Broadcasting announces post-Belo executive team

Diaz

Lynn Beall will remain Broadcasting's executive vice president, while continuing her role as president and general manager of KSDK in St. Louis, following Gannett's takeover two weeks ago of Dallas TV company Belo.

Peter Diaz, formerly Belo's president of media operations, also takes on an executive vice president role, according to a story today by Broadcasting & Cable. The trade site's report includes more details of other executives in the new lineup.

Digital badly misses year-end site relaunch goal

The Indianapolis Star is one of just nine sites relaunched.

In the latest blow to Gannett's make-or-break digital transformation, the company has only managed to install long-planned new website and app designs at nine of its 104 U.S. TV stations and newspapers -- a figure that falls far short of the most recent forecast, according to a review I completed today.

The new designs, which are meant to boost advertising revenue and readership, have been in the works since summer 2011, and were to be modeled after the look first adopted by USA Today more than a year ago. Among many changes, the USAT relaunch created a more tablet-like appearance that placed advertising more directly in front of readers.

As recently as July, Corporate said it expected the relaunch would be largely completed by year's end in the company's top 35 U.S. markets. Indeed, at one point, Corporate had said the rollout could be finished as early as January 2013.

But today, the first business day of the new year, the new look is in place at only two newspapers and seven stations, according to my review, which included 81 community dailies plus 23 stations. (I did not include any of the 20 stations from the just-closed takeover of Dallas TV company Belo.)

Since initially predicting installations in the top 35 markets, Corporate hasn't said anything publicly about possible changes to the timetable, so it's unclear why the new look has reached only nine sites so far.

Without any additional information from Corporate, it's also unclear whether the delay will have any immediate impact on revenue projections. The new design was to create more uniform advertising positions across Gannett, especially for prerolls that were to run before the many more videos now being produced by local sites in anticipation of the site redesigns.

The first to relaunch was WBIR in Knoxville, Tenn., in early September. The first newspaper to come on board was New York's Rochester Democrat and Chronicle, later that same month.

The unexplained delay comes amid a raft of other evidence that Gannett's digital growth is stumbling, according to regulatory documents, as competition across the Web and electronic networks only grows more intense.

Related: This spreadsheet shows the status of site and app relaunches at all 104 U.S. properties.

Gannett and DOJ reach surprise pact on Belo deal

That's according to a Gannett press release issued earlier today. The agreement between Gannett, Dallas TV company Belo and the U.S. Justice Department resolves an anti-trust issue over the future of Belo's KMOV-TV in St. Louis that Corporate had not previously made public.

In the agreement, Gannett will sell most of the St. Louis station's assets after the $2.2 billion takeover of 20-station Belo is completed.

Under the original deal, KMOV and four other Belo stations were to be sold to third-party operators to comply with federal regulations limiting how many stations one company can own in any single market. Gannett already owns St. Louis station KSDK. The other four stations were not mentioned in today's announcement, suggesting they will still be sold to the third parties.

Gannett said the DOJ deal "should enable" the takeover to be completed by the end of the month. It's still subject to final approval from the Federal Communications Commission, according to today's release.

Investors appeared unfazed; Gannett's stock recently traded for $26.68, up 49 cents or 1.9%.

Previously, Gannett had said only that the Justice Department was seeking additional information about the deal, a request that it termed a "standard part" of the department's review of any such deal.

TV market consolidates further with Tribune deal

Less than three weeks after Gannett announced a $2.2 billion acquisition of Belo, the Tribune Co. this morning agreed to buy 19 stations for about $2.7 billion, making it one of the nation’s biggest owners of commercial local TV outlets amid a groundswell of consolidation in the industry.

The stations are in 16 regions, including Denver, Cleveland and St. Louis, and many of their local news broadcasts are ranked first or second in their markets, according to The New York Times. They will complement Tribune’s 23 existing stations and its WGN America cable channel. Tribune is buying the stations from Local TV Holdings, a company owned by the investment firm Oak Hill Capital Partners.

The deal ratchets up the competition with GCI, because four of the stations are in markets where GCI also owns stations: Denver; Cleveland; Greensboro, S.C., and St. Louis. In a fifth market, Des Moines, GCI owns a newspaper.

GCI's Belo deal covers 20 stations, five of which are being spun off to a new third company; GCI will provide advertising sales and other services to those five under a contract. Including all 20, GCI would nearly double its station ownership to 43. The $2.2 billion price includes assumption of $700 million in debt.

Here's Tribune's press release describing the deal. And here's a list of the stations Tribune is buying.

