The truth about USAT's big new circulation pitch

USA Today just made a dramatic change in the way it reports circulation, adding free digital app users to paid sales so it could once more claim the No. 1 circulation spot among U.S. newspapers. The move boosted USAT's total as of Sept. 30 to a record 2.9 million from 1.7 million a year ago -- a 68% increase.

USAT's free iPad app

The two other national newspapers left their formulas unchanged. That resulted in a smaller 14% annual gain for The New York Times, to 2.1 million. The Wall Street Journal saw a 1% decline to 2.3 million. (See this spreadsheet for a complete breakdown.)

But comparing the three papers' figures is hardly apples-to-apples. The NYT's iPad app lets users read only three articles daily for free; after that, they must pay for a digital subscription. The WSJ app also gives readers limited access for free before requiring a paid account.

Not so with USAT, which gives readers free access without any limits. That means more than half the paper's circulation is now unpaid digital. And that doesn't begin to count all those copies provided gratis by hotels, airlines and other bulk buyers.

Why this matters 
Historically, the industry told advertisers paid circulation was more valuable than free because readers were more engaged with something they'd spent money on. Indeed, when USAT lost the top circulation spot in 2009, it downplayed the shift by emphasizing that it remained the top selling print paper, partly as a result of its big single-copy sales.

"Single copy newsstand sales," the paper said in a press release, "reflect customers who actively seek out the newspaper each day and pay full newsstand price, which is widely considered the most valuable circulation by advertisers."

Starting next spring, USAT plans to change its strategy again under the Butterfly Project. It will start including potentially millions of circulation when it likely expands distribution of its new daily local edition to about three dozen of Gannett's community dailies.

In announcing that change last week in a memo to staff, Publisher Larry Kramer didn't say whether those editions would be counted as paid.

But to do so, Gannett effectively would be counting each of those dailies twice. For example, The Indianapolis Star would count as one. And the USAT edition -- which is now the Star's second section -- would also get counted as one.

Related: Poynter Institute says USAT's news coverage is "misleading."

Earlier: Find your newspaper's newest circulation figures.

USAT | As eBay's founder joins digital news scrum, competition grows for Gannett's national franchise

Three techies: Omidyar, Bezos and Kramer

Pierre Omidyar has suddenly emerged as the latest technology titan bankrolling 21st century journalism, a move that could add to the challenges struggling USA Today already faces in its ongoing turnaround.

The eBay founder has agreed to pour perhaps $250 million into launching a digital-only mass-market news provider whose first star hire is Glenn Greenwald, the American journalist famous for reporting on U.S. electronic surveillance programs for Britian's Guardian newspaper.

An investment that size would be one of the largest for a digital news start-up. The closest parallel I can think of is Rupert Murdoch's The Daily, an iPad-only national publication that lost a reported $30 million annually during the two years it published before Murdoch shut it down last December.

Omidyar, 46, and retired from eBay, was offered a chance to buy The Washington Post, a deal that ultimately went to another techie in August: Amazon founder Jeff Bezos. That experience, plus his longstanding focus on social entrepreneurship, led Omidyar to Greenwald, who was already planning to set up an independent media outlet.

Omidyar's principal journalism interest is the kind of investigative watchdog journalism Greenwald does. He was among the first to report information provided by one-time U.S. National Security Agency contractor Edward Snowden.

But, blogger Jay Rosen writes this morning, "Omidyar believes that if independent, ferocious, investigative journalism isn’t brought to the attention of general audiences, it can never have the effect that actually creates a check on power."

A mass-media site
So, Rosen says, Omidyar's new venture "will have to serve the interest of all kinds of news consumers. It cannot be a niche product. It will have to cover sports, business, entertainment, technology: everything that users demand."

For his part, Omidyar wrote today that it will be "a new mass media organization. I don’t yet know how or when it will be rolled out, or what it will look like. What I can tell you is that the endeavor will be independent of my other organizations, and that it will cover general interest news, with a core mission around supporting and empowering independent journalists across many sectors and beats."

