Gannett joins in -- splitting print off from TV/digital

[JimmyHoward33]

What's the advantage of making both companies publicly traded? Is that required because of how they're currently structured? Seems like it would be more reasonable to keep the print co. private making a smaller profit more reasonable than the model that must maximize every cent of margin "for the shareholders." Or is that idea far too simplistic?

 

[GAPrintDino]

I've actually be surprised how well some publications have adapted to the Gannett digital era. Quickly, too. I see a lot of opportunities out there for young journos who understand story approaches beyond a Steno pad. It's a scary, evolving world admittedly but when I see younger writers able to balance 10 tasks at once to create a story that's accessible on multiple fronts, my faith is at least a little restored that there is still a future. It just requires a lot of different batteries.

 

[bevo]

Taking the longish view here, I think this will eventually open the door for a return to local ownership in (many? some?) Gannett markets.

The problem with that is many of the functions are done offsite at regional design, toning and ad centers. A new owner would have to come in a build all those things from scratch.

 

[Bruhman]

Taking the longish view here, I think this will eventually open the door for a return to local ownership in (many? some?) Gannett markets.

The problem with that is many of the functions are done offsite at regional design, toning and ad centers. A new owner would have to come in a build all those things from scratch.

Maybe Gannett can stay in the "regional design, toning and ad center" business and contract those services to local owners? I'm just spitballing here...

 

[Riptide]

I've actually be surprised how well some publications have adapted to the Gannett digital era. Quickly, too. I see a lot of opportunities out there for young journos who understand story approaches beyond a Steno pad. It's a scary, evolving world admittedly but when I see younger writers able to balance 10 tasks at once to create a story that's accessible on multiple fronts, my faith is at least a little restored that there is still a future. It just requires a lot of different batteries.

Yeah, and they want you to do four jobs for one (low) salary. Knock yourself out.

 

[LanceyHoward]

What's the advantage of making both companies publicly traded? Is that required because of how they're currently structured? Seems like it would be more reasonable to keep the print co. private making a smaller profit more reasonable than the model that must maximize every cent of margin "for the shareholders." Or is that idea far too simplistic?

There are at least two related reasons. The FCC cross ownershio rules and taxes.

FCC regulations generally prohibit owning a television station and a newspaper in the same market. The Tribune company and others that had a newspaper and a market in the same market were generally grandfathered.

So if Gannett, which owns the leading Denver television station, wanted to buy the Denver Post it might face issues when it goes to renew it's television license.

If that happened Gannett would be forced with selling a property that had been acquired 50 years ago and have to pay a lot of taxes.

By splitting up they avoid those issues.

One thing I wonder about is whether the newly spun off publishing companies will acquire more newspapers. There has been a lack of buyer interest in part because the parents were concentrating on television or were in Chapter 11.

For example the Tribune company owned both the Ft. Lauderdale paper and a television station. Now that these entities are under separate ownership does the Tribune company try to buy either the Palm Beach and/or Miami paper? I would think that there would be tremendous economies of scale in running one combined website,etc.

 

[HejiraHenry]

I called Investor Relations at Gannett World HQ today, looking for someone to explain to me in plain English what happens next. Of course, whoever answered the phone flunked the "plain English" test, and I had to leave a message on a voice mail. I'll let you know when and if I ever get a response.

 

[PCLoadLetter]

What's the advantage of making both companies publicly traded? Is that required because of how they're currently structured? Seems like it would be more reasonable to keep the print co. private making a smaller profit more reasonable than the model that must maximize every cent of margin "for the shareholders." Or is that idea far too simplistic?

There are at least two related reasons. The FCC cross ownershio rules and taxes.

FCC regulations generally prohibit owning a television station and a newspaper in the same market. The Tribune company and others that had a newspaper and a market in the same market were generally grandfathered.

So if Gannett, which owns the leading Denver television station, wanted to buy the Denver Post it might face issues when it goes to renew it's television license.

If that happened Gannett would be forced with selling a property that had been acquired 50 years ago and have to pay a lot of taxes.

By splitting up they avoid those issues.

One thing I wonder about is whether the newly spun off publishing companies will acquire more newspapers. There has been a lack of buyer interest in part because the parents were concentrating on television or were in Chapter 11.

For example the Tribune company owned both the Ft. Lauderdale paper and a television station. Now that these entities are under separate ownership does the Tribune company try to buy either the Palm Beach and/or Miami paper? I would think that there would be tremendous economies of scale in running one combined website,etc.

They've gotten fairly loose on the TV/newspaper ownership. The FTC has some kind of formula it uses to determine if a company has an unfair monopoly in a market, but it's a strange and complex thing.

Case in point: Gannett bought a bunch of TV stations from Belo. It meant Gannett would own the major newspaper and two TV stations in both Phoenix and St. Louis. Indications from the FTC (I think) were that it probably would have squeaked through with approval in Phoenix, where there are 5 highly competitive stations and the one it was buying was an independent. However, the St. Louis deal was going to give it too much of a grip on the St. Louis media market, so that end of the deal was rejected. Gannett sold the Belo stations in Phoenix and St. Louis to Meredith to avoid the problem.

