Friday, December 20, 2013

Urgent: FCC OK's Belo; closing set early next week

Advancing a deal that will fundamentally reshape Gannett, the company just announced that the Federal Communications Commission has granted approval for Gannett's $2.2 billion takeover of Belo.

"All regulatory approvals for the transaction have been received," Gannett and Dallas-based Belo said in a press release. "Closing is expected early next week upon completion of remaining customary closing conditions."

Today's FCC announcement had been expected.

The takeover, which includes $1.5 billion in cash plus assumption of $715 million in debt, will for the first time turn Gannett into a predominantly TV broadcaster after more than a century as a leading newspaper publisher. Including four stations that Gannett will service, although they will be owned by third-party investors, the deal will add 19 stations to the broadcasting division's existing portfolio of 23.

Gannett announced the surprise deal in June, spurring a big run-up in Gannett's stock. It recently traded today for $27.91, up 43 cents or 1.6%. Year to date, GCI stock is up 55% vs. a much smaller 28% gain in the S&P 500 index.

15 comments:

  1. I think this deal and the lack of discussion about it here sort of speaks to the growing irrelevance of this blog. As Jim says, it dramatically reshapes the company, and has driven the stock price up immensely. Yet there are very few comments.

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    1. It has more to do with the fact that newspaper employees account for the vast majority of Gannett's workforce, and do not see this deal as affecting them. (The lack of comments is also because it's a Friday in the middle of a holiday month.)

      But it's also because I haven't done enough to emphasize the impact this deal will have on the newspaper division: It will push the company even more toward spinning off its newspapers into a separate company.

      Would that be a good thing, or a bad thing? The answer depends on how much more advertising leaves the print newspaper industry, and how well Corporate capitalizes a spun-off division.

      Whatever the short-term outcome, newspaper employees should pay close attention to the Belo takeover.

      Delete
    2. If it would be a good thing from a shareholder standpoint. Unfortunately, they would have some company fuckup heading the publishing division, so if this does come to be close to Martore's retirement, you better be young, dumb and cost effective to stay employed.

      Until then, I hold on to my Gannett shares, keep my mouth shut and do my job.

      Delete
  2. Jim, I think what you're acknowledging is this is a blog for newspaper employees. Nothing wrong with that, but Gannett is no longer mostly a newspaper company. Perhaps this should be the Gannet Newspaper Blog.

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    1. Or the Misspelling the Name of the Company Blog.

      Delete
  3. The spin math/ facts are real easy. If they spin broadcast out, and classified ventures/career builder, that leaves print on its own.
    Nothing else to say there. Let's pray they don't, even though that's likely the most attractive investor proposition.

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  4. So we will have Belo results in the Gannett earnings in 2014. Should be a decent ad year. 2015? If the market can focus on 2016 election and Olympics ad revenue, we could be okay. Not hard to see Gannett stock in the $40 range by then.

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  5. A tax-free spinoff of the newspaper biz likely will occur in 2014. It looks like you print folks will get your wish to be free of current Gannett management, though I don't see print succeeding on its own. Maybe Kushner will buy the print biz once it is on it's own and below the share price slides. He's doing a fine job in LA, slicing his newspaper staff. But that won't happen to you guys, right, since all the current woes are the fault of GCI management/

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  6. You are all entirely missing the point, although I'm not surprised that the dinosaurs on this blog would think like this. The difference between print and broadcast is reduced every year. What's left is a unified digital play that gives a huge storehouse of content and an impressive reach network for digital buys. Anyone who thinks that the company is better if they split apart all of that into separate companies is stuck in the 90s.

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    1. 1. The difference between print and broadcast gets reduced when print's legacy costs -- labor -- are reduced to a point where they reach parity.

      Until then, the newspaper division will continue to be a drag on earnings, which depresses the stock price.

      2. Analysts, representing big institutional investors who own 98% of Gannett's stock, have already started telling Corporate they think the company would be better off with newspapers in a separate company.

      Whether they are stuck in the '70s, '80s or '90s is irrelevant because they call the shots.

      Delete
    2. This comment has been removed by a blog administrator.

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    3. Jim, the poster is correct -- Gannett is building a unified digital publishing platform shared by all its divisions. The websites and mobile apps for TV, USAT and USCP are all on the same platform, same CMS. That will offer very powerful across-the-company revenue opportunities.

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  7. Gannett continues to buy back shares, which makes earnings per share more robust. How are they able to buy back shares and fund deals like Belo? The cash flow generated largely by the legacy newspapers. (the Belo deal is financed largely by fresh loans, but Gannett's cash flow pays down that debt).

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Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

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