FCC chair nominee punts on Belo deal questions

At a U.S. Senate hearing yesterday, President Obama's nominee to lead the Federal Communications Commission declined to comment on whether Gannett and other companies were skirting FCC regulations on ownership of multiple media outlets in the same market.

Wheeler

The nominee, Tom Wheeler, was responding to remarks by Sen. Maria Cantwell, D-Wash., who criticized GCI over its proposal to buy 20 Belo stations, including three in Washington State, according to trade publication Broadcasting & Cable.

FCC local market caps prevent GCI from retaining ownership of Belo stations in five markets where it already owns a station or a newspaper. Those will be spun off to a new, third company led by former Belo executive Jack Sander. GCI has said it will provide some back office services for the Sander stations. And GCI will help the company, Sander Holdings Co., with financing needed to buy the five stations, according to a U.S. Securities and Exchange Commission filing yesterday.

The $2.2 billion Belo deal announced last week can't proceed without an OK from the FCC and other regulatory agencies.

At the hearing, Wheeler, 67, said he understood the seriousness of the issue, and said he's been a longtime advocate of diversity of voices. He said the FCC has asked the General Accounting Office to study the issue and he "looked forward to their opinion," Broadcasting & Cable says.

He said the key is for the commission to look at competition, localism and diversity as the touchstones, not business plans. He declined to comment on whether some broadcasters could abuse shared service agreements to get around the rules. "I am not informed enough to be explicit on that," he said, "but I am going to be."

Obama nominated Wheeler, a telecom investor, on May 1.

Belo units in St. Louis, Phoenix to stay independent

KMOV-TV in St. Louis and KTVK in Phoenix will compete head on with Gannett's existing stations in those two cities when GCI completes its $2.2 billion acquisition of Belo Corp. later this year, according to a published report today.

In three other cities -- Louisville, Ky.; Portland, Ore., and Tucson, Ariz. -- Belo stations in the deal will also be spun off to a third party. But GCI will have more of a hand in their operation through a shared services contract, according to the report in Media Bistro's TVSpy.

Sander

In announcing the acquisition plans last week, Corporate told GCI employees that five of the 20 Belo stations in the deal would be owned by the as-yet-unnamed third party. Jack Sander, a senior advisor to Belo, will lead that entity, Broadcasting Division President Dave Lougee told TVSpy.

Lougee's remarks clarified how GCI and Belo will satisfy any regulatory concerns about maintaining competition in those markets where GCI already has a presence. Federal Communications Commission regulations generally prohibit investors from owning more than one station per market, or a station and a newspaper in the same market.

In St. Louis and Phoenix, GCI already owns KSDK and KPNX, respectively. In Louisville, it owns The Courier-Journal. In Tucson, it publishes The Arizona Star with Lee Enterprises. And in Salem, Ore., near Portland, it owns the Statesman Journal.

Bulletin: GCI buying TV owner Belo for $1.5B cash; surprise acquisition doubles broadcast presence; GCI shares rocket 28% to new post-recession high

[Updated at 2:12 p.m. ET with latest stock price, other details.]

In a stunning announcement this morning, Gannett said it's agreed to buy television company Belo Corp. for about $1.5 billion in cash, plus assumption of $715 million in debt -- a deal that nearly doubles GCI's current broadcast portfolio, stepping up the media company's push to diversify revenue streams and its geographic footprint.

The acquisition also moves Broadcast Division President Dave Lougee more firmly into the lead position to succeed CEO Gracia Martore over the next three years.

GCI will pay Belo's shareholders $13.75 a share, representing a 28% premium over yesterday's closing price for the Dallas-based company and its 20 stations. Including the assumption of debt, the deal is worth $2.2 billion, according to MarketWatch.

GCI's stock soared on the news: At mid-afternoon, it traded for $25.43 a share, up $5.58, or 28%. That is the highest shares have traded since the depths of the Great Recession in spring 2009, when GCI fell below $2.

"From a strategic standpoint, it's very good news for the company," analyst Michael Kupinski of Noble Financial told USA Today. "It makes Gannett a big player in the industry. Without acquisitions, they could have been marginalized."

The timing is crucial. GCI has been facing a deacceleration in revenue growth beginning in the third quarter. That is when the company cycles against big, one-time increases in print newspaper subscription rates a year ago. What's more, the Broadcast Division faces similarly tough comparables because of the surge in advertising revenue it got from the summer Olympics in London and the presidential election.

GCI said it expects to finance the purchase through cash on hand, accessing the capital markets and bank financing. At the end of the first quarter, however, GCI had just $143 million in cash on hand.