 

[LanceyHoward]

What's the advantage of making both companies publicly traded? Is that required because of how they're currently structured? Seems like it would be more reasonable to keep the print co. private making a smaller profit more reasonable than the model that must maximize every cent of margin "for the shareholders." Or is that idea far too simplistic?

There are at least two related reasons. The FCC cross ownershio rules and taxes.

FCC regulations generally prohibit owning a television station and a newspaper in the same market. The Tribune company and others that had a newspaper and a market in the same market were generally grandfathered.

So if Gannett, which owns the leading Denver television station, wanted to buy the Denver Post it might face issues when it goes to renew it's television license.

If that happened Gannett would be forced with selling a property that had been acquired 50 years ago and have to pay a lot of taxes.

By splitting up they avoid those issues.

One thing I wonder about is whether the newly spun off publishing companies will acquire more newspapers. There has been a lack of buyer interest in part because the parents were concentrating on television or were in Chapter 11.

For example the Tribune company owned both the Ft. Lauderdale paper and a television station. Now that these entities are under separate ownership does the Tribune company try to buy either the Palm Beach and/or Miami paper? I would think that there would be tremendous economies of scale in running one combined website,etc.

They've gotten fairly loose on the TV/newspaper ownership. The FTC has some kind of formula it uses to determine if a company has an unfair monopoly in a market, but it's a strange and complex thing.

Case in point: Gannett bought a bunch of TV stations from Belo. It meant Gannett would own the major newspaper and two TV stations in both Phoenix and St. Louis. Indications from the FTC (I think) were that it probably would have squeaked through with approval in Phoenix, where there are 5 highly competitive stations and the one it was buying was an independent. However, the St. Louis deal was going to give it too much of a grip on the St. Louis media market, so that end of the deal was rejected. Gannett sold the Belo stations in Phoenix and St. Louis to Meredith to avoid the problem.

I realize the regs have gotten looser. But as you point out Gannett had to sell a couple television stations. Given that no one seems to have generated a lot of syngery from a broadcast, publishing mix (Tampa, I am talking about you here) I think it is easier to spin-off,

 

[Bronco77]

For example the Tribune company owned both the Ft. Lauderdale paper and a television station. Now that these entities are under separate ownership does the Tribune company try to buy either the Palm Beach and/or Miami paper? I would think that there would be tremendous economies of scale in running one combined website,etc.

That scenario has been an occasional topic of discussion in South Florida, and some of the infrastructure is already in place. For example, the three papers have content-sharing agreements (a lot of Sun Sentinel metro stories turn up in the Miami Herald and vice-versa), and the Palm Beach Post has been printed at the Sun Sentinel's production plant for several years.

The main roadblock might be the strength (or lack of such) of Tribune Publishing, which is starting its existence with a sizable debt load and might not be in position to take on either or both relatively large operations even in their downsized state. Can't really see McClatchy (Herald owner) or Cox (Post owner) buying the other papers, either; if anything, they'd probably be happy to sell.

 

[Drip]

Gannett still eats its young and now the old.

 

[Amy]

What's the advantage of making both companies publicly traded? Is that required because of how they're currently structured? Seems like it would be more reasonable to keep the print co. private making a smaller profit more reasonable than the model that must maximize every cent of margin "for the shareholders." Or is that idea far too simplistic?

There are at least two related reasons. The FCC cross ownershio rules and taxes.

FCC regulations generally prohibit owning a television station and a newspaper in the same market. The Tribune company and others that had a newspaper and a market in the same market were generally grandfathered.

So if Gannett, which owns the leading Denver television station, wanted to buy the Denver Post it might face issues when it goes to renew it's television license.

If that happened Gannett would be forced with selling a property that had been acquired 50 years ago and have to pay a lot of taxes.

By splitting up they avoid those issues.

One thing I wonder about is whether the newly spun off publishing companies will acquire more newspapers. There has been a lack of buyer interest in part because the parents were concentrating on television or were in Chapter 11.

For example the Tribune company owned both the Ft. Lauderdale paper and a television station. Now that these entities are under separate ownership does the Tribune company try to buy either the Palm Beach and/or Miami paper? I would think that there would be tremendous economies of scale in running one combined website,etc.

I'll take a shot at explaining this. I don't know what Gannett's corporate structure looks like, but there's a parent company that is publicly traded. There may be actual operations in that legal entity or it may be a holding company, but in any event there are likely a bunch of subsidiaries that hold different operations. Could be a holding company that owns 100% of the stock of two holding companies - one print and one broadcast, with each of those intermediate holding companies owning interests in more subsidiaries. Whatever. None of those subsidiaries are publicly traded because they are owned by Gannett parent company. They are one big group for tax purposes and for SEC filing purposes and in determining the company's stock value.

If the print operations are going to be separated from broadcast for valuation, they have to be sold so they are no longer legally related. If they are going to be sold and not be publicly traded, some small group of investors would have to buy those operations. If there is no buyer out there, the parent company can do a "spin-off" in which an independent company is created and the shareholders of parent company get proportionate shares in the newly spun company. If the spin off is properly structured, neither the spinning company nor the shareholders will have any tax liability resulting from the spin-off.