A private investment company, Brandes Investment Partners, disclosed today that it has nearly doubled its ownership stake in Gannett. Brandes now owns 11.25% of GCI vs. 6.6% as recently as March 15. The firm was already Gannett's single-biggest stockholder, after buying a chunk of shares around February of this year. That's when it appears to have emerged for the first time as GCI's top investor.
Headquartered in San Diego, Calif., Brandes said in a Securities and Exchange Commission filing today that it now controls 26,190,610 shares of Gannett. That's up from 15,473,398 shares in March. At today's closing price, Brandes' GCI stake is worth about $1.06 billion. But that's barely 1% of the approximately $122 billion in total investments it managed as of Sept. 30.What's more, Brandes' website says, it applies a "long-term perspective to both investment portfolios and management of our business.'' That's important, because it suggests Brandes isn't a corporate raider -- the sort of investor who buys up a bunch of a company, then agitates for change in order to get a quick profit. (I'm thinking, for example, of raiders Carl Icahn and Kirk Kerkorian.)
Plus, for a bit more perspective, the investment company that pushed Knight Ridder out of business, Private Capital Management, owned 19% of that chain -- a much bigger, and more influential stake, than the one Brandes has accumulated in Gannett.
Of course, Brandes could always change its stance as far as being a passive or active investor. Whatever its intentions, institutional investors like Brandes invest to make money, so it must be figuring that Gannett's stock is poised to go up -- at some point.
After doing a quick web surf, I can only find one other newspaper company where Brandes is a big stockholder: McClatchy; it's that troubled chain's No. 1 investor. For a list of Gannett's top stockholders, go here.
[Photo: Brandes]
As a serious investor who used to own newspaper companies, I am dumping stocks in newspaper companies. The younger generation is gathering their news from online sources, the cost of newsprint, ink and other raw materials continues to skyrocket. I don't see any future in newspapers who rely mostly on newsprint to reach their subscribers.
ReplyDeleteThe question is, making money by further shrinking newsroom resources or making money by improving the product with more robust news coverage?
ReplyDeleteSadly, I'd bet my money on further shrinking newsroom resources -- as well as customer service in other departments (circulation, advertising sales, etc.).
ReplyDeleteThe opportunity here for this investor is to privatize a business where the individual parts are worth more than the whole. Gannett is trading at 4.4 x ebitda. But its individual newspapers and TV stations could be easily sold for 8 x ebitda. Vanity buyers would no longer have to bid for NFL franchises and minor league baseball teams in their towns and cities. They could buy their local newspaper instead! The private equity players would be made happy with a short-term bust-up that, with the right amount of leverage, would have reaped a windfall. But the truth is also that after all the TV stations and newspapers are sold, there could also still be a valuable company left in place: Gannett would morph into a company providing various service functions to the assets it just unloaded: national classified ad networks (Career Builder), a news syndication services (GNS), mobile platform publishing services (4info), Topix.net, national ad sales networks, various web services, and more. Conclusion: a smart fire sale in which the old TV stations and newspapers are sold, and the other media service functions are preserved, is the right way to restructure.
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