Risky gambit on TV's future
Combined, those forces had Wall Street analysts pressing Martore for details on other growth initiatives. She has consistently promised to consider new investments, especially beyond newspapers, the historic heart of GCI's operations. TV stations were a logical target, amid broader shifts in the media market.

But in doubling down on TV, Martore is gambling on another legacy industry that's facing some of the same challenges decimating newspapers. Viewers and advertisers are moving to mobile and online rivals, including YouTube and Netflix that are now producing original content of their own.

The Belo acquisition raises Gannett's broadcast portfolio to 43 stations from 23, including stations to be serviced through shared services or similar sharing arrangements. (List of Belo stations.)

Lougee

The deal is one of the biggest in GCI's history, rivaling the $2.6 billion cash purchase in 2000 of Central Newspapers, which included The Arizona Republic and The Indianapolis Star.

The acquisition further raises the profile of Lougee, 54, among candidates to succeed Martore, 61; she faces mandatory retirement age in 2016.

Regulatory hurdles ahead
Following the transaction, Corporate said in its statement, GCI’s Broadcast segment is expected to contribute more than half of the company's earnings before interest, taxes and amortization, and the Digital and Broadcast segments combined are expected to contribute nearly two-thirds.

The deal is expected to close by the end of the year. But it's subject to regulatory approval, including from the Federal Communications Commission. The FCC could express concern about overlapping properties in five three markets where GCI already owns media outlets: Phoenix, home to both KPNX and the Arizona Republic; Tucson, where GCI and Lee Enterprises jointly publish The Arizona Star; St. Louis, where GCI owns KSDK; Louisville, Ky., home to The Courier-Journal, and Portland, Ore., an hour north of Salem, where GCI owns the Statesman Journal.

Generally, a long-standing FCC rule bans companies from owning a TV station and a newspaper in the same market to prevent concentration of media ownership. But the agency has given companies waivers to the rule, such as in Phoenix. GCI and other companies including News Corp. continue opposing the rule.

In the Belo deal, GCI might offer to divest one or more newspapers or TV stations to win FCC approval. For example, that could put Louisville in the crosshairs at a time when investors including financier Warren Buffet are warming to newspapers.

In an FAQ to employees, however, Corporate said the Belo stations in those five markets would be "separately owned," and that GCI would provide support services to them; Corporate didn't identify the future owners of those five, however. In all of the remaining markets, the Belo stations will be fully integrated into the Broadcast division’s operations. (List of GCI's U.S. properties.)

Martore and Lougee are scheduled to brief employees during a 2 p.m. ET "town hall" meeting. A live video stream will be accessible on the GCI's intranet.

Martore hinted at TV deal
In a conference call this morning with stock analysts, Martore said she began talking with her counterpart at Belo, Dunia Shive, some time ago. The two eventually concluded that a merger to create one of the country’s biggest providers of local broadcast television made sense, and eventually began exclusive takeover negotiations, according to The New York Times.

Martore

In late April, Martore told analysts during the first-quarter conference call that Corporate was watching the market for TV stations. "We're getting lots of calls on them. In some situations vis-à-vis overlap situations or other things, they don't necessarily make sense for us to do."

She continued: "But I would say as a general comment, as you know, our broadcast business had its best year in its history last year. We believe conceptually in the fact that more scale and a bigger footprint matters in the broadcast arena. . . . We have very, very good scale now, but improving on that scale could only be a positive going forward. But as always, we would be incredibly disciplined in what we would look at and what multiple we would pay."

In today's announcement, Corporate also said the company will continue its share buyback program and has replaced its existing remaining authorization with a new $300 million authorization expected to be used over the next two years. The company will also continue its existing dividend payment plans.

Belo, originally known as a Texas newspaper company, spun off its newspaper business into a separate publicly traded company called A.H. Belo Corp., which publishes the Dallas Morning News and the Providence Journal, among other papers. Belo now owns 20 television stations and their associated websites, according to The Wall Street Journal.

The Dallas paper is also reporting the deal.

In addition to Central Newspapers, GCI's other major acquisitions have included the $1.5 billion cash deal for U.K. newspaper division Newsquest in 1999, and $1 billion for 19 Thomson dailies in Wisconsin, Ohio and Louisiana in 2000.

Related: TV networks face falling ratings and new rivals.

KSDK | As revenue strengthens, TV stations add newscasts and even some employees, NYT reports

Three years after the TV broadcasting industry buckled under the weight of the ad recession, the more popular stations in markets like St. Louis -- where Gannett owns KSDK -- are adding newscasts and in some cases employees, though not as many as were dismissed during the downturn, according to a New York Times story today.

