New Gannett launches, seeks acquisitions and joint reporting efforts
Gannett, which operates USA TODAY and the newly created USA TODAY Media Network, began life as a publicly traded company Monday, marking the start of an uncertain journey whose outcome largely will be determined by its ability to adapt to readers' changing habits.
Led by CEO Robert Dickey, the McLean, Va.-based company – whose holdings also include 92 local U.S. newspapers and their digital affiliates and 17 dailies in the United Kingdom – plans to acquire more media assets in the U.S. to boost local advertising and marketing revenue. It also seeks to enhance coordination among journalists at its news outlets across the nation and place greater emphasis on social and mobile news distribution, according to executives and company memos.
"Together, we are moving forward as one unified organization with a commitment to strengthening and forging connections in every community that we serve," said Dickey, who was president of the U.S. community publishing division of Gannett's former parent, also called Gannett until it changed its name to TEGNA on Monday.
"Over the next year, we will continue to innovate and invest in this network, push the boundaries of storytelling and how it's experienced and diversify our offerings," he said in a statement.
Shares of new Gannett fell 5.2 % to $14.13 on Monday. The Dow Jones Industrial Average, spooked by the financial turmoil in Greece, fell 1.9%.
TEGNA, which also began trading Monday under the ticker symbol TGNA, kept old Gannett's broadcasting stations and digital businesses, including Cars.com and CareerBuilder.com. TEGNA rose 5% to $31.63.
In August 2014, Gracia Martore, CEO of Gannett at the time and now CEO of TEGNA, jolted investors and employees with her plan to split the company into two publicly traded companies. Martore had been working toward the move for months – doubling the company's roster of TV stations by buying competitor Belo in 2013 for $1.5 billion; cutting costs; getting editors and reporters to react more quickly to news to meet digital audiences' needs; and negotiating to buy the stakes in Cars.com and CareerBuilder.com it didn't already own.
In splitting the company, Martore chose to lead Gannett's more profitable portions and grouped them under TEGNA, a name that was coined using the letters from Gannett.
Martore also formed deals for TEGNA to continue content sharing agreements and other "shared services" with Gannett, such as Gannett newspapers posting TEGNA videos and TEGNA stations showcasing Gannett stories.
With newspapers struggling to maintain revenue and innovate digitally, analysts expect further news industry consolidation. And Martore told USA TODAY last year that new Gannett would be in a position to acquire more local media properties to target small businesses as advertisers and digital marketing clients..
Monday, the Gannett and TEGNA work sites were festive. Banners of new company logos were on display. At meetings with employees, bosses recognized star staffers and vowed that better days were ahead.
Gannett also unveiled further details on its strategy of combining newsroom resources and getting far-flung staffers to work more closely together. It plans to hire a new chief content officer to oversee news operations, among other tasks. Senior editorial executives at Gannett -- USA Today editor in chief David Callaway and the heads of other company priorities, including investigative reporting, analytics, regional operations and consumer experience — will report to the CCO.
Editors of the local newspapers also will report up to that office.
The CCO, who will report to Dickey, also will oversee Gannett's efforts to boost editorial efficiency and cut down on redundant work through the USA TODAY Media Network, in which newspapers will coordinate coverage nationwide. The objective is to strengthen cooperation on reporting national stories between USA TODAY and the local properties that Gannett has initiated over the last couple of years.
Local news sites will run more of USA TODAY's national content. And the network will also increasingly rely on material from Newsquest, Gannett's U.K. operation.
The spun-off new Gannett is "virtually debt-free," the company says, and has $500 million in credit to make strategic acquisitions.
Still, the company faces the stiff challenges that have been encountered by other publishing companies spun off from more diversified parent companies. Shares of Time Inc. are flat after the magazine publisher was spun off from Time Warner a year ago. News Corp, which publishes The Wall Street Journal and New York Post, is down about 10% since it was spun off from its former parent in June, 2013.
Given the "headwinds facing Gannett, longer term we continue to expect revenue to decline due in large part to the shift of advertising budgets to digital," wrote John Janedis, an analyst at investment bank firm Jefferies, in a note to investors.
"That being said, with an increasing value proposition for Gannett's print content and the build-out of its digital domains we see an opportunity for the deceleration of circulation declines, and top line improvement," he wrote.