we will announce a name for the Broadcasting and Digital company. Bob Dickey, our president of US Community Publishing, will become Chief Executive Officer of the Publishing company, which will retain the Gannett name, at that time. After the spin-off, both companies will remain headquartered in McLean, Virginia.
These are highly positive, significant developments for Gannett, and as such, you will likely have many questions. While some of the details will be worked out in the coming months, I will be hosting an Employee Town Hall at 12:30 p.m. (ET) today to discuss these developments and will also be available to answer as many questions as possible. Send questions here.
While both transactions are subject to regulatory approvals, we expect to officially welcome Cars.com employees to Gannett in the fourth quarter of this year, and anticipate completing the separation of our businesses in mid-2015. Until then, it’s business as usual at Gannett and we’ll continue to operate as one, integrated company.
Today marks the beginning of the next chapter in Gannett’s 108-year history, and we are confident these steps will help drive meaningful growth for our businesses — and our employees — over the long term. I know this is a lot of information to absorb, but we could not be more thrilled with the opportunities we see ahead. We are ensuring that the company all of you helped to build will continue to prosper and revolutionize the media and marketing space for another century.