Greenwald says the venture will have branch offices in New York, Washington and San Francisco. Its name has been chosen, but not yet made public, according to Rosen.

Forbes says Omidyar is worth $8.5 billion, ranking him No. 47 on the magazine's list of wealthiest Americans. Bezos, 49, is No. 12, with $27.2 billion.

Omidyar and Bezos are entering the business as USAT attempts a turnaround under another technology entrepreneur: Publisher Larry Kramer. Before coming to the daily in May 2012, Kramer had founded the financial news site MarketWatch.

News Corp. chairman Murdoch isn't the only Old Economy billionaire investing in journalism. Consider another Forbes 400 member: No. 2 Warren Buffett of Berkshire Hathaway. Worth $58.5 billion, Buffett snapped up dozens of print newspapers in recent years, even as he dumped all his Gannett stock.

Related: I interviewed Omidyar for a USAT story in 2005.

USAT | Zimmerman confirms cover price doubling

In a story late this afternoon, Washington Business Journal has confirmed my post this morning that USA Today plans to boost its cover price to $2 from $1 -- the rate last set in 2008.

The Journal quotes USAT publicist Heidi Zimmerman: "As our costs continued to rise, we held our cover price at $1 well after other national newspapers raised their cover prices. The $2 cover price now has us competitively priced against other national newspapers."

In many markets, The New York Times charges $2.50. And The Wall Street Journal, $2.

USAT | Cover price said doubling to $2 on Sept. 30

In late July, during the quarterly earnings conference call, analyst Craig Huber asked a simple question: "What are you guys doing on the USA Today circulation pricing front?"

Today's edition detail, Newseum

CEO Gracia Martore, ever cagey when revealing strategy, gave a mushy reply:

"Right at the moment, we're obviously looking at a lot of things," she said, according to Seeking Alpha's transcript. "We can probably talk more . . . later in the fall."

But now it appears Corporate already had a price increase in the works. Readers tell me USAT's cover price will jump to $2 -- double the current one. The change will be effective Sept. 30, one reader says. It would be the first increase in five years.

[Updated at 6:30 p.m. ET: USAT has now confirmed the price hike.]

Any change at the company's marquee brand will come as Gannett relies more than ever on circulation dollars to bolster the top line: overall revenue. But it's a risky move because many readers will balk, further reducing USAT's circulation volume, once the nation's largest. That would cut even more into print advertising revenue, which management presumably hopes to offset through the higher cover price and more digital ad sales.

Bye-bye, ad sales
The plan would be part of a broader campaign to slowly wean GCI off print ads from its biggest and most troubled business, newspaper publishing, as it pivots toward digital and broadcasting with the $1.5 billion deal to buy TV company Belo by year's end.

The quarterly numbers tell the story. In the second quarter, circulation revenue rose about 12% across the 81 U.S. community dailies after the company imposed big subscription rate hikes last yar. At USAT, however, circulation revenue fell 11%, CFO Victoria Harker told analysts.

That resulted in a net circulation revenue increase of 6%, or $280 million, and substantially offset a $318 million decline in overall newspaper ad revenue during the quarter.

For the quarter, circulation revenue rose to 21.5% of $1.3 billion in companywide revenue. That was up from 20.2% of $1.3 billion the year before.

At USAT, circulation volume has been falling precipitously since the fall of 2009, after The Wall Street Journal overtook the paper as the nation's top-selling daily, when digital subscribers were included. In the most recent reporting period, the end of March, USAT fell to No. 3 after The New York Times marched ahead, also as a result of digital subscription growth. USAT doesn't have a paywall.

Circulation once 2.3M
For the six months ended March 31, USAT's circulation dove 7.9% to 1.67 million copies. Its national rivals surged: The WSJ jumped 12.3% to 2.38 million, and the NYT soared 17.6% to 1.87 million. The shifts also meant USAT lost its status as the No. 1 selling paper in print to the NYT -- one of its last bragging rights.

USAT last raised its cover price to $1 from 75 cents in fall 2008, just as the Great Recession was deepening. At the time, it was the top-selling newspaper, with an average 2.28 million copies sold.

