Week Feb. 22-28 | Your News & Comments

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Honolulu | Attorney general hints he'll OK deal

Although some groups reportedly are organizing to block the planned merger of Gannett's Honolulu Advertiser and the rival Honolulu Star-Bulletin, the state's attorney general appears ready to accept it.

Attorney General Mark Bennett will review the Advertiser's sale to the publisher of its cross-town rival, but Bennett says the newspaper industry has changed in the decade since one of the papers was last threatened with closure. "The economics of the newspaper business and the definition of relevant markets is just not the same as it was 10 years ago,'' Bennett said in a UPI story today. "The antitrust laws don't require someone to operate a business that can't make money."

Gannett announced Thursday that it had reached a deal to sell the Advertiser for an undisclosed sum to Oahu Publications. Oahu plans to merge the two papers if, as expected, no investor steps forward to buy the Star-Bulletin. The deal also is subject to U.S. Justice Department approval. The sale would be completed in the second quarter.

[Image: today's Advertiser, Newseum]

At the Crystal Palace, talk of dueling brand names

"As if the USA Today did not have enough trouble, they now will have to compete with their own parent in whose brand is bigger than the other!"

-- Anonymous@1:53 p.m. today, commenting on speculation that Corporate is now working on a new multimillion-dollar advertising campaign designed to burnish Gannett's brand name.

Urgent: New stock option awards show big 2009 increases for Martore, but not Chairman Dubow

[Table shows new options revealed today vs. those in 2008]

Gannett just disclosed a boatload of new stock options for a dozen of the company's top executives -- awards that offer a glimpse at how big (or small) their 2009 bonuses will look when final details are released next month.

New President and Chief Operating Officer Gracia Martore (left) got 300,000 options -- 50% more than a year ago -- for work as chief financial officer when her cost-cutting drive contributed to more than 6,000 layoffs and other job cuts, according to newly filed documents.

But Chairman and CEO Craig Dubow was awarded 480,000 options, 20,000 fewer than he got for 2008, documents show.

The awards were revealed this afternoon in a series of regulatory documents filed with the U.S. Securities and Exchange Commission. The awards give the 12 named executives the right to buy Gannett stock from the company for $15 a share -- known as the strike price -- no matter how high market prices rise. The options become their property, or vest, in four equal annual installments starting Feb. 24, 2011, the documents show. They expire Feb. 23, 2018. The awards were made Wednesday when the board of directors concluded a regularly scheduled two-day meeting.

Only part of total pay
Stock options are a big part of the annual compensation paid to executives in Gannett and across Corporate America. But they're only part of their annual pay. Last year, for example, Dubow got an $875,000 cash bonus on top of his nearly $1.2 million salary. His total pay, including the estimated future value of stock options: $3.1 million, according to the annual proxy report to shareholders. (2008 pay for the five top executives.)

Details about the executives' total compensation for 2009 will be revealed next month, when the next shareholders proxy report is filed with the SEC. Still, the options announced today offer a glimpse of what they might have gotten in bonuses, pay and other benefits.

Newsquest's Davidson wins, too
By that measure, Martore appears to have gotten a big boost in overall 2009 pay. Dubow, on the other hand, appears to have been given about the same as he got for 2008.

Another big apparent winner: Paul Davidson (left), CEO of Gannett's 17-daily Newsquest division in the U.K. He got 25,000 more options than a year ago, documents show. Newsquest slashed costs last year, reducing overall employment by 23% -- the biggest percentage decrease among Gannett's major divisions.

The options disclosed today are already valuable on paper. Gannett's stock closed at $15.15 a share this afternoon. In Martore's case, for example, her 300,000 shares are worth $45,000 on paper, based on the 15-cent difference between the strike price and today's closing price. Plus, Martore's year had already started well: Three weeks ago, Gannett gave her a $250,000 raise in base pay, to $950,000 a year, as the new president and COO.

What's more, these options could be worth far more a year from now, when they begin vesting. The hundreds of thousands of options awarded executives last year were worthless by the time they were disclosed. Now, a year later, they're worth millions of dollars.

Related: View all today's filings in the company's SEC documents page

Did you get a pay raise or bonus last year? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Honolulu | How layoffs, asset sales are the same

In its plan to sell The Honolulu Advertiser, Gannett is giving up 410 full-time and 190 part-time employees to a new owner: Canadian David Black. He's expected to merge the Advertiser with his Honolulu Star-Bulletin, combining the two staffs into one. It's unclear how many employees will survive any cuts.

The loss of those Gannett employees isn't a layoff, but the outcome is the same: Once the deal is done, company-wide employment drops nearly 2%, based on the company's newly disclosed total of 35,000 worldwide workers. That total was down 16% from 2008, and was likely the single biggest decline in Gannett's 104-year history.

