Gannett ‘Aggressively Pursuing’ Large-Market Acquisitions, Says New CEO (7/29/15)
Strategy follows completion of spinoff from company’s broadcast unit
By Lukas I. Alpert
Gannett Co. ’s new chief executive said Wednesday that the publishing company is aggressively pursuing acquisitions of large-market properties now that it has completed its spinoff from its broadcast unit.
CEO Robert Dickey said on a conference call with analysts that Gannett has assembled a team of banking and legal advisers to pursue deals in markets that have populations of between one million and three million people.
“We are aggressively pursuing all the opportunities in front of us,” he said.
Gannett’s publishing properties—which include USA Today and 92 mostly medium- and small-market daily newspapers in the U.S.—completed their spinoff on June 29, with the broadcasting and digital properties remaining as a separate company now called Tegna Inc. As part of the split, the new Gannett said it was left “virtually debt-free.”
Mr. Dickey, who became CEO after the spinoff, said Gannett would also be open to acquiring properties in smaller markets of more than 500,000 people, but only as part of a purchase of a larger media group, rather than an individual title.
“We are looking for markets that provide good synergies for us, but we are also open and are having discussions about looking at other markets where we don’t necessarily have geographic synergies,” he said.
Other things the company says it is looking for are markets that have a university presence and a diversified economy or that are in a state capital.
The list of newspapers in markets of over one million people is short. One such title, the San Jose Mercury News, was recently put on the block by owner Digital First Media along with its 75 other daily newspapers, but all were taken off the market in May.
Shortly after calling off the sale, Digital First and Gannett swapped stakes in several jointly owned properties, with Gannett assuming full control of a group of newspapers in Texas, New Mexico and Pennsylvania in exchange for Digital First taking full ownership of several newspapers in California.
Digital First declined to comment.
On Wednesday, in its first earnings report since the split, Gannett said it expected the acquisition of the full ownership of the papers from Digital First, as well as the recent purchase of 28 weekly and a daily newspaper in the United Kingdom, to generate $100 million in additional revenue for the company in the next year.
News of the acquisition strategy comes as Gannett said revenue would have fallen 8.7% in the second quarter if it had been a separate company during the period, largely driven by declines in print advertising. Net income would have been $53.3 million, up 2.3% from a year earlier, mostly thanks to cost cuts. Efforts to trim costs will reduce operating expenses by $67 million by the first half of next year.
On a per-share basis, a solo Gannett would have booked 46 cents a share in earnings, up a penny from the year-earlier period.
Last week, Gannett and Tegna reported a combined second-quarter profit of $115.9 million, down from $208.5 million a year earlier. The year-ago results included a $143.5 million gain stemming from a divestiture. Combined revenue grew 4.2% to $1.52 billion. http://www.wsj.com/articles/gannett-2q-stand-alone-profit-would-have-risen-2-3-1438179837