The New York Times' cover price is $2.50, and The Wall Street Journal's is $2 in many markets.

Martore said Corporate would likely be able to talk about any USAT initiatives in the fall. That probably means mid-October, when GCI reports third-quarter results. Those initiatives almost certainly include a plan code-named Butterfly Project to inject even more USAT content into the community dailies.

USAT | Here's Wolff's column -- and it's a doozy

Rupert and Wendi

USA Today media columnist Michael Wolff has returned to his favorite go-to topic -- thrice-married billionaire octogenarian media tycoon Rupert Murdoch -- in a delightfully dishy account of his seismic split from much younger wife Wendi. (Way more interesting than that other billionaire soon-to-be newspaper owner, Jeff Bezos.)

Get this, which Wolff attributes to Gawker:

"Not only has Murdoch had a long-rumored affair with Rebekah Brooks, the former head of his London operation -- soon to be on trial for her alleged roles in the phone hacking scandal that's engulfed Murdoch's British papers -- but his older son, Lachlan, did, too."

Meow!

Yesterday, his Monday column was nowhere to be found online. Either he turned it in late, or editors forgot to post it. The timestamp says 12:04 a.m. today. I tripped across it on Publisher Larry Kramer's Twitter feed. Clearly, USAT ain't shying away from sex.

I'm now live-blogging the Q2 analyst conference

CEO Gracia Martore and other top executives are discussing the just-released second-quarter financial statement. The 10 a.m. ET conference, lasting about an hour, is being webcast in listen-only mode for the general public. How to participate.

11:02 And we're done! GCI's stock is now down 3% to $25.56. Note: Later today, this conference's audio will be available for replay at Corporate's gannett.com website. Also later, I expect financial news site Seeking Alpha will publish a transcript; I'll post a link when it becomes available.

11:01 Martore and Harker are now trying to explain digital revenue growth in Digital Segment vs. company-wide to an analyst who can't read the statement properly.

10:57 We're in the final minutes of the conference. Q: What's status of CareerBuilder with GCI's partner Tribune Co.? Martore defers to Tribune. Ditto for Classified Ventures partnership.

10:54 Q: Interested in more TV stations? Any limitations because of regulatory rules? Martore says not just focused on investing in more broadcast, but any opportunity "at the right price."

10:47 Q: What about possibility of spinning off newspapers into their own division? Martore: focused on acquistion of Belo. GCI is committed to increasing shareholder value. "We always at the board level . . . are looking at opportunities. . . . We never rule anything out." [Hopkins: News Corp. and Tribune Co. are doing these spinoffs.]

10:46 Q: Taking out Newsquest, how would things have been with print advertising in Q2? Positive, Martore says.

10:43 First reference to royal baby! It's driving U.K. retail sales, says Martore.

10:40 Q: Advertising trends in July? Martore says broadcast has a tough comparable to Q3 in 2012. On U.S. Community Publishing, probably in line with Q2. Newsquest in the U.K. will improve, but they still have the drag on the currency side as British pound sterling is weak.

10:39 GCI stock is now down 3.3% to $25.50.

10:35 Q: Still expect 250,000-300,000 paying digital newspaper subs by year end? Martore: ended Q2 around 65,000. [Hopkins says: I don't see how they can hit even the 250K if they're only at 65K now.] Martore says the New York Times Co. has done a "fabulous job" with its paywalls. She's trying to shift attention to the number of existing GCI subscribers -- think it's 1.3 million -- who have activated their digital accounts.

10:33 Q: National advertising best in some time. What's going on? Martore credits USAT team in "really presenting the value USA Today brings in all platforms," plus value of print.

10:32 Q: What's the trend in TV advertising, including in Obamacare-related spending? Martore: Total TV revenues up in the mid-teens in Q3. Continued strength in auto. Corporate very focused on Obamacare reform ads. Broadcast President Dave Lougee says Obamacare will show up mostly in Q4.

10:29 Back to Martore. We're investing for the future, don't expect quick turnaround, etc. Now to the Q&A portion.