What Honolulu deal says about more paper sales

[Sign of times? Gannett has owned Advertiser since 1993]

In Hawaii's state capital, Gannett faced a situation unique among its 84 U.S. newspaper markets: A 600-employee daily that had begun losing money by 2008. A two-newspaper city. A patient investor willing to take the risk of combining the papers. And a balance sheet (Gannett's) sorely in need of more cash.

With all that, it's a wonder Gannett didn't sell The Honolulu Advertiser earlier, assuming Canadian investor David Black was willing to bargain. After all, the Advertiser was losing millions as recently as October 2008; that was when the union representing most of its employees got a peek at the books, before conceding the paper was swimming in red ink. Only then did the labor group, bitterly fighting for a new contract, agree to some of Gannett's cutbacks.

So, why now?
For one thing, the Advertiser may have returned to profitability; that's what I hear Gannett newspaper division finance chief Evan Ray told staffers yesterday when the deal was announced. That would make it more attractive to a buyer.

There are economies of scale. Black owns the smaller cross-town Honolulu Star-Bulletin. He plans to put that paper up for sale. Assuming no buyer steps forward -- a likely scenario -- he'll then combine the two papers under a renamed flag. This all assumes, of course, that Gannett and Black get regulatory approval -- no sure thing under the Obama Administration, as I wrote earlier today.

The newly re-structured paper will be one of 80 or so Black owns in Canada, plus two dailies new to his portfolio: the San Diego Union-Tribune, which he bought last year with a private equity firm, and the Akron Beacon Journal; he bought that daily from McClatchy for $165 million, according to this morning's Advertiser story.

Gannett's announcement didn't disclose sale terms, and none of the stories I've read even hinted at what Black paid. Likewise, none of the stories suggested Hawaii's dreary tourism-based economy is heading for a sudden recovery. Wall Street greeted the news with a big yawn today: GCI recently traded for $15.15 a share, down 1%. Instead, Black is portrayed as an experienced and patient owner willing to ride out the recession.

"I give the guy high marks for tenacity," Gerald Kato, a University of Hawaii-Manoa journalism professor, told the Advertiser yesterday. "I've always thought that any bottom line-oriented businessman would have pulled out of this market long ago."

No Wall Street pressure
Black has another, significant advantage over Gannett: He's not subject to the same relentless Wall Street pressure to boost profits, quarter after quarter; his companies are privately owned.

Are there more Blacks in Gannett's other U.S. markets? The answer depends on whether any of the other 83 newspapers are losing money, or close to running a deficit. As well, Gannett would need equally brave and patient (and possibly foolish) local investors. The economy's got to show more signs of steady recovery. And the credit markets must open further, so investors can tap financing. One thing's certain: As always, Gannett is willing to bargain at the right price.

Is your market ripe for a change in newspaper or TV station owners? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Images: today's papers, Newseum]

Deal with annoying publicists? Here's one for you!

It's a video about a subject near and dear to newspaper and TV reporters everywhere: news embargoes.

Bulletin: GCI inks deal to sell Honolulu Advertiser to rival publisher; regulatory approval uncertain

Gannett announced early this evening that it had agreed to sell its money-losing Honolulu Advertiser for an undisclosed sum to an investor group, Oahu Publications -- publisher of the cross-town rival Honolulu Star-Bulletin.

Star-Bulletin publisher Dennis Francis immediately announced that under antitrust laws, the Star-Bulletin will be put up for sale. If no one buys the daily -- the smaller of the two papers -- it will be consolidated with the Advertiser, the Associated Press is reporting.

In a statement, Gannett noted that the sale is subject to regulatory approval, including from the U.S. Department of Justice, which could block or modify the deal on anti-trust grounds. "Because the Star Bulletin and The Honolulu Advertiser are daily newspaper competitors," the statement says, "OPI has discussed the purchase of the Advertiser with the Department of Justice and the Attorney General of Hawaii."

Assuming Gannett and Oahu overcome those regulatory hurdles, Gannett said it expects the deal will close in the second quarter.

Recalling trouble in Tucson
Regulatory approval isn't guaranteed. The Obama Administration could press antitrust concerns, arguing that the deal would limit competition. The Justice Department, for example, could demand evidence that Gannett made a good faith effort to bring in an owner other than Oahu. Gannett ran into similar obstacles when it tried to close the Tucson Citizen last year. Ultimately, GCI was allowed to close the print edition, but it maintains a skeleton website.

