Stock | Major investor Ariel's stake slips below 5%

Ariel Investments owned 11.5 million Gannett shares as of Dec. 31, the Chicago money manager said in a federal regulatory filing today, down significantly from 14.9 million a year ago.

That reduced its stake of all GCI shares to 4.8% from 6.2%, according to its annual notice to the U.S. Securities and Exchange Commission.

Ariel's filing follows similar reports this week and last by three other big other money managers: BlackRock, AllianceBernstein, and Vanguard.

Managers such as these are typically passive investors, rarely agitating for management changes.

GCI's stock closed today at $14.81, down 9 cents, or less than 1%.

AllianceBernstein boosts GCI stake near 10%

[Updated at 1:22 p.m. ET with BlackRock filing.]

The money manager increased the number of shares it owns to 22.8 million, or 9.6%, from 16.9 million or 7.1% a year ago, Corporate said in a filing with federal securities regulators moments ago.

The latest figures are as of Dec. 31, according to the New York manager’s annual filing with the U.S. Securities and Exchange Commission.

Also today, BlackRock said it had cut its stake to 12.5 million, or 5.2% as of Dec. 31, from 15.2 million, or 6.4%, last year.

In an earlier filing, mutual fund giant Vanguard said Friday that it had it trimmed its ownership to 12.4 million shares, or 5.2% of all. That’s down slightly from 12.7 million, or 5.4%, from a year ago.

GCI traded recently today for $14.64, up 3 cents, or less than 1%.

Stock | Ariel trims GCI stake in first quarter

Chicago-based money manager Ariel Investments sold 2.1% of its Gannett stock during the first quarter, the Motley Fool investing site says. Still, GCI remains No. 1 among Ariel's 116 holdings, valued at $5.7 billion.

GCI stock recently traded for $14.01 a share, up 17 cents, or 1.2%.

Ariel was GCI's No. 3 investor at the end of the quarter, with 14.3 million shares, MSN Money Central says.

JP Morgan Chase was No. 1, with 22.6 million shares. Alliance Bernstein was No. 2, with 16.8 million.

Motley didn't say when Ariel sold its stock, or give any other details. During the quarter, shares traded from $14.26 to $18.93.

Urgent: AllianceBernstein boosts stake to 7.1%

In a new regulatory filing today, money manager AllianceBernstein said it had increased its stake to 16.9 million shares, or 7.1% of Gannett's stock. That was as of Dec. 31, and compares with 12.2 million shares, or 5.1%, at Sept. 30, according to data I found here this morning.

Bernstein's increased holdings followed word last week that another big investor, BlackRock, had added enough GCI stock to become the company's No. 2 investor.

As in BlackRock's case, Bernstein did not say how much it paid for the additional 4.7 million shares, or when the purchases occurred, according to the filing with the U.S. Securities and Exchange Commission. GCI stock recently traded for $17.10, up 10 cents, or less than 1%. The stock has lately been on a tear, soaring more than 13% at one point on Monday before closing lower.

Through its parent company, AXA Financial, the company's holdings have see-sawed over the years. At Dec. 31, 2008, AXA controlled 30.8 million shares. But by April 30 the following spring, it had sold most of those shares, leaving itself with just 952,828.

Related: list of major stockholders

Urgent: No. 1 investor AXA drops millions of shares

After boosting its stake just last year, Gannett's single-biggest investor sold most its nearly 31 million shares as of April 30, the money management firm said in a new U.S. Securities and Exchange Commission notice, moments ago. As is customary for such filings, the notice by AllianceBernstein parent AXA Financial does not include any explanation for the action. The money manager's ownership at:

Dec. 31, 2008
Shares: 30.8 million
Stock price: $8.00

April 30, 2009
Shares: 952,828
Stock price: $3.91

We now know that rival institutional money manager Ariel Investments of Chicago apparently was buying, as AXA was selling.

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Back to the future? Ariel's Rogers on newspapers

With advertising and readers fleeing to the Internet, it's hard to recall a time when newspaper companies were more out of favor among investors. So why would Ariel Capital Management pour more money into Gannett, the ailing publisher of USA Today, and 101 other dailies in the U.S. and the U.K.?