10:24 Relaunch of top 30 newspaper markets' digital offerings by year end. Unless I'm mistaken, that means GCI will miss its deadline of getting all done by the end of 2013.

10:17 Here's Harker. She's reading from a script that also highlights key figures from the financial statement. GCI stock is now down 2.6%, to $25.67. That's not bad, considering the company missed Wall Street's revenue forecast by $30 million.

10:12 Revenue in Digital Marketing Services is up 90%, albeit it off a small base. No dollar amounts given. The unit is expected to generate $275 million to $350 million in new revenue, also by 2015.

10:09 Martore talks about trends in the USA Today Sports Media Group. So far, I'm not hearing any specific dollar amounts as the unit aims for $300 million in promised new revenue by 2015.

10:03 And we're off. Here's Martore. She's recapping the financial statement. CFO Victoria Harker will follow. The most interesting part of the conference, as always, will be the question-and-answer session near the halfway mark.

9:53 I often wonder who chooses the background music we hear as we wait for the conference to begin. Right now, it's classical.

9:48 a.m. We're waiting for the conference to begin in about 10 minutes. In early trading, GCI's stock is down 4.3% to $25.22.

Earlier: Questions employees should ask during today's Town Hall meeting.

Related: Across Corporate America, earnings calls take on a whiff of show biz, according to The Wall Street 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.

How the Teamsters nearly beat Gannett's board; 'golden parachutes' vote was surprisingly close

In an unusual rebuke to the board of directors, shareholders last week came within striking distance of passing a Teamsters union proposal to trim the "golden parachute" severance packages that Gannett's top executives could get if the company was sold, according to a new regulatory filing.

The vote came at the annual shareholders meeting Tuesday morning. In a press release that afternoon, Corporate said only that stockholders had "rejected a shareholder proposal and supported management’s position" on the vesting of stock awards in the event of a change in control.

But it wasn't until late Friday afternoon that Corporate filed a regulatory notice revealing the actual tally was unexpectedly close: only 55.7% voted against the proposal, even after directors had made a lengthy argument opposing the measure.

To be sure, it failed. And a non-binding advisory resolution on how much CEO Gracia Martore and other senior execs got paid last year in salary, bonus and other perks won 93% of the vote.

Still, the outcome on the Teamster's proposal shows many stockholders remain unhappy about how much the board is paying execs when revenue growth is anemic and profits still require cost-cutting. Indeed, the discontent was reflected elsewhere: in the way the vote split on re-electing the nine directors themselves.

Thumbs down on three

In the press release, Corporate said each director had received "at least 96.6% of the votes cast." However, three directors -- all members of the committee that decides executive pay -- got twice as many "against" votes as the other directors. There were Chairman Marjorie Magner, plus Howard Elias and Duncan McFarland, according to the U.S. Securities and Exchange Commission filing.

Magner

(A fourth member of the executive compensation committee last year, Arthur Harper, did not stand for re-election, and has since retired.)

This isn't the first time the compensation policy and committee members have drawn opposition. Two years ago, when shareholders got their first chance for a say-on-pay resolution, about 20% of votes were cast against the policy. A year later, with Craig Dubow's retirement as board chairman and CEO, the compensation policy got a big overhaul. The board, it appeared, had taken notice.

Last week, the International Brotherhood of Teamsters in Washington, which owns 180 shares of stock, was the vesting proposal's author. The union targeted a provision of the enormous severance packages -- called golden parachutes -- that Martore and other top executives would get if they lost their jobs after a change in GCI's ownership. (Text of the proposal, and the board's opposing statement, starts on Page 58 of the 2013 proxy report to shareholders.)

Under that severance provision, millions of dollars worth of stock awards -- including options and restricted shares -- would vest immediately, rather than over a period of years. That stock would be included in their severance if they were fired by new owners -- or even, for certain executives, if they voluntarily resigned soon after the first anniversary of the company's sale.

Martore's $46M 'chute
The financial stakes are enormous. In Martore's case, her golden parachute was worth $46.4 million as of March 22, when the proxy report was published. That report details how much executives get paid, plus matters coming to vote at the annual meeting -- including, last week, the Teamsters' measure.