Still, the Advertiser has been losing millions of dollars since at least October 2008, when a union representing employees there confirmed the daily was running in the red. The paper has suffered as Hawaii's tourism-based economy collapsed amid the housing bust, the credit crisis and, finally, the deep recession. Under these circumstances, Gannett could argue that it had just two choices: Sell to Oahu, or shutter the paper to avoid more losses.

The Advertiser is the biggest daily in Hawaii. Its daily circulation is 115,278; Sunday is 125,922.

GCI bought paper for $250 million
Gannett has a complicated history of newspaper ownership in Hawaii's state capital. It owned the Star-Bulletin from August 1971 until January 1993, when it stunned its employees by selling the afternoon paper for an undisclosed sum to Liberty Newspapers. Gannett then bought the competing Advertiser for $250 million.

The Advertiser and the Star-Bulletin were published under a joint operating agency (JOA), where business operations were combined, but the two newsrooms remained separate.

The Star-Bulletin's new owner was controlled by Florida investor Rupert Phillips, according to the daily's history on its website. "The paper's life was nearly cut short in 1999, when Phillips reached a deal with Gannett to close the Star-Bulletin in exchange for a $26.5 million payment,'' the paper says. But the deal was scuttled amid community opposition and anti-trust lawsuits brought by federal and state authorities.

The paper was put up for sale. David Black, CEO of Black Press Ltd., a majority owner of Oahu Publications, bought the paper in March 2001. The JOA was dissolved, and Black has operated it as the scrappy upstart ever since.

Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Images: today's papers, Newseum]

Generation gray | They're older; are they wiser?

[Gannett's 13 most-senior officers last year]

Unfairly or not, aging industry leaders are accused of being out of touch with future consumers: young people who are abandoning newspapers in favor of Facebook, Twitter and other digital media. In response, you'd think, Gannett and other publishers would add younger executives to the ranks of senior officers.

But, no. A review of Gannett's annual reports over the past 10 years shows the opposite has happened. The median officer's age has actually increased since 2000.

Last year, the median age of 13 officers listed was 57, according to the just-published annual 10-K report. (See chart, above.) In 2000, the median of a much longer roster of officers -- 35 -- was lower: 54 years, according to that year's annual report.

Does age really make a difference? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Photo: Chairman and CEO Craig Dubow, appointed in July 2005; he is now 55 years old]

Then and now: GCI's evolving description of itself

Publicly traded companies file annual reports with federal regulators that include an essential piece of information: a short description of their principal business. Following is a glimpse of how Gannett's has changed; for the first time, "news" is now officially de-emphasized:

Feb. 25, 2009

"The company is a leading international news and information company."

Feb. 24, 2010

"Gannett is an international media and marketing solutions company."

Accurate, or not? Post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Documents show how Gannett did the impossible

By late 2007, Gannett had cut staffing to the bone, earning its reputation as the leanest outfit in the newspaper industry. Its 32,800 U.S. newspaper employees produced 85 dailies, including USA Today. It was now down to the marrow, conventional wisdom said at the time; any more payroll reductions would make it nearly impossible to get out the newspapers every day.

Yet, as the new annual report shows in stunning detail, Gannett found still more ways to whack away at staffing. Two years later, the company is publishing the same number of papers -- minus just one. (R.I.P., Tucson Citizen.) But now it's doing so with 8,100 fewer workers: U.S. newspaper employment plunged to just 24,700 by the end of last year, according to the 2009 annual 10-K report, filed yesterday with the U.S. Securities and Exchange Commission. In other words, Gannett torpedoed one of every four newspaper jobs in just two years.

How many more can it possibly cut? We know hundreds are at risk as newspaper advertising production work is consolidated at two new hubs in Des Moines and Indianapolis; that's expected to be complete by January 2011. Hundreds more positions could be cut when an untold number of presses are shuttered as printing gets outsourced; the number of shutdowns this year is expected to be at least eight.

Moreover, Gannett is well ahead of ABC News in combining television jobs -- reporter and camera operator, for example -- into so-called one-man band positions; is there any doubt there will be more to come at GCI's 23 TV stations?

The lesson of the past two years is clear: Don't underestimate the industry's lowest-cost operator to extend that reputation further.

[Image: yesterday's Des Moines Register, Newseum. The paper eliminated 42 jobs during the big July layoff]

Urgent: Gannett employment plunged 16% in 2009; after broad layoffs, workforce now totals 35,000; U.S. newspapers took biggest hit: 4,500 jobs cut

[Annual company-wide employment at the end of each year]

Wielding big layoffs and other cuts, Gannett slashed its workforce 16% last year, to 35,000 employees, the company disclosed today in its annual 2009 10-K report to federal regulators. The new company-wide total is down from 41,500 a year before. It was the largest annual decline since 1994, according to readily available records, and likely the biggest in the company's 104-year history.