"Our firm is based on contrarianism," Founder John Rogers (left) once told the Chicago Tribune. "We often find that's where opportunity is.''

Today, the Chicago money management firm emerged as Gannett's new No. 2 stockholder, after it told federal regulators it had amassed 28.8 million GCI shares, more than double the 11.1 million it held on Dec. 31. The news electrified Wall Street investors: Gannett's stock rocketed to $3.75 a share, up a whopping 39%, or $1.06 a share.

In that Trib interview, Rogers said the industry's woes were about to bottom out, setting up pure-play newspaper stocks for a rebound. "When everyone decides an industry can only go down, usually that's getting close to a bottom," Rogers said in that memorable interview.

Memorable, of course, because it took place in late July 2007. Aerial had just boosted its stake in McClatchy Co. to 15.5% from 10.3% only three months before. (Aerial's share has grown still more; it's now 26.2%.) At the time, Miami Herald owner McClatchy's stock traded for $26.50 a share.

Yikes! Today, MNI closed at 61 cents, up 3 cents.

Memorable source, too!
There aren't many minority professionals on Wall Street, much less founders of investment firms. So, Rogers occupied a prominent if not lonely position on the various minority source lists I kept over the years as a Gannett reporter and editor.

[Photo: Aerial]

Urgent: Money manager Ariel doubles GCI stake; Chicago firm suddenly vaults to No. 2 stockholder

Ariel Investments just notified federal regulators in a new filing that it now owns 28.8 million Gannett shares -- 12.5% of all -- more than double the 11.1 million it held as of Dec. 31, according to MSN data.

Investors went nuts: GCI's stock recently traded for $3.74, up $1.05, a stunning 38%, Google Finance is now reporting. Broader markets are up, too, but not so much: The Dow Jones industrials and the S&P-500 index are both up less than 3%.

The Chicago money management firm led by founder John Rogers displaces Brandes Investment Partners of San Diego, Calif., as Gannett's No. 2 shareholder.

The old line-up, at Dec. 31, according to MSN:

• AllianceBernstein: 30,843,284 (13.4% of all shares)
  
• Brandes Investment Partners: 23,469,400 (10.2%)
  
• Barclays Global Investors: 13,600,252 (5.9%)
  
• Ariel Investments: 11,121,977 (4.8%)
  
• State Street Global Advisors: 9,823,345 (4.3%)
  

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Don't Blame Me Inc.: How we pass the Tucson buck

Like you, my financial security is very important. That's why I demand the highest possible return from managers of mutual funds where I invest my hard-earned savings. Now, here are the consequences:

Don't blame Corporate's executives now stationed at Arizona's 139-year-old Tucson Citizen, if they've been screening stories for negative references to Gannett during what may be the paper's final days of publishing. "Truth is," says Anonymous@3 p.m., local management called Corporate, "and asked for someone to come to deal with a newsroom spinning out of control."

Besides, Corporate's reps are just following orders, right?

Don't blame local management's boss, Bob Dickey (left). The head of the newspaper division -- Gannett's biggest, and most troubled -- told Citizen employees two months ago that "dramatic changes" in the newspaper industry, mean it's "no longer viable" for GCI and its business partner to produce two daily papers in Tucson. "We deeply regret having to take this step,'' he said. (Dickey then took off for California winter golf resort Palm Springs, for a couple five-figure rounds in a celebrity tournament -- initially, at shareholder expense.)

Besides, Dickey is just following orders.

Don't blame Dickey's boss, Chairman and CEO Craig Dubow (left). He got handed the keys in 2005, just as the economy started pitching into a major recession -- especially in Arizona. Announcing a second round of furloughs only five days ago, Dubow told employees in a memo: "We are about to begin the second quarter without any real relief in sight from this unprecedented economic downturn." (Less than a week before, Gannett disclosed that the board of directors gave $2 million in all-cash bonuses to Dubow, Dickey and GCI's other five top-paid executives -- even though GCI stock plunged 79% last year.)

Besides, Dubow is just following orders.