"Station economics affect the nation’s news diet," the NYT says, "because local TV news is consistently identified in surveys as the top news source for most Americans."

Why now? Advertisers are coming back. So-called retransmission fees are climbing. And the recession forced stations to innovate, especially around news-gathering, according to the NYT.

GCI's 23 TV stations have buoyed overall revenue. For example, in the second quarter, broadcasting revenue including Captivate rose fractionally, at 0.2 of a percentage point, to $184 million. But in GCI's largest division, newspapers, advertising and subscription revenue fell 5.2%, to $912 million, regulatory filings show.

Last year, on the strength of Olympics and political advertising, broadcasting accounted for 14% of GCI's overall $5.4 billion in revenue, according to the company's annual 10-K report to the U.S. Securities and Exchange Commission. In 2009: 11% of $5.5 billion.

That's translated into a net increase in broadcasting jobs, even as GCI's overall employment tumbled once more. Last year, the division ended the year with 2,550 employees -- up 2% from 2009. In the U.S. newspaper division, by contrast, employment fell 9%, to 22,400.

TV | News Corp. said suitor for Conan O'Brien

Amid reports he may be shunted aside so Jay Leno can return to his late-night berth, Tonight Show host Conan O'Brien (left) is mulling options that could include accepting a purported offer from News Corp., The Wall Street Journal is now reporting.

Leno's future on the NBC network is of more than passing interest to Gannett stockholders; 11 of the media giant's 23 television stations are affiliated with NBC. Like many affiliates, GCI's stations have struggled with falling prime-time ratings since Leno was moved to an earlier time slot last summer.

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TV | How Jay Leno's future drives your fortunes

The unfolding drama over whether Jay Leno (left) is shifted back to his old late-night time slot is more than an issue for the NBC network and the broader television industry. The outcome is important to Gannett employees and stockholders. That's because nearly half of GCI's 23 television stations are NBC affiliates, more than any other single affiliation. They include giants KUSA in Denver and WXIA in Atlanta.

Gannett has been watching the impact of NBC's weak prime-time ratings on its 11 affiliates for some time. Adding to that is the uncertainty over the recent sale of a controlling interest of NBC to cable giant Comcast. Only last month, broadcasting division President Dave Lougee told Wall Street analysts: "While we are concerned about the network’s prime rating performance, that is not new. We have been concerned for some time."

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KSDK | Anheuser-Busch hits back 'AIG' beer story

Rarely have we seen beer-making king Anheuser-Busch hit back so hard against a news piece, says the St. Louis Dispatch on its Lager Heads blog:

"We wonder . . . is this part of the company’s stated commitment to "communicate in a thorough and timely manner"? If so, reporters might want to gird up their loins for battle. Or at least for criticism."

More from the post: "The crux of the issue, so far as we can tell, is a trip by 14 Anheuser-Busch managers to meetings and training events at company property at Lake of the Ozarks. The trips, it seems, are cast in the KSDK-TV piece as an example of especially ill-timed corporate greed. A-B strongly objects to that characterization."

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KSDK-TV: Anchor Lane 'gone' after 25 years

Deanne Lane's contract at KSDK of St. Louis was due to expire next month, the St. Louis Post-Dispatch says, "and rumors had circulated that she was being asked to take a big pay cut if she were to stay."

Post-Dispatch columnist Deb Peterson continues: "When I reported March 20 that Lane’s contract wouldn't be renewed without the pay cut, and that Lane was balking, Lane called me to say those rumors were absolutely untrue. 'I have not and would not balk at any pay cut, especially in this economy,' she said at the time."

Is GCI broadcast adopting NBC's Art House model?

In a productivity move, NBC centralized graphics production at a single facility, Art House, in Fort Worth, Texas; it now serves all of the giant network's TV stations. As other broadcasters take similar steps, a Gannett Blog reader says GCI's broadcasting division will likely be next.

"Gannett's version will be online soon -- probably after the major stations (KUSA, WUSA, KARE and KSDK) get more familiar with the Avid Interplay/ISIS media management and figure out who to rightsize," the reader says.

Art House is a familiar consolidation strategy. It mirrors Gannett's selling papers that can't be clustered; the consolidation of photo processing at a central toning facility; the shift of customer service to the "Centers for Excellence," and the centralization of copy editing and design at some Wisconsin papers. Plus, of course, Gannett is offshoring newspaper advertising production jobs, under a contract with 2AdPro of Los Angeles.

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