The U.S. newspapers accounted for the most job losses by division: 4,500, says the report filed with the U.S. Securities and Exchange Commission. But the U.K. newspapers experienced the biggest percentage decline: 23%.

The employment drop in the U.S. Community Publishing Division -- 4,500 jobs -- is a particularly striking figure. Late last June, based on a well-regarded source, I asked Corporate whether USCP was on the verge of laying off exactly that number of employees. The company disputed that forecast, and division President Bob Dickey told employees in a memo the actual number for that July layoff would be far smaller: 1,400.

Gannett's new 35,000 total includes 1,600 employees at jobs site CareerBuilder. Although GCI owns barely 51% of the company, it counts all the employees as though they worked entirely for Gannett. That was an accounting change that began with the 2008 annual report.

The complete breakdown by major divisions:

U.S. newspapers
2008: 29,200
2009: 24,700
Change: down 15%

Newsquest
2008: 6,600
2009: 5,100
Change: down 23%

Broadcasting
2008: 2,700
2009: 2,500
Change: down 8%

CareerBuilder
2008: 2,000
2009: 1,600
Change: down 20%

How is your worksite contending with fewer employees than a year ago? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Day 2: As board meets, dividend news is likely

(Updated at 3:36 p.m.) That 4-cent dividend has now been announced.

Gannett's 10-member board of directors concludes a regularly scheduled two-day meeting today, with members expected to announce another quarterly dividend after stock markets close at 4 p.m. ET. The quarterly dividend is now 4 cents a share. GCI recently traded for $14.91, up about 1%. Its 52-week range: $1.85 to $17.33.

Earlier: Board said meeting; likely topics include bonuses

Amid good pension news, big cautions lay ahead

[2008 annual report reveals total underfunding of four plans]

President and Chief Operating Officer Gracia Martore disclosed welcome news this month about the Gannett Retirement Plan, the biggest of four pension plans benefiting most of the company's nearly 40,000 employees. Because of surging stock markets last year, the value of Gannett's main pension plan investments rose about $150 million, she told a Feb. 1 teleconference of Wall Street stock analysts. That was good news for employees and investors because it bolstered Gannett's ability to pay retirement benefits; investment assets, after all, are the source of those payments.

But Martore didn't report a key piece of information: the plan's overall funding levels -- the assets required to meet all estimated current and future benefit payments. That is a figure now disclosed once a year in the company's annual 10-K report, filed with federal regulators. We'll get fresh information when the 2009 report is filed with the U.S. Securities and Exchange Commission as soon as this week.

The last 10-K report, covering 2008, revealed a sobering view of the Gannett Retirement Plan ("GRP" in the table, above). At the end of that year, it was underfunded by about $587 million. That was for two principal reasons: a sharp decline in the plan's stocks and other investments during the year, one where the great recession sent markets tumbling. (Those of you invested in the company's 401(k) plan experienced similar declines.)

The other reason: Gannett hasn't contributed to the plan since adding $50 million way back in February 2004, according to annual 10-K reports. What's more, Gannett isn't facing mandatory contributions this year, Martore told Wall Street analysts after GCI reported fourth-quarter earnings. "We may look at doing something on the voluntary side; but it would not be of significant scope,'' she said during the question-and-answer portion of the conference.

Underfunding: Gannett isn't alone
Many companies have underfunded pension plans. The 100 biggest U.S. pensions were just 79% funded in 2008 vs. 109% funded at the end of 2007, according to consultant Watson Wyatt Worldwide. That means they had 79 cents set aside for every dollar owed to current and future retirees, The Boston Globe reported.

Gannett gave itself some relief by freezing the plan's benefits in August 2008, which limited future expenditures. If stock markets continue rising, the value of the plan's assets should rise, too. Also, assuming Gannett's financial situation continues improving, the company could resume large plan contributions.

But as investment professionals say, past performance is no guarantee of future results. The stock market could dive again; as I write this, the Dow Jones Industrial Average closed down 100 points today. And Gannett's revenue and profits could suffer unexpected, additional declines if it can't stem advertising losses to online competitors; that could pinch GCI's ability to fund the pension plan.

What's more, Gannett's total pension underfunding is actually much bigger than the $587 million in the main plan at the end of 2008. The company is on the hook for three other plans: one for U.K. employees in the Newsquest newspaper chain; another supplemental plan for a small group of senior executives, and a third "all other" plan, which the company doesn't appear to detail in the annual report.

Combined, those plans had a total underfunding of nearly $892 million at the end of 2008. (See the table, top.) We'll know the status of the four-plan underfunding when the 2009 report is filed, as I said, as soon as this week.

