Gannett plans to spinoff publishing business
McLean-based Gannett announced Tuesday plans to separate its publishing business from its broadcast and digital side. The separation would be implemented through a tax-free distribution of Gannett’s publishing assets to shareholders.
The news comes a day after Tribune Co. completed the spinoff of its publishing division, which includes The Chicago Tribune and The Los Angeles Times. Magazine publisher Time Inc., which publishes Time, also recently was spun off from Time Warner.
Gannett said the transaction will create focused companies which will have more opportunities to grow organically and pursue strategic acquisitions. The publishing company will keep the Gannett name. The broadcasting and digital company has not yet been named.
In addition to the spinoff, Gannett plans to fully acquire Cars.com for $1.8 billion in cash. Under the agreement, Gannett will acquire the 73 percent interest it does not already own in Classified Ventures LLC, which owns Cars.com. The site allows consumers to search, compare and connect with sellers and dealers. Cars.com draws 30 million visits per month and displays approximately 4.3 million new and used cars from nearly 20,000 dealers.
“Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio,” Gracia Martore, Gannett’s president and CEO, said in a statement. “These acquisitions, combined with our successful initiatives over the past two and a half years to strengthen our publishing business, make this the right time for a separation into two market-leading companies.”
Martore will lead the broadcast and digital business while Robert J. Dickey, president of Gannett’s U.S. Community Publishing division, will become CEO of the publishing company. Both companies will remain headquartered in McLean.
Gannett said it expects the publishing business will be virtually debt-free after the separation, with all of Gannett’s existing debt retained by the broadcasting and digital company. It anticipates the initial combined dividend of the two independent companies will not be less than Gannett’s current 20 cents per share quarterly cash dividend.
Gannett is the largest U.S. newspaper publisher. Its publications include USA TODAY; 81 local U.S. daily publications and Newsquest, a news provider in the U.K. that has 17 daily paid-for titles and more than 200 weekly print products, magazines and trade publications. On the broadcasting side, Gannett owns or services 46 television stations, which reach one-third of the nation’s television households.
The acquisition of Cars.com is subject to regulatory approval and other customary closing conditions. It is expected to be completed in the fourth quarter of this year.
The distribution to Gannett shareholders of shares of a new entity holding the publishing business is expected to be completed in mid-2015.