Martore

Of Martore's payout, as much as $11.7 million would be in stock awards subject to the immediate vesting provision, according to the report. (The lion's share, nearly $18 million, would be the value of her pension.)

In their proposal, the Teamsters took pains to say Martore and other top execs might, indeed, be entitled to severance under a change in control. But, they said, unvested awards should "vest on a partial, pro rata basis up to the time of the senior executive’s termination."

"We do not question that some form of severance payments may be appropriate," they said in their supporting statement. "We are concerned, however, that current practices at the company may permit windfall awards that have nothing to do with a senior executive’s performance."

Coming from the Teamsters -- a group known for hardball tactics -- that's hardly an intemperate, unreasonable request. And I imagine that's why it received so many favorable votes.

What's next?
I suspect the union will feel emboldened by the close results, and so will return next year with a similar proposal. But if history is a guide, the board may negotiate an agreement before it comes up for a vote again.

That's what happened when a different shareholder took aim at another part of those golden parachutes. At the 2009 annual meeting, a proposal to eliminate tax gross-ups in change-of-control situations won an unusually large 48% of shares. The next year, the Amalgamated Bank LongView Large Cap 500 Index Fund came back with the proposal for the 2010 annual meeting.

Sensing defeat, the board agreed to drop the tax gross-ups, where the company would cover income taxes on the parachutes. Martore and a handful of other executives were grandfathered in, however.

(And I'm sure they're happy about that. For Martore, the gross-up would be worth $9.3 million in a change of control. For Bob Dickey, president of the U.S. community newspaper division, the gross-up would be $3.7 million of the total $18.4 million value of his parachute. For all the details on those and other execs, see Page 54 of the proxy report and the table under the heading, "Potential Payment Obligation Upon Change in Control.")

In a settlement of another Teamsters proposal next year, Martore & Co. might also get grandfathered in on the vesting of stock.

A negotiated settlement would be an important strategic step. In theory, directors represents the interests of stockholders. But in practice, they're often beholden to management. Neither directors nor top managers want shareholders dictating the agenda, including especially about executive pay.

The board -- and Martore -- came too close to that last week.

Tribune, others in play
Whatever happens next year, the possibility Gannett might be sold is still remote -- although not as much as it was only a few years ago, when the entire newspaper industry was in free fall. The market for media properties has warmed up.

Tribune Co. has exited bankruptcy, and has a reasonable chance of selling The Los Angeles Times, Chicago Tribune and other titles. Legendary investor Warren Buffett has been snapping up newspapers. News Corp. expects to sell its U.S. community newspaper chain in New England. And broadcast TV stations are once more being shopped.

To be sure, GCI could be an acquirer as much as a takeover target. With GCI shares at $22, up more than 60% from a year ago, the company's market capitalization is now $5 billion, making it a very large fish to swallow.

But that doesn't mean it can't happen, another reason why we probably haven't heard the last of the Teamsters.

What you won't hear at today's annual meeting

There will be many huzzahs and much back slapping this morning when shareholders gather for their annual meeting at Corporate's Crystal Palace headquarters in McLean, Va.

And no wonder.

Last year, companywide revenue rose 2.2%, the first annual increase since 2006. Gannett navigated a tricky technology test, rolling out newspaper paywalls that allowed the company to justify average 25% subscription rate hikes.

Through some creative (ahem) accounting, the company claimed an impressive 19% increase in digital revenue. By the end of the year, digital represented 25% of total revenue, making GCI look more New Line than old. And the broadcasting division rode the summer Olympics and national election slugfest to its best year ever.

Cover of annual report

Those are exactly the bullet points in CEO Gracia Martore's annual letter to shareholders, in the glossy 2012 Annual Report.

The bottom line, as always, is of particular interest to stockholders: Total return to investors was 41% vs. 16% in the widely-watched S&P 500 list of companies, after a $154 million stock buyback and 150% increase in the annual dividend.

Good news like that landed GCI at No. 186 on Barron's magazine's just-published list of 500 companies that did the best job investing for growth. That was way up from No. 378 a year ago.