A cautionary note
I am by no means an expert on pensions. The subject's complexity is reflected in the fact that the word pension appears at least 44 times in the annual report. Employees and retirees who are concerned about their benefits should consult an accountant or other retirement professional. My observations here are meant only to start a discussion on the subject.

Current and retired Gannett financial professionals, please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

USAT | Why it's better to cover Olympics solo

From a story today on New York magazine's website by Dan Friedell, a USA Today reporter who covered three previous Olympics (including two for NBC) before USAT laid him off in December:

While there's something magical about having the "infinity" credential of big media at the Olympics (its presence around your neck allows you to go just about everywhere and anywhere, for free), the fact that I don't have it this time around has given me a new appreciation for the event that is the Games.

Got a Gannett survivor success story to share? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Image: cover of New York's current print edition]

Why some publishers can't resist reading this blog

"You know that she keeps coming back to check on the comments. Guaranteed."

-- Anonymous@1:13 p.m. today, adding to a growing string of comments on a long-ago post about the publisher of two Gannett newspapers in Louisiana.

Poughkeepsie | Getting fired made her a Web star

Reporter Michelle Leder probably had no idea that getting fired by Gannett's Poughkeepsie Journal 12 years ago would help turn her into an Internet star -- the founder of a financial news blog so successful, she was able to sell it to mutual fund powerhouse Morningstar.

In 1998, Laura McGann writes today in a new post on the Nieman Lab blog, Leder's Poughkeepsie Journal editor shot her an e-mail, saying her job on the business news desk would not be waiting for her when she returned from abroad.

Five years later, Leder launched what's become a wildly popular investment site, Footnoted.org. Leder posts "nuggets of interesting information pulled from the fine print of securities filings for valuable investor news,'' McGann says. "This month Morningstar purchased the site for an undisclosed sum. Leder will continue to run the editorial side and contribute content. Morningstar will sell subscriptions to her premium content (some content will remain free)."

One of Leder's best "gets'' was discovering that former Gannett Chief Financial Officer Larry Miller received a 2003 consulting contract with Gannett worth $600,000 a year for the rest of his life. (The deal is described under the heading "certain relationships" in that year's proxy report to shareholders.) The contract would continue until either the company or Miller canceled it. I couldn't find any evidence the contract had been rescinded in a recent search of Gannett's Securities and Exchange Commission filings.

Got a Gannett survivor success story to share? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

In other corporate directorships, fewer distractions

By one measure -- the number of their other corporate directorships -- Gannett's board of directors has a pretty good record, as they prepare to start a series of GCI meetings on Tuesday.

With the exception of Karen Hastie Williams, they've restrained from overextending commitments to other corporate boards, according to GCI's list of members' directorships and trusteeships. After all, the fewer other board seats held, the more attention they can pay to overseeing Gannett's top executives. (So long as the directors choose to, of course.)

Williams, who serves as Gannett's most powerful director after Chairman and CEO Craig Dubow, holds seats on four other corporate boards: Insurance giant Chubb Corp.; Continental Airlines; SunTrust Banks, and WGL Holdings, parent company of Washington Gas Light Co.

Although the chart, above, shows John Louis with four seats, two of them are at non-profits organizations: Northwestern University and the Chicago Council on Global Affairs. Likewise, Neal Shapiro's three directorships are all at non-profits, including Tufts University. One of Dubow's two other directorships is on the Associated Press' governing board.

Related: capsule biographies of all 10 Gannett directors

Is a new Gannett branding campaign in the works?

I doubt many consumers could identify the parent company of Gannett's newspapers and TV stations. And if they could, they might struggle to pronounce it correctly. (As we know, the accent is on the second syllable in "Gannett.")

Now, I've been told, Corporate is considering a multimillion-dollar campaign to turn Gannett into a true brand name. The tag line, I'm told: "Gannett ... connecting you to your world."

I have precious few details, and this tip is from just one source (albeit one who's been spot-on before), so treat this with a grain of salt. If true, any such brand campaign would be an unexpected challenge to USA Today's role as Gannett's public face in the more than 27 years since the paper was launched. So, why would Corporate back any such initiative?

Within the newspaper industry, it could turn around Gannett's reputation for being a low-cost, low-quality operator of newspapers and TV stations -- an image created despite the hard work of generations of employees on the front line. That would help in recruiting talented workers, when and if they company returns to significant hiring mode. It also could enhance efforts to sell advertising.

In the consumer market, a branding campaign would strengthen the company's network of websites, as younger customers show less allegiance to the older, existing brands: the newspapers and TV stations Gannett has bought or established over the years. In other words, consumers would think "Gannett'' when they look for news and information in their local markets.

Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Image: the cover of Gannett's 2008 annual report to shareholders]

Gannett board of directors said meeting this week; likely topics: bonuses, plus status of wage freeze

Starting on the top row, left to right, with executive compensation committee members in boldface: Dubow, Elias, Harper, Louis, Magner, McCune, McFarland, Shalala, Shapiro and Williams.

The board of directors gathers for a regularly scheduled two-day meeting beginning Tuesday, a reader tells me, and history suggests the agenda will cover annual pay for Chairman and CEO Craig Dubow and other top executives. Directors could also be briefed on the future of the year-long newspaper division wage freeze due to end April 1; the outlook for any more unpaid furloughs, and a reported new Gannett branding campaign. Also on tap, I'm told: an exclusive dinner party for directors and as many as 100 select employees.

Last year's meeting culminated in a flurry of regulatory filings that offered hints at the size of executive paychecks, a big chunk of which come in the form of stock options. Back then, the documents filed with the U.S. Securities and Exchange Commission revealed that 2008 bonuses had been cut in half for Dubow and then-Chief Financial Officer Gracia Martore (left) following the company's dreadful performance that year. Those 2008 stock options have since become quite valuable.

As soon as later this week, we should see a similar raft of SEC documents revealing stock given as part of 2009 bonuses. Don't be surprised if those bonuses have spiked way up, given the surge in Gannett's stock during the year. Complete details on those 2009 stock awards, plus salaries and other benefits, will be disclosed in the annual proxy report to shareholders, due the middle of next month.

Wage freeze future uncertain
The year-long wage freeze was imposed on the approximately 29,000 employees in the U.S. newspaper division starting April 1 last year. My reader source worries the freeze will continue, rather than get lifted. (The reader, a good source in the past, goes so far as to say in an e-mail: "It is most likely going to be extended." I have not heard that from any other sources, however, so caveat emptor.)

Lending credence to that notion: a recent move by USA Today, which extended its own wage freeze 90 days past its scheduled end date of Jan. 31. In a memo to employees earlier this month, Publisher Dave Hunke cited the economy's "inconsistent and unsure'' recovery. A bit ominously, he said the extension was for a "minimum'' of 90 days.

To be sure, USA Today faces unique market pressures: It's almost exclusively dependent on national advertising, while Gannett's community papers get their ad sales from local retailers and other businesses. Still, Hunke's warning on the economy could reflect broader worries on the powerful Gannett Management Committee led by Dubow.

For her part, Martore -- recently promoted to President and Chief Operating Officer -- has on two occasions failed to rule out another round of unpaid furloughs later this year. Most of the company is on one-week furloughs during the current quarter. Last year, there were furloughs in both the first and second quarters.

A less dramatic meeting?
Tuesday or Wednesday, the board should approve the quarterly dividend; watch for an announcement on that. Plus, directors could preview the annual report to the SEC, called a 10-K; that information-rich document could also be filed as soon as this week. Last year's 10-K, for example, revealed a steep decline in the company's overall employment.

Also, directors may learn details about what I'm told is a major, new advertising campaign in the works meant to burnish Gannett's brand name. (I plan to write more about that later this week.)

For sure, there will be other items on the board's agenda, although it's unlikely they'll be as monumental as a year ago. Back then, as Gannett tumbled near bankruptcy, directors agreed to slash the annual dividend by 90%, to just 16 cents a year. That freed up $325 million annually to pay down the company's crushing debt, a big portion of it due to a disastrous $1.8 billion stock buyback led by Dubow and Martore.

A hint: You'll know the board is meeting at Gannett headquarters in McLean, Va., if you see a complement of black SUVs and other fancy cars parked in front of the Crystal Towers, with chauffeurs waiting to ferry many of the 10 members to and from their hotels.

Earlier: One of the longest-serving directors, Donna Shalala, is facing her last year on the board, according to bylaws. Plus: As board finalizes top executive bonuses, will committee repeat last year's surprise decision?

What do you want the board of directors to know about how you've coped with the wage freeze and unpaid furloughs? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Image: a recent USA Today front page, Newseum]

Week Feb. 15-21 | Your News & Comments

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Board of directors 101; plus: Shalala on way out?

[Shalala looks for her chauffeured car after the April annual meeting]

Historically, Gannett's board of directors has met in regularly scheduled sessions as many as six times a year, although the smaller executive committee occasionally gathers in person or by phone to handle pressing business. The board has overall responsibility for hiring and firing the CEO, chief financial officer and other top executives, as well as approving broad business strategies.

