Tuesday, January 28, 2014

Mail | Three reasons why Gannett won't break up

Anonymous@7:05 a.m. says that, despite a recent published report, Gannett won't split itself into two companies -- one with newspapers, the other with TV and other faster-growing businesses -- for several reasons.

1. Gannett and its board of directors are way too conservative. And they have the most conservative CEO on the planet running the company. It would be too radical for them to even think about doing it. With 70% of the revenue coming from print, they can't begin to think of how or why a split could possibly bring more value to the company.

2.  Gannett's leadership doesn't have the strategic change management knowledge, decision-making ability, or good judgement to understand how to navigate a split of their company. It barely knows how to facilitate restructuring teams as a result of three years of downsizing its workforce. It would be an utter internal organizational cluster-fuck with even more fiefdoms sprouting up all over the place and people jockeying for positions around the company. It would be a freakin' mess -- and more of a mess than the company is now. And that's saying a lot.

3. The company is too . . . scared to try running with TV and digital on their own. And management should be scared because there's no real guarantee of local TV news' long-team survival. If they tried to run a digital company all solo, they may have to reduce their workforce again. And that's probably not going to happen. Gannett is a deer in the headlights when it comes to any of this. They are too scared to do anything radical or anything at all. So, they'll just stand there in the middle of the road and we'll watch them get hit by the semi-truck.

As always, other views are welcome. 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 green rail, upper right.

21 comments:

  1. What a load of tosh! Gannett under Martore is a force to be reckoned with again. The market cap of the company has recovered under her leadership and the company is performing well in a still difficult margin. Stop sniping and start celebrating the future of Gannett.

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    1. What are you smoking, you must be in Denver. Or one of her "team players"

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  2. Gannett managers (baby sitters) have no vision. Leadership through fear is not a management tool, strategy, or long-term value building exercise.

    Unfortunately for the company (-ies), leadership was forced (without understanding or acknowleding it) to adopt a multi-media approach; ultimately their "print" focus will be their doom.

    The days of ad order faxes overflowing and unplugging the machine (and the skillset required to do this) will be their undoing. Promoting from within is essentially incestuous with regards to believing print will save the day. Community papers (AKA "the paper") throughout the US demonstrate this belief by decimating any talent at savings one's own arse where baby-sitters are concerned.

    My dollars bet the company will spin the anchor dragging the bottom of the deep blue sea and management from Belo and the NBC folks with enough gumption will jettison the institutional print minded lemmings.

    GO BELO!!!

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  3. Despite how we all might feel about the leadership at Gannett, it is fair to say they have weathered the industry's storms better than nearly all of their peers in the newspaper business. None in that business figured out the disruption of the web except perhaps the NYT and they are in many ways a special case. Knight-Ridder? McClatchy? Lee? Tribune? As for comparisons to other Broadcast management teams, keep in mind that it Gannett that bought Belo. This management team is fully capable of pulling off a split of the company into separate print and broadcast companies if it so desires.

    With the Belo acquisition, the Gannett team has bought the company more time to try and build a viable digital advertising and digital marketing services business. It's a short-term move to support their longer term strategy. But given the company's track record in building businesses (vs. buying them), it is not likely to pay off as they hope. The only business built by Gannett was USA TODAY. It took over 10 years to turn a profit and never achieved the margins of Gannett's most successful print products. The current management team does not have that amount of time to build their new businesses. Gracia, Jack and a few others will be retiring in just a few years, so they won't see the end result of what they are currently trying to build.

    Splitting the company would be difficult, but not impossible. It could be the career capstone for Gracia and Jack, if they and the Board decide it is the last best way to increase shareholder value. When it comes to Gannett's leadership and what they are capable of doing, never say never.

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    1. Weathered? More like sucked up better than their peers.

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    2. The New York Times is only a special case because it made itself a special case. There's no reason USAT couldn't have done a better job figuring out the disruption of the Web. Wait a minute... there is a reason... Gannett isn't dedicated to making a news gathering organization work. The Times still cares a little, and that means more people care about the product.

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  4. Jim, shallow analysis. If they didn't have the cojones to split, they wouldn't have bought Belo. Maybe they won't, but not because Gracia is '"conservative." You are way off on that one

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    1. I've written about the possibility of a split several times over the past six months -- most recently in a post on Dec. 8, where I wrote that CEO Gracia Martore isn't sold on the idea.

      Gannett's U.S. dailies and TV stations occupy a combined 111 markets, offering economies of scale no one else can match, she says. Still, if newspapers become an even bigger drag on growth, analysts will surely push harder for a breakup.

      Even as she demurs, Martore leaves herself wiggle room, as she always does when analysts ask about future strategy. She and her fellow board members will never say never, she said in October: "We're always looking at different alternatives. . . . What we're in this business to do is to create additional shareholder value. And that's what we're focused on doing."

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    2. Analysts have nothing to do with it.

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  5. I'd have to disagree with all 3 points -

    #1 - While I agree then lean conservative, it's not a big leap to consider spinning off the newspaper group. It's already been done or is in the process at other public companies. For Gannett, it's simply follow-the-leaders. Not a whole lot of risk involved.

    #2 - Again, I agree with the OP that management doesn't have a lot of vision, but Gannett is famous (or is it infamous?) for hiring high-priced consultants. Those consultants would surely advise to abandon the print. Print and broadcast already operate as separate units. The change would be relatively low-impact, especially for the pieces they keep (broadcast and digital). After the spin it off, who cares if newspapers fades away (which is it's destiny anyway!)?

    #3 - Fear isn't a deterrent - now they have a real excuse to cut the workforce. Do you realize how many layoffs they could bury in this? Their only concern is how to eek out enough profit for upper management to continue to be employed with hefty bonuses. Dickey and Company slowly fade into oblivion.

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  6. If Gracia is close to retirement, I highly doubt she will want to be remembered as the one who broke up Gannett. She'll leave that bit of dirty work to her successor.

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    1. It won't be viewed as breaking up Gannett, it will be viewed as saving Gannett. More importantly for GM, it will be seen as increasing shareholder value, which is ALL she cares about. And all she is really supposed to care about.

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    2. I think we are all very aware of what Gracia really cares about.

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  7. This comment has been removed by a blog administrator.

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  8. All you fearful publishers and ad managers commenting here have nothing to add but wishful thinking.

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    1. And this isn't jim ^^^^^

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  9. It will take at least another year to 18 months to complete the unified strategy that the board has been plowing money into for a couple years -- integration of news websites and content management systems, rollout of USAT Butterfly, integration of Belo, consolidation of press assets and printing sales in GPS, etc.

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    1. Don't forget USAT Sports Media Group and Gannett digital marketing services - or are they no longer part of the "unified strategy"?

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  10. There is nothing "unified" about Gannett. This is a completely fractured, disorganized mess of a organization beyond which I have never seen.

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    1. Yawn. These posts are getting tiresome and repetitive. I think Jim is trying to seed the blog again.

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    2. Then stop reading. Insults (especially anonymous insults) are cheap.

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