A different bottom line
But here's something you won't hear management touting this morning. It's from a less widely read regulatory document, the annual 10-K report. There's a table on Page 28 showing a very different bottom line, one of great interest to longer term investors, including many of the company's nearly 31,000 employees.

The table says GCI's annual return to shareholders continues to lag the S&P 500 companies when measured over a longer time frame, 2007-2012 -- a period when the entire newspaper industry was slammed to its knees. That's hardly surprising, of course, because it's an apples-to-oranges comparison. The S&P holds many companies driving the economy's future, including technology heavyweights Amazon, Google and Oracle.

But even in a more apples-to-apples comparison, GCI still came up short: $100 invested in the company's stock in 2007 was worth just $57.48 at the end of last year, according to the 10(k). Meanwhile, that same $100 invested in a peer group of other media concerns was worth much more: $110.71. Better than GCI, and the S&P, too. (Spreadsheet shows all figures for 2007-2012.)

Corporate chose the peer group. It includes A.H. Belo Corp., Belo Corp., Discovery Communications, E.W. Scripps, Journal Communications, McClatchy Co., Media General, Meredith Corp., Monster Worldwide, News Corp., New York Times Co., Washington Post Co., and Yahoo. Many of the group's companies have a strong publishing/broadcasting orientation, but the group also includes companies in the digital media industry, according to the 10(k).

GCI's stock closed Monday at $20.40, down 12 cents.

Recovery not assured
The company's been relying on those fat subscription price increases and broadcasting's bang-up year -- add-ons that will lose their mojo when comparisons cycle through during the quarter starting in less than two months. To be sure, Digital Marketing Services and the USA Today Sports Media Group are still forecast to pick up the slack, especially starting by 2015.

But by then, unless things change, the current top management team will be entering Corporate America's version of lame duck territory: Martore, 61, faces mandatory CEO retirement age in 2016.

If you bought GCI at the beginning of 2012, you'll be among the shareholders cheering on management this morning. However, if you're really long -- well, at least there'll probably be complimentary coffee and pastries in the lobby.

Related: a list of the annual reports to shareholders going back to 1998

Urgent: New York Times passes USAT in circulation

That's according to ABC's just released newspaper circulation figures for the six months ended March 31. The key numbers compared to a year ago, which include print and digital:

• The Wall Street Journal: 2,378,827, up 12.3%
• New York Times: 1,865,318, up 17.6%
• USA Today: 1,674,306, down 7.9%

The data show the continued role of digital editions and subscriptions via paywalls in upending the rankings. Both the WSJ and NYT have paywalls; USAT doesn't. Total digital:

• WSJ: 898,102
• NYT: 1,133,923
• USAT: 249,900

ABC's figures are limited to the top 25 daily and Sunday. The other Gannett title on the dailies list is The Arizona Republic (ranked No. 20): 293,640, down 8.7%. 

On Sundays, The Detroit Free Press is No. 6 with 708,114 (up 6%). And the Republic is No. 13 with 542,274, up 0.7%.

GCI has been focusing on building Sunday for some time. As print editions are dropped, Sunday will no doubt be the last to go.

Related: ABC's data for prior periods.

Why Gannett won't be bidding for the Boston Globe

A day after the New York Times Co. announced plans to put The Boston Globe up for sale, there's plenty of speculation about possible bidders -- including Boston-connected moguls such as Mitt Romney and former General Electric CEO Jack Welch.

But Gannett isn't on anyone's list. Larger chains are reducing their newspaper holdings, the Poynter Institute's Rick Edmonds told the Globe, making it more likely a buyer would emerge from the Boston area. Although Edmonds only called out GCI by name, other big chains absent from today's speculation on potential buyers include McClatchy Co. and Lee Enterprises, plus Tribune Co. and Journal Register, both of which are just now emerging from bankruptcy.

One exception might be News Corp., which is about to spin off its newspaper holdings including The Wall Street Journal and a group of small New England dailies. CEO Rupert Murdoch has a soft spot for print that might make him a more emotion-driven bidder. Another exception could be Omaha billionaire Warren Buffett, who has recently been adding papers to his portfolio.