Don't blame Dubow's bosses, the other members of the 10-person board of directors. Gannett paid those nine independent directors a combined $925,882 last year. But they only work part-time, and some have other duties. For example, the second most-powerful member, Presiding Director Karen Hastie Williams (left), is on four other boards; she's one of two directors who were members of the board that hired Dubow as CEO, four years ago. "Our company’s stock price performance in 2008 deeply disappointed all of our shareholders, the board and management included,'' Gannett's board told stockholders last week, in the new proxy report.

Besides, the board is just following orders.

Don't blame the board's bosses, large pension and mutual funds, like those managed by Gannett's single-best shareholder, AXA Financial. Owner of 13% of GCI's stock, the company's main division, AllianceBernstein, has lost billions on paper -- spurring its board to change CEOs in December. Only a month later, disclosing a 73% drop in the firm's net income, new CEO Peter Kraus told investors: "Capital markets plummeted during the final quarter of 2008, leading to substantially negative investment returns for clients."

Besides, Kraus is just following orders.

And don't blame Kraus's boss: me -- and all the other investors who demand the highest possible return on investments, no questions asked.

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Dividend shift costs top investors $32M in Q2

Gannett's top five shareholders, their stockholdings, and income they lost in the next quarter after yesterday's 90% dividend cut:

• AllianceBernstein (30.8 million shares): $11.1 million
• Brandes Investment Partners (23.5 million): $8.5 million
• Barclays Global Investors (13.6 million): $4.9 million
• Ariel Investments (11.1 million): $4.0 million
• State Street Global Advisors (9.8 million): $3.5 million

[Data: MSN]

A put-up -- or shut-up -- moment for our owners

Microsoft did not pay its first public stock dividend until 28 years after Bill Gates co-founded the software giant. Google still does not pay dividends, 10 years after its start. If Facebook goes public, once the capital markets are restored, it will not pay a dividend for many years afterward, either.

These companies are all in technology, the same industry CEO Craig Dubow has said is Gannett's future, as it is transformed into a digital news and information network, from an Old Economy newspaper manufacturer.

In all start-ups, but especially those in technology, every penny of profit must be plowed back into research and development, into hiring the best engineers available, so the venture can scale up as quickly as possible. There isn't a second to waste. This is Start-up 101 -- a subject I reported for most of eight years, covering entrepreneurs and venture capital on USA Today's tech-news team.

For directors, a watershed moment
I write this as Gannett's board of directors is believed to be debating an unprecedented reduction in the dividend -- the first such cut, if approved, since the company began paying dividends to public stockholders in 1967.

Pushed to the wall by the growing credit crisis, this board may finally go on record, answering a central question: Are Gannett's principal stockholders -- AXA Financial, Brandes Investment, and the rest -- genuinely committed to GCI's future?

I have long questioned Corporate's investment in real transformation, precisely because the dividend policy never changed -- other than its yield rising ever higher. In practice, Dubow's version of transformation was little more than rearranging the deck chairs. Dubow may never have said precisely that Gannett was in start-up mode. No matter -- that's exactly where the company must be: on start-up footing, with a capital structure reflecting that fact.

In other words, if the board does anything less than suspend the dividend, we remain mired in the vicinity of fantasyland -- i.e.: a 43% yield at today's closing stock price: $3.75, down 8%.

Continuing to demand dividends has meant one thing: our owners did not believe in Gannett's ability to transform into a viable technology company. If they thought otherwise, they would want to spend all their profit on making sure the company got the best launch possible. We are now at a put-up or shut-up moment.

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Shoring up defenses against growing cash squeeze, Gannett board assembles for historic dividend vote

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

Weighing an unprecedented dividend cut, Gannett's board of directors has shifted dramatically under Chairman Craig Dubow, the chief executive since 2005, public documents show. Except for Karen Hastie Williams, a board member since 1997, few of Dubow's other nine co-directors have much history with GCI. That's good or bad, depending on whether you want directors voting with their heads -- or hearts, during their two-day meeting, which starts today.

Six of the nine directors joined after Dubow became CEO, so they may be unduly swayed by him because they owe their lucrative board seats to his favor. Corporate governance experts have long criticized such clubby boardrooms, saying their members function exactly the opposite as they should. These critics are especially scornful of companies like Gannett, which concentrate too much power by combining the board chairman and CEO positions.