But this board, like too many across Corporate America, has tended to be too cozy with management, serving more as a giant rubber stamp than as a skeptical body on executive decision-making.

The board's failings are partly due to structure: Like many other Corporate boards, CEO Craig Dubow is also the chairman, where he controls the agenda in tandem with the lead outside director, Karen Hastie Williams (left). In effect, that means Dubow largely supervises himself, giving him tremendous leeway over company policies and his own pay.

Williams, 65, and Director Donna Shalala are the board's longest-serving members, although it appears Shalala is on her way out. The women also are the only two directors who were on the board that originally appointed Dubow the company's chief executive in 2005. They've both collected huge director fees for their service. (See chart, below.) Williams got paid more than $891,000 from 1997-2008, SEC filings show. Shalala got more than $666,000 from 2001-08. We'll know how much they were paid last year when the next shareholders proxy report is filed next month.

Shalala, the former Secretary of Health and Human Services in the Clinton Administration, turned 69 on Valentine's Day. Mandatory retirement age is 70 for directors who did not work as executives in the company, according to the committee's bylaws, so she's in her final year as a director.

What sort of director would you like to see replace Shalala? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

USA Today tweaks homepage design once more

Less than seven weeks after launching a redesign of its home page, the company's top-selling paper has updated it further. The changes are small, but noticeable enough to make me wonder why there isn't an editor's note acknowledging and explaining the move (unless I'm just missing it). Can anyone explain what's going on?

Here's a snapshot of the page taken moments ago . . .


. . . followed by a snapshot of the page as it looked on Jan. 3, after the earlier redesign:

What do you think of these tweaks (if you even see them)? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Why Martore has inside track to be next CEO

"She knows where all the bodies are buried. The next few years are going to be rough
(if the company even survives) and those
in charge of picking CEOs won't want a newbie looking under rocks."

-- Anonymous@5:45 p.m., on speculation today over President and Chief Operating Officer Gracia Martore's chances of succeeding CEO Craig Dubow, as his fifth anniversary draws closer.

USA Today to start specialized Puerto Rico edition

The new Puerto Rico edition starts Monday, the top-selling daily announced today, and will cater to travelers and tourists on the island. Besides the regular USA Today newspaper, the Puerto Rico edition will include two pages of translated articles from Spanish-language Puerto Rican daily El Nuevo Dia, according to the Associated Press.

"The translated articles will be focused on Puerto Rican politics, economy, society, sports, entertainment and tourism. USAT has a similar partnership in Cancun, Mexico," the AP says.

The Puerto Rico Daily Sun is now the island's only English-language daily. It was created in 2008 by a group of journalists after the San Juan Star folded, according to the news service.

Succession | Who will be Gannett's seventh CEO? Turnover is up, and Dubow hits five years in July

Gannett CEOs since the company was founded in 1906, from top row: Frank Gannett, Paul Miller, Al Neuharth; bottom: John Curley, Doug McCorkindale, Craig Dubow.

With history as a guide, Gracia Martore's recent promotion to president and chief operating officer makes her a natural candidate to replace CEO Craig Dubow -- possibly, fairly soon.

She certainly has the experience: An employee for 25 years, and chief financial officer since 2003, Martore (left) was made acting CEO by the board of directors during Dubow's medical leave of absence last summer. Moreover, insiders have always been favored: The company's five CEOs since Frank Gannett died in 1957 all rose through the ranks. Dubow has been CEO since 2005, and chairman since 2006.

Across Corporate America, CEO turnover has been rising for years, according to Forbes magazine. Their average tenure fell to 4.8 years in 2009 from nine years in 1990. Dubow, 55, still recovering from two rounds of back surgery, will have been CEO five years in July. His predecessor, Doug McCorkindale similarly served five years. (See chart, below.)

Corporate boards like to keep their options open, so they seldom formally declare a successor in public. Instead, they telegraph their intent to Wall Street via promotions such as Martore's. Directors are known to switch horses, too. Then-USA Today Publisher Tom Curley was widely seen as a successor to McCorkindale until his unexpected departure in 2003 to become CEO of the Associated Press. Age, too, can be a factor. Martore is 57. With rare exceptions -- McCorkindale, for example -- mandatory retirement age is 65.

Her 'tremendous financial skills'
True to form, Gannett's board played their intent close to the vest when Martore got promoted Feb. 1. Directors didn't explicitly anoint her Dubow's heir-apparent.

"Craig has brought new vision and direction to our company,'' lead outside director Karen Hastie Williams (left) said in a statement. "As the economy continues to move ahead, we look forward to furthering the many changes under way and setting the course for what our company will look like in the years to come. This move will allow Craig to concentrate on Gannett's long-term strategic planning while Gracia manages the day-to-day operations of the business. Craig and Gracia have been exceptional leaders for Gannett and work in tandem as an outstanding team."