GCI's investments recently have been relatively small, and focused on digital ventures that complement existing businesses, such as in sports media.

New York Times watchdog Ira Stoll lists 25 potential buyers on his Smarter Times blog; GCI isn't among them. The competing Boston Herald has a shorter list. And the Globe story includes some of the same names floated by Stoll and the Herald.

The Globe's weekday circulation is 230,351; Sunday is 372,541, according to the Sept. 30 ABC report. Those figures are less than half what they were in 1993, when the NYT Co. paid $1.1 billion for the Globe plus other businesses.

Today, after the industrywide depression, the Globe and its sister daily, the Worcester Telegram & Gazette, might fetch only $100 million to $150 million, according to industry consultant Ken Doctor. And that's assuming pension obligations aren't part of the deal.

Warnings in '93 prescient
But that would be a significant improvement over the puny $35 million offered four years ago, when the NYT Co. last entertained bids.

Even in 1993, when the deal was announced, some Wall Street analysts wondered whether it made sense for the NYT Co. to invest so heavily in the newspaper business, which was already growing slowly even as it still produced substantial profits, the NYT reported at the time.

Sulzberger

But the late Arthur Sulzberger Sr., the NYT Co.'s board chairman at the time, told his paper he believed analysts who predicted the death of the newspaper business were wrong. He said the Globe could become an attractive part of the company's offerings to advertisers and that there could be joint advertising sales.

Even if newsprint is eventually replaced by electronic delivery of information, Sulzberger said, businesses like the Times and the Globe would remain viable because of their information-gathering abilities.

Viable, yes. But nowhere near as profitable.

Poynter: GCI shows digital circ works small scale

Gannett’s fourth quarter earnings yesterday put to rest the idea that digital paid subscriptions will only work for the biggest newspaper organizations like The New York Times and The Wall Street Journal, according to the Poynter Institute's Rick Edmonds. "They are proving a spectacular success at the company’s diverse collection of 80 community newspapers," he writes today.

Earlier: In the long run, however, what will revenue look like?

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.

Murdoch

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.

News Corp. considers splitting into two entities

If the owner of The Wall Street Journal, Fox News and other media properties follows through, it would mean cleaving the newspaper business that once formed the heart of the conglomerate from the Fox movie studio and TV networks that now represent the most profitable parts of Rupert Murdoch's media empire, according to The New York Times' story early today.

The Murdoch family would likely retain control of the entities, according to The Wall Street Journal's own story about the deliberations. Murdoch has previously opposed such a move, but has recently warmed to the idea.

Should NWS proceed, it could announce its intentions to pursue a split as soon as this week, the NYT said early this morning. Both papers cited sources they didn't identify.

Memo: Dow Jones ad exec to new USCP position

Molly Evans, senior vice president for advertising since 2008 at Dow Jones' community newspaper group, has been named to what may be a newly created Gannett job -- director of revenue initiatives -- for the U.S. Community Publishing newspaper division, according to a Dow Jones memo today.

In her Gannett position, the memo says, Evans "will be helping to create new revenue programs, products and partnerships, something she has done so well for us for the last several years." She'll be based at headquarters in McLean, Va.. Her last day at Dow Jones will be May 11.

The memo was signed by Patrick Purcell, executive chairman, and William Kennedy, COO, of Dow Jones Local Media Group. That is the former Ottaway chain of small dailies, mostly in New England. Dow Jones is a unit of News Corp., which also publishes The Wall Street Journal.

The memo also says: "During her 14 years with our company, Molly has provided strong leadership and produced great revenue results wherever she has worked. . . . It's hard to imagine our company without her sharp mind, her mastery of detail, her relentless creativity and her wry sense of humor."

According to her LinkedIn profile, Evans was classified advertising manager at The Tennessean in Nashville from 1991-1993.

Obama on newspapers he reads -- and Jon Stewart

[Obama: Stewart is 'brilliant']

"I’ll thumb through all the major papers in the morning. I’ll read The New York Times and Wall Street Journal and Washington Post,
just to catch up."