Not so independent: Williams
I'm not persuaded Williams is sufficiently independent of Dubow to qualify as a strong enough presiding director, the de facto deputy chair. For one thing, Williams is one of three directors who were on the 2005 board that hired Dubow as CEO, then elected him chairman a year later. Her reputation is tied to Dubow's success -- or failure. (Duncan McFarland and Donna Shalala were the other two.)

Plus, it's hard to imagine Williams, 64, a retired Crowell & Moring attorney, can devote enough time to Gannett, given her directorships at four other large, publicly traded companies: insurance giant Chubb Corp.; Continental Airlines; WGL Holdings, parent of Washington Gas Light Co., and SunTrust Banks. Amid the finance industry meltdown, SunTrust alone could occupy her attention full-time; its shares are down 87% from a year ago.

Boardroom basics 101
Directors represent shareholders, and management serves at their pleasure. The board retains a CEO; sets key compensation, and reviews big initiatives. Above all, its duty is guarding shareholder interests. Liquidity trumps sentiment (i.e., the First Amendment).

There are about 8,900 Gannett stockholders, but the board is principally concerned with the views of the biggest investors, including No. 1 AXA Financial of New York, and No. 2 Brandes Investment Partners of San Diego, Calif. They are "institutional" investors, managing money on behalf of small investors in mutual funds and retirement plans.

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By the numbers: Gannett's stock, and its dividend

$3.72

Recent GCI trading price; down 88% from a year ago

5.42 cents

first dividend paid to public

23.5 million shares

10% of all, owned by No. 2 stockholder Brandes Investment Partners

30.8 million shares

14% of all, owned by No. 1 stockholder AXA Financial

40 cents

current quarterly dividend

230 million

number shares outstanding

$311.2 million

total dividends paid in 2007

$275.7 million

total dividends paid in 2008 (first nine months)

8,900

number of shareholders

Oct. 24, 1967

date Gannett became a public company

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Eats, 'chutes & heaves: Dubow's gilded $36M exit

Reprising a July 2008 post about golden parachutes for the top brass:

That $36.3 million is what stockholders would potentially pay CEO Craig Dubow -- if he, along with other top brass, get canned within two years of a "change in control," according to the last shareholders proxy, filed March 13 with the U.S. Securities and Exchange Commission. (Detail of Dubow portion, above; full table showing all payouts, below.) The relevant section starts on page 40.

The document defines a change in control as:

• an investor's buying 20% or more of the company's stock
• a shift in the board of directors, where the incumbent members are forced out of a majority
• a sale or merger of the company
• Gannett's complete liquidation or dissolution

Here's a screenshot of the full chart, showing payouts after a change in control for all the named executive officers; click on the image for a bigger view:

Earlier: Retired Chairman and CEO Doug McCorkindale's super-sweet retirement package. (Hint: He and his spouse don't pay a dime for their health insurance.)

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[Credits: Gannett Blog readers for helping with my original research; SEC Forms 14A, March 13, 2008; Eats, 'chutes & heaves?]

AXA boosts stake; six-month losses now $421M

Gannett's single-biggest investor, AXA Financial and affiliates, own 30.8 million shares -- up 33% from May 31 -- the big money manager said today in a new U.S. Securities and Exchange Commission filing. Its Form 13G/A report follows a similar one yesterday from No. 2 stockholder Brandes Investment Partners.

The new filing shows most of the shares continue to be controlled on behalf of clients of AXA's biggest unit, institutional investor AllianceBernstein. AXA did not reveal how much it paid for the additional 7.6 million shares it bought since the end of May. Gannett's stock has dived 72% since then, however.

Shares, closing stock prices, and values on these dates:

May 31, 2008
Shares under control: 23.2 million
Stock price: $28.81
Value: $668 million

Dec. 31, 2008
Shares: 30.8 million
Stock price: $8.00
Value: $247 million

AXA doesn't reveal the overall proportion of Gannett shares it owns. But it appears to be about 14%, based on the 228 million outstanding as of Sept. 28. Combined, then, AXA and Brandes now control more than 24% of the company.

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