Whatever the board's hedging, Martore's intimate familiarity with GCI's capital structure as finance chief could give her an edge. After all, companies in shrinking markets depend more on cutting costs to maintain profitability. "She has tremendous financial skills and extensive knowledge of our business operations,'' Dubow said in announcing Martore's elevation. "She's earned this opportunity and I couldn't be more pleased that she will serve as our president and COO."

Moreover, Wall Street isn't expecting dramatic changes in GCI's strategic plan -- indeed, investors don't want that. They seek steady, reliable profits, the sort Gannett once delivered. For that, you need an executive who can manage earnings and who has the intestinal fortitude to make tough decisions, such as laying off thousands of employees. That describes Martore to a tee.

Who would you like to see as the next CEO? An insider? Someone from outside? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Urgent: Buffett reportedly sells 1/3 of his GCI stock

[GCI traded for $9.53 to $15.99 in fourth quarter as he sold]

Influential investor Warren Buffett (left) has sold one million of three million Gannett shares, The Street website is now reporting, as his Berkshire Hathaway conglomerate shuffled its portfolio in the fourth quarter.

The Street doesn't say when Berkshire sold its GCI shares, or the price. The stock traded between $9.53 and $15.99 during the quarter, Google Finance says. Today, it traded recently for $14.98. Buffett has been a significant investor in newspapers, including ownership of the The Buffalo News and a big stake in the Washington Post Co., where he's is a member of he board of directors.

Berkshire's sale follows news that one of Gannett's biggest investors, Brandes Investment Partners, sold virtually all its 23 million shares. And the company's No. 1 investor, Ariel Investments, reduced its stake by nearly three million shares.

At a minimum, these sales suggest some investors don't expect Gannett's stock to rise anytime soon. Some sales, such as Brandes', may be a decision to cut losses by the end of the 2009 tax year.

[Chart: Google Finance]

To Bob Dickey: We're 'looking for a true visionary'

Frustrated by readers who only want to "crucify the executives,'' Anonymous@7:04 a.m. raises a question that's noteworthy for what it says about the quality of employee communication from Corporate.

"Let's get back to reporting on things that matter to an editor like me in a large-market newspaper,'' @7:04 says. "I would really like to find out from my divisional president, Bob Dickey (left), what he believes a newspaper looks like in three years. Do we all go the way of Detroit? Should we all start writing for the web and then reverse-publish for print? What is the role of a newspaper publisher in a changing media environment? . . . We are all in the same boat and we are looking for a true visionary."

Anonymous@11:20 a.m. seconds that request: "Mr. Dickey," they write. "We know you read this blog. Please send a response or an e-mail to your employees and tell us what the newspaper looks like in 3-5 years. What grand plan are you putting together with your corporate strategists around e-readers, mobile phones -- and where does that place the newspaper? We await your answers. Please provide explicit details and not 'corporate-speak' answers."

As a Gannett employee, I had the same question: What was top management's vision for the company in a rapidly-changing media landscape? CEO Craig Dubow's first big initiative -- emphasizing news on the web first, followed by print -- wasn't ground-breaking when it was unveiled in 2006. Dubow was simply pulling Gannett into a 21st century model ignored by his predecessor. And Dubow's repeated admonition that Gannett would remain the No. 1 news source in its markets was only a restatement of the company's long-held goal.

2007: vision interruptus
Whatever big vision might have emerged was lost starting in mid-2007, when the company began an alarming slide toward bankruptcy. Truth be told, that's been the Dubow-Dickey vision for newspapers ever since: Keep Gannett out of the hands of creditors long enough for the economy to rebound.

The immediate threat of Chapter 11 bankruptcy now seems past. That means it's time for Dubow & Co. to articulate the vision sought by many employees. What should be worrisome, though, is readers like @7:04 are still asking whether newsrooms should "start writing for the web" and then update for print. More than three years after that very goal was built into the Information Center reorganization, why is anyone still posing such basic questions? What's that say about the effectiveness of communication from Corporate down to the trenches?

What's your vision for the company? What do you hear from the Corporate office? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

[Image: today's Detroit Free Press, Newseum. Last spring, the paper dropped home delivery for all but three advertising-rich days; the rest of the week, it produces an abbreviated edition for newstand sales]

When cleaning falls victim to budget cuts . . .

"At our Wisconsin site,
our mascot is the dust bunny."

-- Anonymous@11:14 p.m., responding to my search for worksites that still have mascots, after the Detroit Free Press laid off The Yak.