-- President Obama, in speaking to RollingStone. He also says he doesn't watch a lot TV news, but added: "I like The Daily Show. . . . I think Jon Stewart’s brilliant. It’s amazing to me the degree to which he’s able to cut through a bunch of the nonsense – for young people in particular, where I think he ends up having more credibility than a lot of more conventional news programs do."

Occupy Wall Street marches on Murdoch's home

They're heading uptown today to get in the face of some of New York's richest tycoons, according to this New York Daily News story.

Murdoch

A "Millionaires March" will visit the homes -- or, more realistically, the gleaming marble lobbies -- of five of the city's wealthiest residents, including News Corp. CEO Rupert Murdoch, JPMorgan Chase CEO Jamie Dimon and conservative billionaire David Koch.

Marchers want to present the moguls with oversize checks to dramatize how much less they will pay when New York State's 2% tax on millionaires expires in December.

Exec pay | Murdoch's compensation jumps 50%

Newspaper publishing baron Rupert Murdoch, the CEO of News Corp., continues to be one of the most richly compensated executives in America -- collecting $33.3 million for fiscal year 2011.

Murdoch

The 80-year-old media mogul's salary and stock package soared 46% over 2010 because of the addition of a $12.5-million bonus, according to the Los Angeles Times.

News Corp.'s vast global holdings include The Wall Street Journal, Dow Jones Newswires, Fox News, and a string of U.S. community newspapers. Murdoch has pushed the WSJ to broaden its editorial focus in recent years, bolstering its sports and politics reporting to make it more competitive with other general interest papers, including USA Today.

Details of Murdoch's pay, disclosed in a regulatory filing yesterday, come as he and his son and corporate heir-apparent, James, grapple with damage from a widening British phone hacking scandal.

Murdoch's pay included $287,070 for personal use of the company's jet.

By comparison, Gannett CEO Craig Dubow's annual pay last year doubled, to $9.4 million. (Annual pay details for Dubow and other top executives.)

GCI shares climbed 1.6% last year. NWS rose 3.1%.

NWS is considerably larger: It had $33 billion in revenue during FY 2011 vs. $5.4 billion for GCI in calendar year 2010.

Here's the story they're reading on the 11th Floor

The shark who's been circling USA Today -- Rupert Murdoch -- is witnessing a full meltdown of his News Corp. empire.

Murdoch

This morning, Prime Minister David Cameron called an emergency session of Parliament for Wednesday, a day after Murdoch, his son James, and former top lieutenant Rebekah Brooks are to testify to a government inquiry into a phone-hacking scandal engulfing News Corp.

Yesterday, the industry was shocked when Brooks, the former chief executive of Murdoch's News International, was arrested on suspicion of illegally intercepting phone calls and bribing the police. Soon after, Britain's top police official quit, saying "the ongoing speculation and accusations" against his department had made it difficult for him to do his job.

In the U.S., The New York Times has been leading the news charge. The Wall Street Journal is limping behind. And USA Today's Money section has another gripping, page-turner of a Q&A by Maria Bartiromo.

Related: the Poynter Institute recalls America’s phone-hacking scandal at The Cincinnati Enquirer.

Will 'hacking' be Murdoch's version of rosebud?

"All these years, he’s been a tycoon, a media mogul -- and now it's as if he’s suddenly become Citizen Kane."

-- Roy Greenslade, speaking to The New York Times about Rupert Murdoch's influence over British politicians. Greenslade is a frequent critic of Gannett and its U.K. newspaper operations. He blogs about media for London's Guardian, which has been leading coverage of a phone-hacking scandal at newspapers owned by News Corp., which Murdoch and his family control.

(Rosebud?)

Related: Media critic Howard Kurtz says Murdoch's News of the World "didn’t exactly discover phone hacking. Back in 1998, the Cincinnati Enquirer paid $10 million and apologized to Chiquita Brands after a reporter obtained voice-mail messages from a company executive 'in violation of the law,' the paper acknowledged."