Wednesday, June 27, 2012

Stock | News Corp. board reportedly meets today; speculation on an NWS breakup drove GCI up 6%

The board of directors at the owner of The Wall Street Journal and Fox News reportedly meets today to consider splitting the company in two -- a possible move that sent Gannett and other newspaper shares soaring yesterday on speculation of an industry-wide shift.

GCI's stock closed at $14.04, up 6.4% -- one of its biggest single-day percentage advances over the past year.

If the board approves the split of its publishing and entertainment assets, News Corp. is expected to announce the restructuring tomorrow, according to this WSJ story; it cited a person familiar with the situation. The New York Times is carrying a similar report. Some NWS employees, the NYT says, "worry that the company’s newspapers will lose their economic safety net without the high-performing entertainment assets propping them up."

NWS shares jumped 8.3% yesterday on earlier reports about deliberations. Among newspaper publishers overall, GCI rocketed higher than all but NWS and Lee.

The spinoff idea has been in "gestation" for several years, the WSJ said, although CEO and controlling shareholder Rupert Murdoch had until recently opposed the idea. Amid a phone hacking scandal in the U.K. that has roiled the company, Murdoch, 81, has recently warmed to it, the paper says. In addition to being CEO, he also is chairman of the board.

Why GCI's rising
Wall Street may have interpreted the NWS talks as a further affirmation of the value of newspapers, according to MarketWatch. For one, financier Warren Buffett has recently been on a newspaper buying spree.

But investors may also have been betting on the possibility GCI could spin off its 23 TV stations plus other non-newspaper properties such as Captivate and PointRoll. GCI's approximately 100 U.S. and U.K. papers, including USA Today, have been a drag on earnings as the industry hit fierce competition from more nimble digital rivals.


  1. Unless somone like Carl Icahn comes in and threatens the board with a block stock purchase, forget about a stock spinoff of broadcast at Gannett. Besides, this company has enough trouble filling management slots with good people at one company, let alone two.

  2. Spinoffs are popular right now.which is why Gannett wont do one. The runup past $14 wont last. Remember the short lived gains when they announced share repurchases and a dividend hike? Gone.


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