Why Gannett may be forced to break itself up

Gannett and other big media conglomerates prospered when newspapers dominated the information industry, Jack Shafer says in a new Press Box column on Slate. But with new rivals like Facebook rocketing by, media giants are racing to bust themselves into smaller, more nimble pieces to boost their stock prices.

Big shareholders like Brandes Investment Partners may force Gannett CEO Craig Dubow to do the same, despite his insistence here and here that GCI stay independent. Shafer notes that Brandes nearly doubled its stake to 11.3% this year even as the value of its GCI shares tumbled.

"If the stock continues its slide," Shafer says, "might Brandes decide that the parts are worth more than the whole and order the sell-off of Gannett's newspapers and TV stations? Such a move would be celebrated in cities like Louisville, Des Moines, and Nashville, where Gannett bought and wrecked some pretty good newspapers."

Worth repeating: Brandes isn't known as an activist investor, this reader said.

The pressure on Dubow is all the greater when even shares of the New York Times Co. outperform GCI. The NYT is known more for the quality of its news coverage than its shareholder returns. But at Friday's closing prices, Gannett shares are now down 45% since July 2005 -- when Dubow became CEO -- vs. a smaller 40% decline in NYT shares.

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